Bitcoin Holdings Risk: Saifedean Ammous Says Massive Stashes Pose No Threat
Concerns often arise in the crypto community about the potential influence and power wielded by entities holding vast amounts of Bitcoin. Could large holders, sometimes referred to as Bitcoin whales, pose a significant Bitcoin holdings risk to the network or market? Bitcoin Standard author Saifedean Ammous recently offered a compelling perspective on this very topic.
Saifedean Ammous Bitcoin’s View on Concentration
According to Saifedean Ammous Bitcoin concentration in the hands of a few large players, even hypothetical scenarios involving single entities holding massive amounts, wouldn’t fundamentally threaten the protocol. Speaking in an interview, Ammous considered the extreme case of Michael Saylor’s MicroStrategy somehow accumulating 10 million Bitcoin – nearly half the total supply.
Ammous suggested such a holder would likely leverage their position to acquire even more Bitcoin, rather than attempting malicious actions against the protocol itself. The inherent design of Bitcoin makes it difficult and economically disadvantageous for a single entity to corrupt it.
Addressing the Bitcoin Whales Threat
The idea of a Bitcoin whales threat often centers on fears of market manipulation or excessive centralization. However, Ammous dismissed the notion that a large holder would try to hard fork the protocol to create more supply, for example.
He argued that such an action would diminish the value of their existing massive holdings, an outcome a rational actor would avoid. The economic incentives within the Bitcoin protocol align against such destructive behavior, even for the largest participants.
MicroStrategy Bitcoin and BlackRock Bitcoin ETF Holdings
Currently, the largest publicly known corporate holder is MicroStrategy Bitcoin, led by Michael Saylor. The company holds 538,200 BTC. Another significant holder is the BlackRock Bitcoin ETF, which holds roughly 585,000 BTC via its iShares product.
Collectively, these two entities hold approximately 5.3% of the total Bitcoin supply at the time of the original article. While this is a notable percentage, Ammous pointed out a crucial distinction: neither MicroStrategy nor BlackRock truly ‘own’ these Bitcoins outright in the traditional sense. They hold them on behalf of their shareholders and ETF investors.
Ammous emphasized that these firms hold Bitcoin because they are fulfilling their fiduciary duties to their investors. This dynamic introduces a layer of accountability and market pressure.
Investor Power vs. Large Bitcoin Holders
A key part of Ammous’s argument is the power of the underlying investors. If firms like MicroStrategy or BlackRock were to manage their Bitcoin holdings in a way that harmed investors or abused their market position, those investors would likely react.
Investors could sell their shares or exit the ETF, seeking alternative, more trustworthy ways to gain exposure to Bitcoin. This potential for capital flight acts as a significant check on the behavior of large holders. The emergence of new players, such as Twenty One Capital backed by figures like Jack Mallers and firms like Tether and SoftBank, aiming to offer competing Bitcoin exposure vehicles, further reinforces this market dynamic.
Summary
In conclusion, while the growth of large Bitcoin holdings by entities like MicroStrategy and through vehicles like the BlackRock Bitcoin ETF is a notable trend, Saifedean Ammous argues it does not constitute a fundamental Bitcoin holdings risk to the protocol itself. The incentives embedded in Bitcoin’s design, combined with the power of investors to withdraw their capital if large holders act against their interests, provide robust safeguards against potential threats posed by even the largest Bitcoin whales. The market’s natural forces and the protocol’s resilience are seen as sufficient defenses.
