- The name is based on the fact that Bitcoin whales move around the cryptocurrency space causing waves at every turn, much like the mammal.
- Bitcoin whales attract significance for the reason it’s blockchain’s decentralized structure which arises issues with respect to entities or individuals holding such enormous amounts of bitcoins.
- Bitcoin network has been operating at maximum efficiency recently the transaction fees have been well below USD 1.
In the cryptocurrency world the term whale is used to denote individuals, or entities, that hold large amounts of digital currencies. The name is based on the fact that Bitcoin whales move around the cryptocurrency space causing waves at every turn, much like the mammal.
Famous bitcoin whales include Satoshi Nakamoto and The Winklevoss twins which are estimated to hold a significant proportion of the existing Bitcoins all over the globe. However, most of the Bitcoin whales are anonymous traders distinguishable only by their public addresses.
Bitcoin whales attract significance for the reason it’s blockchain’s decentralized structure which arises issues with respect to entities or individuals holding such enormous amounts of bitcoins. This provides them with a monopoly to control the market according to their favorable directions. It is for these reasons that traders analyze the moments of such whales to determine the appropriate move to facilitate their transactions.
Merits of Whale Transactions
Recently, on 24 November, a whale sent approximately 44,000 Bitcoins worth USD 310 million. The transaction fee charged for such a transaction, which was only around BTC 0.00004551, equivalent to USD 0.32, becomes a noticeable fact.
Each Bitcoin transaction necessitates a transaction fee required to be paid to the miners, who are responsible to secure the network. This miner will give higher priority to transactions with a higher fee. This fee varies from USD 1 to USD 5-10 when the network has a higher demand rate and in periods of congestion respectively. Since the Bitcoin network has been operating at maximum efficiency recently the transaction fees have been well below USD 1.
For these reasons one can understand that Bitcoin is perhaps the most economical way to facilitate large transactions unlike fiat-based payment methods which frequently charge high percentage fees when sending large amounts of money. Apart from that Bitcoin enable instant and secure payments which cannot be frozen or reversed unlike fiat-based payment centralized methods which are slow and can’t be reversed
The efficiency of the Bitcoin transactions, when compared to Fiat-based payment methods, can be understood from a simple illustration. For wire transfer of USD 310 million the fee charged will amount to USD 1.55 million and USD 6.2 million of fees at a common rate of 0.5% to 2% fees. On the other hand, the fee this particular Bitcoin whale paid was 0.00000010327%.
Are whales a threat to other players?
Bitcoin whales become an essential part of the market with their ability to influence prices and create trends with their enormous capacities. Since these whales are followed by numerous others with respect to its trends, any decision adopted by it will have a significant impact on the price range.
Bitcoin whales must be monitored in a close range to form significant decisions that are synchronized with the moment of such entities to avoid contingencies. However as noted above, these whales have the ability to monopolize the market to tune the trends in their favor. Unless there is a proper regulatory system to have control on such entities, the crypto-market world will be in their hands.