A common source of FUD surrounding Dogecoin is the claim that certain wallets holding a large percentage of the supply are owned by private investors or so-called “whales”. In reality, many of the top Dogecoin wallets are cold wallets or hot wallets controlled by exchanges and brokers, and they thus represent Dogecoin held in custody for thousands - or hundreds of thousands, even - of people.
To those accustomed to blockchain analysis, many of those wallets appear as wallets managed by trading platforms, as they exhibit patterns of activity and volume that were typical of crypto exchanges or brokerage services holding large amounts of collateral. In particular, the Dogecoin community has identified the exchanges and brokerage platforms behind some of the largest wallets, including the infamous “whale” holding 30% of the supply. This was possible through a bit of community sleuthing that involved collecting circumstantial evidence and tracking deposits and withdrawals from exchanges to private wallets. As it turned out, that infamous whale wallet, which was split across several addresses in October/November 2021, contains the holdings of hundreds of thousands of retail holders.
Customers of these exchanges and brokerage services sometimes voluntarily opt to hold Dogecoin within the custodial solutions offered by these platforms; other times, they are forced to do so, since some platforms might not be allowing withdrawals to private cold wallets. Whenever this has been the case, the Dogecoin community has been asking insistently and ceaselessly for these platforms to enable withdrawals. Little by little, over the past months, more of these services have enabled withdrawals to private wallets.
It is also important to educate the community in this sense so that they can understand the benefits - but also the responsibility - of decentralization and non-custodial wallets, which is at the core of a permissionless, decentralized cryptocurrency. Similarly, it is important to realize that this is also a problem of maturity of the Dogecoin ecosystem: as more and better non-custodial solutions are built for Dogecoin, holders will realize the benefits and importance of self-custody.
Not your keys, not your Dogecoin, after all.