A crypto whale is a cryptocurrency term that refers to individuals or entities that hold a large number of coins of a particular cryptocurrency. They hold enough cryptocurrency that they have the potential to manipulate currency valuations. Even though there is no official threshold, when it comes to Bitcoin you must have 1,000 coins to be considered a whale, but for altcoins this number is much higher, since their market capitalizations are significantly lower than that of Bitcoin.
A study conducted by the National Bureau of Economic Research (NBER) showed that the concentration of bitcoins in the cryptocurrency segment is clear: although there are millions of investors, the top 10,000 hold one out of every three bitcoins in the world. Besides, the top 0.1% of the world’s miners (50 in total) control 50% of the bitcoin mining capacity.
When a person or a group of people gains control of more than 50% of a network’s mining hashrate, the cryptocurrency becomes vulnerable to the so-called 51% attacks or majority attacks, in which a group of miners controlling more than 50% of the network’s mining rate or its computing power end up interfering in the normal functioning of blockchain transactions. The network is especially vulnerable if the price of bitcoin falls sharply, which could happen if a whale starts to move the pieces in the net.
However, it’s more difficult to conduct a 51% attack in established blockchains like Bitcoin and Ethereum than in altcoins. This phenomenon has been experienced especially by some small tokens that are not really decentralised because the cost of performing a 51% attack increases along with the network hashrate. This means that the bigger the network and the more nodes there are participating in it, the harder it is to control over 50% of it.