Analyzing Bitcoin's Decentralization: Coefficient of Variation Approach and 21 Million Divisibility

Abstract

Bitcoin, a decentralized digital currency, has
received a lot of interest due to its potential to
challenge the traditional financial system.
This study applies a coefficient of variation
analysis with an emphasis on the idea of
dividing the entire supply by 21 million to
determine the degree of decentralization for
Bitcoin. The coefficient of variation is a
statistical indicator of diffusion, making it
possible to analyze how many Bitcoins
different stakeholders hold. We can learn
more about the degree of wealth
concentration or distribution among Bitcoin
users by examining the degree of
decentralization using this method. This
research calculates the coefficient of variation
using publicly available information on
Bitcoin addresses and the holdings linked to
those addresses. The findings will contribute
to the ongoing discourse on Bitcoin's
decentralization and shed light on the
potential impact of the fixed supply of 21
million Bitcoins on wealth distribution within
the Bitcoin network.