‘Whales’ pulling bitcoin’s strings

LONDON: Bitcoin, the star of the cryptocurrency world, is widely seen as a freewheeling tool as open as the Internet itself.

But analysts have cast doubt on the veracity of that perception, highlighting that the bulk of bitcoin is in fact heavily concentrated in the hands of a powerful few.

Some 1,000 bitcoin holders — out of a total 11 million — hold some 35.4 per cent of currency, according to BitInfoCharts.

These bitcoin “whales” — a word popularly used for big money players in financial markets — “literally control the currency”, said Bob McDowall, an expert in cryptocurrencies.

They could “dictate monetary policy, which is normally the function of a central bank or a government”, he said.

A key difference with typical currencies is that the number of bitcoin in existence can never exceed 21 million. There are currently some 17 million bitcoins in circulation.

Bitcoin’s surge in value to a peak of US$19,500 (RM77,900) in December last year turned some of its first investors into billionaires.

The BitInfoCharts study also found that the top 10 account holders held 5.96 per cent of the bitcoins.

Experts cautioned that the statistics should be taken with a pinch of salt, however, as several individuals could be behind a single account and one person could hold several accounts.

Big bitcoin players can hold a lot of sway over the market.

To try and prevent excessive falls in the value of the currency, observers believe that the “whales” may be checking with each other first before putting in major orders, leading to suspicions of fraud in this unregulated market.