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Author: Admin | 2025-04-28
By Dr.Pooyan Ghamari Swiss Economist Bitcoin, once envisioned as a decentralized and democratic alternative to traditional financial systems, now exhibits significant centralization in its ecosystem. While the technology powering Bitcoin—the blockchain—remains decentralized, the reality of its ownership, market dominance by a few wallets, and the concentration of power in centralized exchanges paints a different picture. Today, Bitcoin is controlled by a small group of entities and individuals who dominate the market, influence price movements, and profit at the expense of the broader community. In this article, we’ll examine how this centralization has occurred, explore the mechanics of how these groups dominate the market, and understand the ways they profit by cashing out on retail traders through manipulation and market design. Table of Contents 1. The Myth of Decentralization 2. How Bitcoin Became Centralized 3. Who Owns Bitcoin? Wallet Concentration Explained 4. Centralized Exchanges: The True Power Brokers 5. The Liquidation Engine: A $500 Million Daily Game 6. How the Dominant Group Profits 7. Retail Traders as the “Cash Cows” of the Bitcoin Market 8. How Coordination Among the Few Drives Market Cycles 9. Why This Matters: Risks of Bitcoin Centralization 10. Can Bitcoin Be Truly Decentralized Again? 11. Lessons for Investors 12. The Future of Bitcoin: A Crossroads Between Centralization and Decentralization 1. The Myth of Decentralization Bitcoin’s decentralization was its core promise. By relying on a peer-to-peer network, Bitcoin aimed to distribute power among thousands (if not millions) of users. The lack of intermediaries, like banks or centralized authorities, was one of its greatest selling points. However, the reality today is far removed from this ideal: • Ownership is concentrated in a few wallets. • Most trading activity occurs on centralized exchanges. • A small group of entities wields disproportionate influence over Bitcoin’s price. This concentration of power undermines Bitcoin’s founding principles and makes it resemble the very financial systems it was designed to disrupt. 2. How Bitcoin Became Centralized Bitcoin’s centralization is the result of several interconnected factors: 1. Early Adoption: Early miners and investors accumulated large amounts of Bitcoin when its value was negligible. Over time, these individuals have retained a significant portion of the total supply. 2. Institutional Investment: Hedge funds, corporations, and even governments now hold large amounts of Bitcoin, consolidating ownership further. 3. Mining Centralization: Mining, once a decentralized activity, is now dominated by a handful of large operations with access to cheap electricity
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