Bitcoin hit $100,000 for the first time ever on December 5th and debates have ensued about if it could solve the wealth inequality problem. Even though it offers financial inclusion opportunities, there are concerns over its concentration in institutional hands.
For the first time ever, BTC went above $100,000 on December 5th, a big moment in digital finance. Even after a pullback below that level, it’s still up 32.1% in the last month and over 120% year to date, showing unbeatable profitability.
Since its inception in 2009, BTC has gone up over 893,000 times, presenting life changing opportunities for early investors. For example, individuals who purchased Bitcoin in August 2011 have seen astronomical returns, making the asset one of the most profitable in history.
However, will this milestone solve wealth inequality or widen the gaps? These are questions that keep looming.
The Role of Bitcoin Whales and Institutions
Bitcoin was initially celebrated as it was supposed to be the way out of centralized, traditional financial systems due to its decentralized nature. But, with institutional adoption, whale dominance, and several other reasons, there’s been talk of market centralization.
As of 2024, US spot Bitcoin ETFs hold over 1.1 million BTC which is over $100 billion and are getting close to Satoshi’s estimated holdings. A big chunk of BTC’s supply is in the hands of institutions like BlackRock and other big investors who can move the market.
Anndy Lian, an intergovernmental blockchain expert said:
“The concentration of Bitcoin in the hands of a few poses risks for perpetuating existing inequalities. It’s vital to implement regulatory oversight to maximize Bitcoin’s role in wealth redistribution.”
While institutional adoption makes BTC more mainstream, it raises questions on accessibility for smaller investors.
Financial Inclusion in Developing Regions
Despite the criticisms, BTC still offers financial empowerment in regions with underdeveloped banking infrastructure. Its decentralized nature means people can store and grow wealth without traditional banks.
Ryan Lee, chief analyst at Bitget Research, said:
“Bitcoin is digital money that cannot be controlled by any authority. It remains the best bet for global financial inclusion and wealth equality.”
Based on available data, Bitcoin has been a lifeline for many regions with hyperinflation or restrictive banking policies. Such nations like Venezuela and Zimbabwe are actively escalating their utilizations of this digital currency to shield their economies from the eccentricism of their hardly volatile currencies.
Bitcoin also benefits from its capped supply of 21 million coins, which creates scarcity and prevents inflationary pressures commonly seen in fiat currencies.
Opportunities for Latecomers
While early adopters got the biggest gains, analysts said there’s still financial opportunity for latecomers. In 2017 people said Bitcoin was overvalued when it hit $1,000. Today it’s 100x more.
Bitfinex analysts call Bitcoin a pure capitalist opportunity:
“Bitcoin creates asymmetric wealth opportunities for holders, even at $100,000. Late adopters can still benefit from future price appreciation driven by increasing institutional and governmental adoption.”
Projects like the Pennsylvania Bitcoin Strategic Reserve Act show the growing governmental interest in BTC as a store of value and inflation hedge. This could solidify BTC’s path to stability and benefits for early and late adopters.
Bitcoin’s Impact on Unequal Wealth
Unequal wealth is still an issue that affects very many countries. The wealth of the top 1% in the US alone grew by more than $21 trillion between 1989 and the year 2021, whereas the bottom 50% of residents saw their share shrink to a mere 2%.
Bitcoin offers a potential solution since it allows everyone to access the same financial tools if they have the internet. Unlike other forms of finance, BTC removes the barriers of credit history or even access to banks to give more people a chance to accumulate wealth.
Critics, however, say Bitcoin’s price volatility and speculation itself prevent it from addressing systemic inequality.
Catalyst for Change or Missed Opportunity?
While BTC hitting US$100,000 has opened up new ways to make money, its impact on wealth equality is dependent on how it will be adopted.
James Wo, founder of DFG digital asset platform, said Bitcoin is a tool for financial empowerment:
“Bitcoin allows users to bypass centralised financial systems. As institutional adoption grows, late adopters can still benefit from its long term stability.”
Historically, BTC has performed well during traditional banking crises. A fine instance is the collapse of the Silicon Valley Bank, which raised BTC by a full 26% in price in March 2023, known for reflecting its potential of being a safe-haven asset.
Conclusion
The full circle of Bitcoin at $100,000 is like a feather in its success cap and a reminder of the challenges that lie ahead.. While BTC is supposed to be a tool of financial inclusion, the high concentration of ownership among whales and institutions is a concern for exacerbating inequality.
As BTC evolves, it will need inclusionary adoption and regulatory policies to reach its full potential in bridging the wealth gap. How it turns out, whether it’s a catalyst for change or just another symbol of financial inequality be its legacy in the digital age.
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