The Washington PostDemocracy Dies in Darkness

Forget the 1 percent. In the Bitcoin world, half the wealth belongs to the 0.1 percent.

Kolin Burges, right, of London and Aaron (only his first name was given) of the United States  conducted a sit-in in front of the Mt. Gox office in Tokyo last week. Burgess said he was hoping to get back the $320,000 he has tied up with the Bitcoin exchange. (AP Photo/Kaori Hitomi)

The fall of Mt. Gox has a lot of people saying Bitcoin is dead. Yes, the Tokyo-based exchange may be gone, but the virtual currency has much more than a single exchange (which wasn't even the largest at the time that it collapsed). There's still a great deal of room for Bitcoin to grow, particularly in the West: Mt. Gox's collapse hasn't done much to temper curiosity among regulators and entrepreneurs.

It's no surprise that Americans are still interested in the cryptocurrency: Bitcoin is highly concentrated in the United States. Despite recent crackdowns by foreign governments on Bitcoin, which has sent its prices tumbling, North America has twice the number of Bitcoin-related, venture-backed businesses that Asia does. Overall, Canada and the United States account for 60 percent of such companies, according to a study released last week by Coindesk. Seventy percent of all Bitcoin venture capital goes to U.S.-based firms.

The distribution of investment in Bitcoin seems to be highly unequal, suggesting that the United States may have an early lead on the currency's development compared with other countries. Given Bitcoin's potential not just as a method of payment but as a kind of programmable currency that can be used for contracts and other kinds of  cumbersome transactions, this could be a huge deal. And while drawing comparisons to the early Internet may not be exact, it's hard not to think that the first country to figure out digital currency will enjoy tremendous first-mover advantages.

Of course, the drawback to consolidation is that those benefits will be concentrated in the hands of a relative few. That dynamic is already playing out among individual holders of Bitcoin, with a growing gulf between the Bitcoin-rich and the Bitcoin-poor. According to Risto Pietilä, a Finnnish entrepreneur, the overwhelming share of Bitcoin wealth is held in just a few dozen wallets. Half of all bitcoins belong to around 927 "individuals." If those figures are right, then half of the world's 12 million or so bitcoins is held by a tenth of a percent of all accounts. That's a stunning statement of inequality, since in the real world 46 percent of the world's wealth belongs to 1 percent of the global population. The Bitcoin world, then, is even less equal than the real world.

You don't have to look far to find concrete evidence of this concentration. Ross Ulbricht, the alleged operator of the illicit drug marketplace Silk Road, may have been sitting on a pile of as many as 144,000 bitcoins worth tens of millions of dollars when the FBI seized them. Others have said they lost hundreds of thousands of dollars in the Mt. Gox implosion.

Some of those people showed up at Mt. Gox's headquarters in protest. Their accouterments — Google Glass, a Macbook Pro, a trendy messenger bag — gave them away.  As unfortunate as their losses were, the protesters are a reminder that no matter how unequal the Bitcoin economy is, it's still mostly a playground for the ultra-rich.