No, Everyone Is Not Getting Rich Off Bitcoin (2024)

If you're ruing the decision not to dip your toes into the cryptocurrency market, and feel like you are one of the few that missed out, don't worry, you're not. Even with the recent plunge inprices, bitcoin and other cryptocurrency prices remain well above historical levels.The New York Times published an article over the weekend titled Everyone is Getting Hilariously Rich And You're Notwhere a bunch of white dudes dressed like they pioneered theWilliamsburg hipster movementtold their stories of cryptocurrency success, leaving casual readers to wonder, why not me?

However, despite the media frenzy,distribution data suggest you arenot alone if you don't own bitcoin, and if you do, you are certainly not getting rich. While millions read aboutsurging cryptocurrency pricesandgrowing market caps, the number of actual wallets widening is just a handful. (See also:The 6 Most Important Cryptocurrencies Other Than Bitcoin)

According to bitinfo, which tracks the total number and value of bitcoin addresses, 75% of addresses are home to less than 0.01 bitcoin, and 97.54%have a balance of less than onebitcoin.So at its current price of $10,100, three-quarters of bitcoin addresses are worth just over $100. And at the other end of the scale, the number of addresses with balances between 100,000 and 1,000,000 is three, or 0.0000106%. And in monetary terms, the bitcoin millionaire buzz is more a fuzz. Just 0.07% percent of addresses are worth more than $1 million whereas 74.5% of addresses are worth less than $1.

So when Erik Finman, the 18-year old school drop-out told CNBChe became amillionaire by investing money from his grandma into bitcoin, there's no need to feel foolish. Erik is one of afew bitcoin millionaires.

Howit compares to U.S. stocks?

If bitcoin isn't making you rich, then the record stock market pricesmust be right? Again, not really the case. While concentration of wealth in U.S. stocks is nothing compared tocryptocurrency markets, the shrinking number of people benefiting from the bull marketpaints a pretty clear picture of the overall asset concentration in the U.S.

On January 16, the Dow Jones Industrial Average topped 26,000 for the first time, just 12 days since it surpassed25,000. However, the decade-long bull rally is makingfewer Americans wealthy. According to New York University professor, just 13.9% of Americans directly own stocks, and the bottom 60% of U.S. households own just 1.8% of stocks. And much like bitcoin, ownership is highly concentrated with the top 1% owning more than 40% of stocks.

The Bottom Line

After a fruitful2017wherethe price of bitcoin rose from below$1,000 to nearly $20,000, prices have steadied to trade in the $10,000 to $15,000 range to start 2018. However, reddit threads and chat rooms remain clustered with enthusiasts. But don't be fooled, there are only 166,853 addresses worth more than $100,000.

In other words, 0.05% of Americans have slightly less than the average U.S. household income in bitcoin.Minus tax. Minus transaction costs. And with the recent slide in the price of bitcoin this small section of society may become less well-off.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author does not owncryptocurrency.