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How was, or is, this avoidable even now, and in existing monetary systems? One caveat is that though there are a few major actors, no one can be sure where they are physically. It is detached from political jurisdictions, which is the unique goal of Bitcoin.

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There's confluence of factors that naturally results in power law (or pareto's law) distribution. The direct consequence is "stuff largely controlled by small group".

How to mitigate that? It is IMO understudied area of economics because economists prefer thinking of "value" of anything as a scalar, not as random variable. In cases where it isn't possible they just conveniently assume normal/gaussian random distribution. (See @nntaleb)

> How was, or is, this avoidable even now, and in existing monetary systems?

Transfer payments.

Historically made under the threat of violence by a populist king or warlord. Who, in almost all cases where the transfer payments continued, was swiftly replaced by a republic. Bitcoin turns the clock back to the feudal reality of land-owning nobles. We just made the cost of defending the land vanishing.

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