Bitcoin soared from $970 to $20,000 in 2017, before falling to its current price of just over $13,300.
Just like the price, the number of Bitcoin-made millionaires is also rising. But finding out the exact amount is the hard part.
After all, it only took you 50 Bitcoins to become a millionaire at one point last year. But how many people have become real millionaires as a result of the rise of Bitcoin and other cryptocurrencies?
There are 23,943 addresses holding at least a million dollars worth of Bitcoins, according to BitInfoCharts.com, which tracks Bitcoin data. But it’s more difficult to track how many people have made million-dollar profits out of cryptocurrencies due to the nature of its underlying technology.
“It is impossible to know,” a spokesperson for BitInfoCharts told Penta in an email. “My guess is somewhere between 20,000 and 200,000.”
“It is impossible to know how many Bitcoin addresses belong to one person (as a rule there is more than one address in each wallet). And one address can hold assets of many customers,” the spokesperson wrote.
Intelligence groups which conduct research on high-net-worth individuals might share the challenges as BitInfoCharts.com. Global wealth research institutions Wealth-X and Hurun declined to comment on this topic, saying they don’t have any research to share. And UBS Wealth Management says they don’t have any public estimates available either.
The issue is not just with Bitcoins, but with all other cryptocurrencies as well. Ethereum, the second biggest cryptocurrency after Bitcoin, hit a fresh record high of $1,417.38 on Wednesday. It was worth just $10 at the start of 2017 and the value is up over 13,000% in a year. But just like Bitcoin, it’s difficult to track how many people have made it onto the millionaires list as a result of the Ethereum or any other cryptocurrencies’ high return rate.
“I’m not aware of any means of calculating this [the number of millionaires] besides anecdotal evidence,” said Nolan Bauerle, director of research at Bitcoin news and research group Coindesk. “Because asset security, in a physical sense, remains an issue, and because cryptocurrencies are bearer instruments, many people who hold a lot of cryptocurrency are not ostentatious and do not display their wealth openly.”
BitInfoCharts.com data show that there are, at a minimum, three individuals or groups holding more than $1 billion in Bitcoin, including Cameron and Tyler Winklevoss, the twin brothers who are best known for taking Mark Zuckerberg to court over the founding of Facebook.
But the return rate and personal wealth creation brought by cryptocurrencies hasn’t overly impressed Wall Street professionals.
“It’s like going to the casinos. If you are lucky, you can certainly win a million dollars, but it’s pure luck,” says Kiran Ganesh, head of investment advice solutions at UBS Wealth Management.
Mr. Ganesh said he does not see buying cryptocurrencies as a real investment but more like a gamble. “You are betting on the fact that some people will have more confidence in Bitcoins and will keep buying it,” he says.
He suggested that those who are lucky enough to have already become millionaires thanks to cryptocurrencies move their wealth to assets that have a more certain value in the long-term, such as private equity or real estate.
UBS has barred its team from pitching Bitcoin to clients. “The bubble to end all bubbles continues. Cryptocurrencies only have value if accepted as currencies. However, they cannot be used for the most important transaction in an economy, and cryptocurrency supply can only rise and never fall (making them a poor store of value),” UBS global chief economist Paul Donovan wrote in a post on the company’s website in December. “To date, using cryptocurrencies requires (effectively) a simultaneous asset sale and purchase of goods or services.”
And UBS is not alone in saying “no” to cryptocurrencies. Merrill Lynch has blocked clients and financial advisors who trade on their behalf from buying Bitcoin, citing concerns over the cryptocurrency’s investment suitability, according to a recent Wall Street Journal report.
The ban applies to all accounts and precludes the firm’s roughly 17,000 advisors not only from pitching Bitcoin-related investments but also from executing client requests to trade the Grayscale Investment Trust Bitcoin fund. The ban extends an existing policy barring access to newly launched Bitcoin futures.
Wells Fargo joined Merrill Lynch in prohibiting its brokers from selling Grayscale’s Bitcoin Investment Trust Fund Monday, according to Investopedia and Financial Advisor IQ.
However, one of most prominent Bitcoin critics, JPMorgan Chase Chairman and CEO Jamie Dimon, softened his stance on the cryptocurrency. He said he regrets previously calling Bitcoin a “fraud,” saying in an interview with Fox Business earlier this week that he believes in the technology…