Who owns bitcoin?

The price of bitcoin may have surged, but there is still a healthy debate about its long-term prospects. Clear points of contention centre around ownership and transparency. So who does own bitcoin? 

Source: Bloomberg

In financial markets, the price is everything and it is determined largely by supply and demand. Information about who owns an asset and who wants to buy that asset is a key driver of the price. In the equity market for example, traders will often focus on things like where the money is flowing and what ‘insiders’ like hedge funds and pension funds are doing with their equity holdings. This level of detail is easily obtainable and if the transaction is large enough, the details of transacting parties are reported to the market.

This level of transparency is not only useful for market regulators, it also provides insights that will often affect sentiment towards a stock and influence other market participants.

Bitcoin ownership is not transparent

When it comes to bitcoin and other cryptocurrencies, however, the opposite appears to be true. Many see the lack of transparency and complete anonymity of ownership as a positive attribute.

In a digital world where hacking and cybercrime is always a threat, those with a sizeable hoard of digital coins appear keen to keep a low profile not to become a target. They may hold a number of wallets, so the risk is spread. The technology and processing of cybercurrencies also supports anonymity – the blockchain ledger that records each and every transaction does not display names or details of the participants, meaning they are essentially anonymous.

This is a clear concern for governments, with the US Internal Revenue Service (IRS) declaring that in 2015 only, 802 individuals claimed profits or losses in relation to bitcoin transactions. That could change soon though, with startups such as Chainalysis creating software which tracks transactions and offers greater insight on who is buying and selling bitcoins to tax authorities, police and banks. That may be the start of increased transparency in the cryptocurrency market, although it will take time to resemble more mainstream markets like equities and other exchange traded instruments, if indeed it ever gets that far.

Bitcoin is now being covered by a handful of investment bank analysts, and if we see momentum build towards more efficient bitcoin processing, in turn leading to wider acceptance from retailers and a less dominant position for PayPal, this may be the point when bitcoin really comes onto the institutional fund's radars as an alternative investment.

Discover cryptocurrency trading with IG

Sign up for our free three-part guide, you'll find out:

  • The brief but exciting history of cryptocurrencies

  • The factors that drive cryptocurrency prices

  • The differences between trading physically and on leverage

  • How to get started with IG

Form has failed to submit. Please contact IG directly.

  • I’d like to receive information from IG Group companies about trading ideas and their products and services via email.

Get my guide

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

Apparent broadening participation in the bitcoin market

A great way to understand the level of anonymity is to view the ‘Top 100 Bitcoin Addresses’ on websites like 99Bitcoins. Here we see the bitcoin address and the number of bitcoins held but not the holder’s identity. The address with the largest level of holdings globally is Bitfinex, which holds close to 500,000 coins (0.699% of all bitcoins). These are held on behalf of its thousands of clients, which in-turn are not made public.

The website BitcoinRichList suggests that the top 100 bitcoin addresses own around 17% of all bitcoins. This figure stood closer to 20% in August 2016, so one can assume that the ensuing 800% rally in prices since then has seen some larger holders taking profits amid increased and broadening participation.

Well-known bitcoin owners

Aside from the raft of celebrities who have talked up their involvement in bitcoin, we have seen some well-known entrepreneurs and businessmen speak out about their sizeable exposure to bitcoin. The biggest of these are Cameron and Tyler Winklevoss, who once said they owned 1% of all bitcoins. That would be around 1.65 million at the current level that has been mined. Remember that Bitfinex is the largest holder of bitcoins with less than 500,000 coins, so if the Winklevoss brothers still have this level of exposure, it must be spread over many accounts. Bitcoin creator, Satoshi Nakamoto, would also have spread his holdings over multiple accounts.

Many of the other big holders of bitcoins tend to be involved in the in the creation or mining of the digital currency, or else in running an exchange or a payment system. Names like Tony Gallippi, the Chairman of virtual currency processor Bitpay, who is said to have $20 million invested in bitcoin, or Dave Carlson, a software engineer who set up bitcoin mining company MegaBigPower. Mr Carlson had been speculated as earning $8 million per month at one stage.

The fact that little is known about who actually holds bitcoins is down to the blockchain technology itself. Some see this as a drawcard and like the privacy bitcoin offers, while others are less enthusiastic.

Bitcoin trading

You don’t need to own cryptocurrencies to trade
on them.
Find out more about trading on bitcoin with IG.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by writer

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.