Who holds the richest 100 bitcoin addresses?

Rhys Muter 10 February 2018

Bitcoin rich list - ITIThe bitcoin rich list leads to more questions than answers, even if huge revenue streams can be noticed.

Satoshi Nakamoto created and mined huge amounts of bitcoin in its early stages. The exact number is unknown but the most accurate method of estimating how much bitcoin Satoshi may have mined suggests that Satoshi could have mined as much as 1.8 million bitcoin.

Well, surely that would put him in the bitcoin rich list, right? The problem with that is that Satoshi’s bitcoin could be held in a large number of wallets. That is the same for anyone who has large amounts of bitcoin.

In this article, the bitcoin rich list is looked at to see who just might be sitting at the top of the pile. There are some problems with knowing exactly who is at the top so some useful information is given to get a better grasp of things.

This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

The power law shows how it is more likely that exchanges are linked to the rich list. Then the article finds out who is on the bitcoin rich list and shows some huge revenues are being made.

What to know about the top 100 bitcoin rich list

First, one wallet does not equal one person. With Hierarchical Deterministic wallets, or more simply HD Wallets, any number of wallet addresses can be generated when receiving bitcoin. For privacy, this is generally recommended. But for having a peek at the bitcoin rich list, this privacy means there could be any number of wallet addresses for one person.

Second, there are some strange results in the top 100 bitcoin list. For example, there is a wallet known as wallet 967. This wallet’s last transaction occurred on 25 July 2010. The amount of bitcoin in it… Around 31 thousand. That means roughly US$620 million dollars worth of unaccountable bitcoin is floating around somewhere out there, at peak bitcoin prices.

Third, there is no way to know exactly who owns a bitcoin wallet. The only possible method is if that wallet can be linked by several transactions and then successfully identified against an internet provider address. This leaves only the rare case that a wallet can be voluntarily disclosed by its holder. In the top 100 bitcoin addresses that is rare. All those examples are cryptocurrency exchanges and one mining business.

According to information held by BitInfoCharts, the only wallets that can be identified are: Bitfinex, at number one on the list holds over US$1.4 billion worth of bitcoin; Kraken, sitting at 54 on the top 100 list, holds over 22 thousand bitcoin, valued at over US$183.1 million; and second wallet is held by Kraken at position 66, which holds over 17 thousand bitcoin and is valued at over US$146.3 million, as at the time of writing.

In addition to those known exchanges, XAPO and BitMain are identified as holding wallets on the top 100 list. Bitmain is the biggest cryptocurrency mining business. The wallet address linked to Bitmain sits at number 60 and holds over 20 thousand bitcoin valued at US$169.3 million. XAPO holds cryptocurrency for clients in cold storage vaults sort of like a bank. XAPO sits at 80 on the list and holds 12,300 bitcoin valued at US$102 million.

Power Law

The only way to make any sense of the top 100 is by using the power law. Power law suggests there is a power imbalance that can explain the distribution of wealth in certain cases. For example, 80% of global wealth is held by 20% of people. One study says that the wealth imbalance in the cryptocurrency market is even higher than that, meaning that even fewer wallets own more than 80% of all cryptocurrency.

By using the idea of power law and the information above, a pattern begins to emerge. Number one and number 66 on the top 100 list are identified as being owned by exchanges. Bitfinex and Kraken respectively. In terms of total 24-hour trade volume, Bitfinex and Kraken rank 4 and 8, respectively according to market information from CoinMarketCap.

That means that if 80% of bitcoin is owned by 20%, that 20% could mostly be exchanges. With that information, it can be said confidently that many more wallets within that top 100 could be linked to exchanges.

Looking at the wallets that rank at 16 and 17, the information shows that they have had only two inputs into their wallets and none of that has been spent. It is likely that only an established cryptocurrency exchange could be involved in a trade like that because that amount of bitcoin is not freely floating around the market. That is what economists call liquidity.

The addresses ranked 89 to 113 all have bitcoin totals between 10 and 11 thousand bitcoin. Of those 24, only 11 have traded in the last three months. Of those 11, five have only had the one input. Inside the top 100, there are 20 wallets that have only less than 10 inputs. This pretty wide-ranging data and what is certain is that only the largest existing trading companies or mining outfits could have that kind of liquidity to park away.

The top 100 might be totally dominated by wallets linked to exchanges. That is only if it is safe to assume that power law applies to the rankings. Due to the confusing cryptography of bitcoin, it is not safe to make that assumption, but no clearer pattern exists without complex cryptanalysis tools.

Trading habits of exchange addresses

A clear pattern can be seen by looking at the wallet that is reported to be owned by Bitfinex. There is a clear pattern of exchanging bitcoins through various wallets. It is impossible to know where the funds are going. It can only be estimated, but some transfers of bitcoin from the Bitfinex wallet are wallets linked to Bitfinex. With that, at least a picture of the kinds of revenue Bitfinex is generating can be seen.

Revenues of Bitfinex are big. Looking at the month leading up to bitcoin’s 17 December 2017 all-time high this can be seen easily. From 17 November the Bitfinex wallet reduced its bitcoin holding from 170,740 to 121,516 by 24 November, as the bitcoin price jumped from US$7,435 to US$8,277, according to figures from BitInfoCharts. That represents a significant reduction by 28.83%

It also represents a revenue of US$185 million. There is bigger revenue to show. By 5 December the Bitfinex wallet shows 142,578 bitcoin at US$11,563.69. That number was reduced to a new low of 118,956 bitcoin by 9 December. In that selling period there were two large transactions of 5,000 bitcoin and larger and by averaging those prices, a rough revenue is found. The total of that revenue appears to be US$410 million.

But wait, there’s more. By 17 December there were 136,289 bitcoin in the Bitfinex wallet. Starting from 10 December until 17 December, 25 thousand bitcoin was transferred out of the Bitfinex wallet. 10 thousand of those bitcoin were sold over 15-16 December for an average price of US$17,193.50. Just those 10 thousand bitcoin show an estimated revenue of US$171.9 million.

The revenue over this period alone roughly equals US$766.9 million. And that is not counting the further 15 thousand bitcoin sold during the month leading up to bitcoin’s all-time-high. Otherwise, total revenue may have been in excess of US$1 billion.

Not much more can be known without complex cryptanalysis tools. The blockchain reveals the public address of where the bitcoin is transferred from and where it went to. The trouble is that it is impossible to know whether the transfers are going to clients of Bitfinex or whether someone is profiting the difference.

What can be shown is that there are linked wallets to the Bitfinex wallet. On 2 February and 9 February, there were two bitcoin transactions totaling 30 thousand bitcoin. The rough total revenue from that would be US$248.3 million. But it is not possible to describe this US$250 million chunk of bitcoin as being revenue. All that chunk of bitcoin is doing is occupying the number 19 spot on the top 100 bitcoin addresses list, as at the time of writing 10 February 2018.

What is known other than huge revenues?

There are other wallets which seem to be linked that are much more active. But it is impossible to say confidently that these wallets are used for the purpose of paying out clients’ withdrawals. If this were likely it could be just as likely to say that Bitfinex is moving most of the bitcoin into untraceable wallets essentially stealing its clients’ funds. But again... impossible to know. Also, remember that Bitfinex is only the fourth largest cryptocurrency exchange.

The trouble with the top 100 bitcoin addresses is that one address does not equal one person. Even more confusing, one exchange does not equal one address. This highlights the difficulties of knowing who anyone is on the top 100 bitcoin list. What is important is that in certain conditions we can guess confidently that the top 100 addresses are mostly linked to exchanges.

This rich list does not feature Richard Branson or even Warren Buffett, but the people behind these exchanges are quickly turning into the new wealthy.

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