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⚡From Institutions to Whales🐋

Croxroad

02 Mar 2024 — 6 min read

☕️ GM Dear Plebs!

Here is Crox Road, your daily dose of orange pill that will turn you into a Bitcoin Maxi.

The menu for today:

🎭 Crypto Titans Unleashed

The price of Bitcoin is close to its all-time high, thanks in large part to US finance giants. Investment firms like Grayscale, BlackRock, and Fidelity, are pouring billions of dollars into buying the volatile digital asset. In the last few weeks, these powerful institutions have become so-called 'Bitcoin whales'.

Because of Bitcoin's system, there will only ever be 21 million bitcoins. 19 million have been created, but many are already accounted for and probably off the market. So what other organisations or individuals are Bitcoin whales, and what does the shift in wealth mean for the digital currency that was originally created as peer-to-peer internet money?

The figures below are estimates gathered from direct research and published information, but should give a good overview of how Bitcoin is distributed. Our data collection ended on the morning of 29 February. Estimates for how many bitcoins are lost forever vary between three million to as many as six million. Bitcoins can be lost because people forget the details of their digital wallets - there is no 'customer support' in Bitcoin. Just ask James Howells, who lost 8,000 bitcoins on a discarded hard drive in Wales.

Some of these lost bitcoins might also come from abandoned criminal proceeds left untouched. According to crypto-investigators at Elliptic, 3.15 million bitcoins have been dormant for 10 years or more. Some analysts - like those from investigators Chainalysis - say Bitcoin that hasn't been moved in five years could also be lost too. So millions more bitcoins could potentially be added to the lost pile.

A loose estimate that's often agreed upon is 3.5 million. But 1.1 million of those dormant coins are likely to belong to the anonymous creator of Bitcoin, so we can take that portion out of the equation. A conservative estimate for lost coins therefore is about 2.4 million, or 11% of all bitcoins.

Cryptocurrency exchanges act like banks for crypto-users. You can exchange your traditional money like dollars or pounds for Bitcoin and other digital tokens. K33 researchers estimate that about 2.3 million bitcoins are kept by exchanges, either on behalf of customers or as floats. Binance is the world's largest exchange and is estimated to have about 550,000 bitcoins - followed by Bitfinex (403,000), Coinbase (386,000), Robinhood (146,000), and OKX (126,000). In total it is thought exchanges hold about 11% of all bitcoins.

Leaving your coins on an exchange can go wrong though, for example with the collapse of FTX which left customers without access to their coins. Some Bitcoin purists are also uneasy about how a reliance on large and increasingly regulated and legally compliant exchanges goes against the anti-establishment ethos of Bitcoin.

A Bitcoin whale is someone who holds more than 10,000 bitcoins in their digital wallet. The website Bitinfocharts uses public blockchain records to keep a Bitcoin Rich List of the 100 richest wallets, and there are about 80 wallets with 10,000 coins or more, whose owners are unknown. Owning one of these wallets would make you a billionaire. Some of them might be the wallets of people or organisations which appear elsewhere in this graph but we will never know unless a researcher makes the link or the whale outs themselves. A loose estimate is that large whales account for about 8% of all bitcoins.

The way that Bitcoin was invented means there can only ever be 21 million coins. Every coin has to be mined using a network of volunteer computers around the world. These computers - often owned by large Bitcoin mining companies - act like high-tech accountants checking and securing the record of Bitcoin transactions. In return for the work, the computers are automatically rewarded with Bitcoins.

Over time, the amount of coins given out as part of the mining reward is automatically reduced and in April it will halve again, squeezing the supply of new coins further. There are still about 7% of coins yet to be mined, and it is estimated that the last Bitcoin will be created in 2140.

The anonymous creator of Bitcoin holds an estimated 1.1 million bitcoins in wallets that were the first to be created in 2009. None of the coins have been moved in years, and no-one knows who Satoshi is - or even if he/she/they are still alive. If they are still alive - and estimates are correct - then this would make Satoshi Nakamoto roughly the 22nd richest person in the world. This stash is about 5% of all bitcoins.

🥎 From Software Developer To Working Full Time In Bitcoin

Robin Seyr's journey from software developer to full-time Bitcoin advocate is a captivating tale of transformation, explored in a Croxroad Podcasts interview. Seyr draws parallels between Bitcoin and the foundational TCP/IP protocol of the internet, envisioning Bitcoin as the base layer of the financial system. He discusses the long-term nature of the Bitcoin revolution, its potential as a protocol for diverse applications, and the significance of patience in its development.

Seyr explores Bitcoin's role in preserving wealth, potential catalyst events for a price surge, and the challenges of adoption. His narrative unfolds the perfect storm propelling Bitcoin's growth, balancing entertainment with societal impact. The interview delves into Seyr's analogy of Bitcoin to the TCP/IP protocol, emphasising its transformative force in reshaping the financial landscape.

Further, Seyr envisions Bitcoin as a protocol for building applications, providing a secure base layer for innovation in finance. The interview also touches on Bitcoin adoption and mindset in Austria, highlighting the diverse paths individuals take to integrate Bitcoin into their lives.

In conclusion, Seyr's narrative serves as a beacon for Bitcoin enthusiasts, emphasising the transformative power of adopting Bitcoin's philosophy. Beyond its financial aspects, Bitcoin represents a mindset shift, and Seyr's journey exemplifies the broader societal implications of embracing this digital currency.

🎯 Web 3.0 History

Web 3.0 signifies the next evolutionary phase of the internet, potentially rivalling the impact of Web 2.0. Rooted in principles of decentralisation, openness, and enhanced user utility, it stands as a paradigm shift in the digital landscape. These fundamental ideas find their roots in the visionary concepts articulated by Tim Berners-Lee in the 1990s.

Decentralisation, a core tenet of Web 3.0, liberates users from the need for permission from central authorities to contribute content, eliminating single points of failure, and evading the threat of a 'kill switch.' This model ensures freedom from unwarranted censorship and surveillance, fostering a more democratic and resilient online environment.

The bottom-up design approach advocated by Berners-Lee promotes inclusivity, allowing code development in the public domain, encouraging widespread participation, and fostering experimentation. This approach contrasts sharply with the centralised control wielded by a select few in Web 2.0, symbolising a shift towards a more democratic and collaborative internet.

Berners-Lee's 2001 vision of the Semantic Web was an early exploration into bringing structure to the meaningful content of webpages. At that time, computers struggled to process the semantics of language accurately. The Semantic Web aimed to enable software to comprehend the contextual nuances of words or phrases, empowering it to execute sophisticated tasks for users.

While the Semantic Web laid the conceptual groundwork for Web 3.0, the latter has surpassed these origins. The expensive and intricate process of converting human language into a format understandable by computers, coupled with the substantial evolution of Web 2.0 over the past two decades, has propelled Web 3.0 into a domain far beyond its initial semantic aspirations. This evolution underscores the dynamic nature of the internet and its constant quest for innovation and improvement.