Some Musings on Bitcoin Distribution — More and More Long-Term HODLers and Illiquid BTC | by Sylvain Saurel | Jan, 2022
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Remember that these are only estimates, since the Bitcoin network is pseudonymous, the only certain information you can check for yourself is the information related to the network addresses.
Here is a chart illustrating this Bitcoin distribution:
If the supply of Bitcoin is hard-capped at 21 million units, many coins are already lost forever. Their owners have probably lost access to the associated private keys. It is estimated that there are 3,790,000 of these coins lost forever!
This only makes the remaining BTC units even rarer, as Satoshi Nakamoto mentioned at the beginning of the Bitcoin network:
“Lost coins only make everyone else’s coins worth slightly more. Think of it as a donation to everyone.”
Thus, instead of the 21 million BTC initially planned by Satoshi Nakamoto, mankind will have to make do with a maximum circulating supply of around 17,210,000 BTC (at best).
In addition to these coins, which will probably be lost forever because they can no longer be used in transactions on the network, we must take into account the war chest that Satoshi Nakamoto was able to accumulate at the beginning of the Bitcoin network for his mining work to secure the network.
The figures estimate Satoshi Nakamoto’s possession at 1,041,715 BTC. Since we haven’t heard from Satoshi Nakamoto since December 2010, this suggests that those 1,041,715 BTC will never be usable again. This would again make the other coins actually in circulation even more valuable.
Then we have a total of 2,330,018 BTC stored at the moment on all the exchange platforms of the market from Coinbase to Binance, through Kraken or KuCoin and FTX.
Grayscale Bitcoin Trust is next, with 654,885 BTC held for its customers. This Bitcoin is therefore not directly owned by Grayscale but was purchased on behalf of its clients. Bulgaria then supposedly holds 213,519 BTC that it seized from criminals during a police investigation that ended in May 2017. At the current price of Bitcoin, this represents $10.8B, more than the gold reserves of Bulgaria’s central bank.
However, it is unclear how the country plans to use its Bitcoin in the future.
The company Block.one, which later created the cryptocurrency project EOS, also has a huge war chest in BTC with 164,000 coins in its possession. Behind them are private individuals with the Winklevoss twins owning something like 150,000 BTC according to various estimates. That would make the Winklevoss twins the multi-billionaires of the Bitcoin world.
As you can see, those who believed in Bitcoin before anyone else and bet a lot of fiat money on its future success are being amply rewarded for their boldness today.
MtGox comes in behind with 141,686 BTC that will eventually be returned to the customers who were cheated during the hack of the exchange platform as I explained to you a few weeks ago. Having embraced the Bitcoin revolution in August 2020, MicroStrategy is already on that list with 122,477 BTC. But what Michael J. Saylor’s company owns in Bitcoin will only increase in the future, as its strategy is clear: buy BTC in DCA mode by taking advantage of every dip.
Behind that, holdings are below 100K BTC.
With a current circulating supply of 18,911,575 BTC when I made this chart, this represented 10,172,613 BTC held mainly in cold storage whether by individuals or exchange platforms.
Going further, it is interesting to look at the statistics on the liquidity of BTC held which are proposed by Chainalysis:
As you can see, 15,437,568 BTC are considered illiquid. The current supply of highly liquid Bitcoin, which is moved very frequently, is about 1.5 million BTC. The liquid supply is 1.9 million BTC.
Finally, we can see that the number of addresses holding Bitcoin for at least a year is constantly increasing and is now approaching 10 million:
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