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Supply schedules and ownership spread for Bitcoin and peers
Supply schedule and ownership concentration are important to evaluate when investing in cryptocurrencies. For payment tokens in the top 30 cryptos by market cap, the percentage of supply to be released in the coming years varies greatly.
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Bitcoin, Bitcoin Cash, and Litecoin have the same theoretical supply schedule. Bitcoin Cash is a fork of Bitcoin, and hence the supply and remaining issuance are almost identical. Litecoin, however, started later, and a larger percentage of the supply is still to be issued.Monero and Dogecoin have significantly different supply schedules from Bitcoin. Both Monero and Dogecoin have what is called constant tail emissions. Constant tail emissions mean that the same amount of tokens will be issued annually for all eternity. The two supply schedules are still vastly different. A larger percentage of Monero's supply was issued before entering tail emissions, and the tail emissions are relatively smaller compared to Dogecoin.Supply schedules are important for the investment proposition of a cryptocurrency because they will impact the future supply side, which, together with demand, determines the market price. Ownership concentration is another dimension to evaluate when assessing the future market supply of a cryptocurrency. If tokens are concentrated in a few hands, this proposes several risks for future prices. Firstly, it poses a greater chance that the current prices are manipulated because the concentrated owners control market supply to a larger extent. Secondly, large token holdings often indicate they are acquired at a low cost, either through early and cheap mining or pre-allocations. A rational individual would continue taking profits without crashing prices in this case. Hence, increased demand is less likely to increase prices significantly because large holders will rationally respond with increasing market supply. In conclusion, a high ownership concentration of a token poses a greater future price risk than spread ownership.Ownership concentration is hard to evaluate due to the pseudonymous nature of the blockchain entries. One entity can be behind multiple seemingly unrelated addresses. There are some methods to cluster addresses together, but this is easy to avoid for the technically sound. Still, even though the numbers are hard to interpret, there are substantial differences in ownership concentration among the payment tokens.All Shiba Inu tokens were pre-allocated, meaning there is no new issuance. Shiba Inu, unsurprisingly, also stands out negatively with a very high ownership concentration. For all the other tokens, all coin issuances are block rewards. But no allocations don't necessarily mean that ownership is highly spread out. The issuance schedules are massively frontloaded - early adopters will, in practice, get huge allocations.Source: K33 ResearchThe figure above lists the percentage of tokens held on exchanges and the share of tokens held by the top 50 addresses (excluding exchanges). Bitcoin has the lowest ownership concentration of all the tokens by a substantial margin. Bitcoin Cash, Litecoin, and Dogecoin appear to have similar distributions, while Shiba Inu tokens are highly concentrated, as noted earlier. The privacy features of Monero prevent us from obtaining similar statistics for XMR. XMR is, relative to most other coins, used frequently as a medium of exchange, and hence we believe the supply to be fairly spread out.
