The recent Bitcoin rally to as high as $42,000 was driven primarily by institutional investors suddenly waking up and realizing the asset’s long-term value potential, and their response was to buy it now so they wouldn’t have to pay higher prices someday if Bitcoin eventually catches on.

While FOMO has been rewarding crypto investors as wealthy individuals seek to protect their wealth, the continued concentration of Bitcoin and wealth could have dangerous consequences that the asset’s creator (Satoshi Nakamoto) has been working hard to avoid, which is why the wave of institutional buying may not be as positive as it appears.

Wealth transfer from cash to Bitcoin

Currently, Bitcoin is priced at $37,000 per coin and has never been in higher demand, but the world is still in the grip of a global pandemic. Unemployment has also never been higher, and ordinary, everyday citizens are calling for stimulus money to help them pay their bills, or cover the cost of food and other basic necessities.

Yet more money is flowing into Bitcoin than ever before. And unlike in 2017, it’s not just retail digital assets. Some retail investors are back, but this time the price per Bitcoin is even higher, but they are not the ones buying a significant share of the cryptocurrency supply at these levels.

The amounts they bought were insignificant but did drive the overall upward momentum, but the price increase was mainly due to wealthy institutional investors buying large amounts of Bitcoin.

The large number of OTC buy orders happening behind the scenes has reduced the supply that was once in short supply in the past, and it has enabled many early cryptocurrency investors and retail investors to survive the bear market, which has led to positive changes in global wealth distribution.

But with whales absorbing such a significant share of Bitcoin’s supply, the decentralized asset has failed to gain traction among early backers who want a better financial future for all.

Cryptocurrency becomes centralized

Bitcoin as a technology enables the future of free finance, but because it is supplied on the free market (as it should be), over time it will come to be owned and therefore controlled by the world’s current wealthy.

Satoshi Nakamoto, the creator of the cryptocurrency, sought to free the world from third-party control of money. But if the majority of the Bitcoin supply is owned by a handful of people, does the distribution of wealth suffer from his original intention?

Sadly, the answer is no. Even with the recent crypto “crash,” wallets that already have 1,000 BTC or more in them continue to buy Bitcoin. Only those who are already wealthy can afford to continue buying at $35,000 each, and those who already have $35 million in money in a single wallet can definitely be classified as “already very wealthy.”

Bitcoin could have made them rich, but will cryptocurrency evangelists cheer when much of the supply is controlled and concentrated in corporate coffers rather than citizens seeking financial freedom?

More than 2,400 wallets hold 1,000 BTC or more, representing 2.4 million of the total supply of 21 million Bitcoins. This means that only 2,400 people or entities own the top 10% of the most scarce resource.

While these entities drive up the price of Bitcoin for any preconceived cryptocurrency investor, Bitcoin’s original purpose is obscured by the centralization of the same old wealth.

In the absence of a true changing of the guard, cryptocurrency will have at least partially failed in its original mission.

Without real vigilance and change, cryptocurrencies will at least cause some changes to their original mission.

The original text comes from newsbtc and is translated by Blockchain Knight. The English copyright belongs to the original author. Please contact the translator for Chinese reprint.