Topic: Can you help me refute a contrarian? - page 3. (Read 2990 times)

Not true at all.

Just tell your friend he's right to be alarmed, and to not buy any bitcoin.  But you buy bitcoin.  A lot of it.  And hold it for 2 years or more.

Then revisit your supposedly smart friend in 2 years, and ask "Hey, remember that bitcoin that you didn't buy two years ago because you were too worried about the distribution?  Well it's now 60X the price of what it was then back then.  And btw, I did buy some then.  But you're so smart for not buying any, as the distribution is still not good.  Much better than it was then, but still not good."

 

Also, I can guarantee you that unlike our current fiat world, the top bitcoin holders in the world are probably some of the truest, most deserving, most libertarian folks you'll likely to ever meet.  Well, until the greedy, corporate, banker, politician pig elite come along to buy up what bitcoin is available with their fiat millions.  Hopefully those top BTC holders won't sell out to the greedy pig elite.

Your friend would probably be SHOCKED to learn that once upon a time, one person (Satoshi) owned ONE HUNDRED PERCENT OF ALL COINS. (That was the instant after he mined the first block.)

So .... you could tell your friend that the distribution of coins is slowly diffusing throughout all of humanity, like a drop of ink in a bucket of water, like so:

At any given point in time, X number of people own Y% of all coins.

Once upon a time, one person (Satoshi) owned 100% of all coins.

Five years later, 930 people own 50% of all coins.

And so on. If you keep Y constant, X is going to increase, and increase, and increase as a function of time.

Why should this process of diffusion ever stop?

Assume that the 1000 or so people who own 50% of all coins got together and decided to take control over the market. And assume they had the ability to do so. Do you really fear that they would conspire to destroy their investment? Or would they instead do everything in their power to protect the value of their investment? Like, for example, invest in the infrastructure that gives bitcoin its value in the first place?

Nice link - here's the pyramid image with the global breakdown of wealth from that article:

I would say to your contrarian friend that there are 8 billion people on this planet, that makes 2000 bits (or 0.002 bitcoins) per living person if distributed equally; if distributed how actual wealth always is (exponential falloff), he will see that the tail of people with 10 bits or less would be several billion people long. So he can either cut that long line while he still can, or take a place at the end with other contrarians, simple

Yes, bitcoin maybe distributed less uniformly than traditional wealth at this point, but it is normal at the growth stage. From inception, when 1 man had 100% of wealth, to now, we travelled a long way.

Just look outside the Bitcoin economy. Distribution is less symmetrical there:

http://www.zerohedge.com/news/2013-06-02/its-1-world-who-owns-what-223-trillion-global-wealth

If it bothers you that others have more money than you, then there is really nothing that can be done to help you.

Wealth tends to follow Pareto distributions and bitcoin is certainly no exception.  It is impossible to know the true wealth distribution for bitcoin (by individual, not by address), but the estimates from the article you referred to (and a bunch of other articles at the time) were taken from Risto's work here on our forum: https://bitcointalksearch.org/topic/distribution-of-bitcoin-wealth-by-owner-316297

I'm not sure where the "90% currently hoarded" comes from, but using blockchain.info's estimated TX volume data, the velocity of money for bitcoin is approximately 3.  As this includes both payments for goods and services and transfers of funds (it's not possible to separate them based on blockchain data alone), most economists would consider this an upper bound to the "velocity of money" term from the Quantity Theory of Money perspective.  

Have a read here - https://bitcointalksearch.org/topic/distribution-of-bitcoin-wealth-by-owner-316297

And here - http://letstalkbitcoin.com/blog/post/rise-of-the-zombie-bitcoins

It's very hard to tell who owns what in what numbers. We'll never know.

Some of the largest active wallets may be owned by groups. Many of the biggest wallets came from a time when it was relatively easy to mine huge numbers and the private keys are quite possibly lost.

In this day and age if you had a vast number it would be far safer to split them between multiple wallets.

Hey folks, I just got an e-mail from a contrarian friend of mine.  He's a pretty bright guy--young, educated, tends to view things through an old-fashioned lens.

Some of these facts, I knew.  Some I didn't, and in fact, I'm still not sure if I buy them.  He linked me to a Forbes article from January 2014 that he was quoting, but the author of that article didn't cite her sources, so I'm not sure how to verify or debunk.  Maybe some of y'all can shed some light.

--There are (or were in January) approximately 12,000,000 bitcoins mined
--47 people own 29% of the coins. 
--930 people own 50% of the coins.
--approximately 10,000 people own 75% of the coins
--approximately 1,000,000 own the rest
--90% of bitcoins are currently hoarded and not circulated

IF this is all true (and I would REALLY love to find out that this is not the case), such a concentrated ownership is truly disconcerting.  It seems to violate some of the spirit of what I see on this board, suggesting a movement of the people by the people and for the people.  That is really wicked consolidation.  One could (and I would) easily argue that concentration of the distribution of wealth in our world leads to a lot of problems related to power, politics, and equality of even opportunities.  IF this is true, bitcoin is even more consolidated than other stores of value.  And the 90% hoarded figure is even more disconcerting.  Sure, some of the smaller players are buying strictly as a store of value.  But price manipulation by a mere 47 people could be really significant. 

By the way, if there are 12,000,000 mined coins and 9,000,000 are spoken for by 10,000 people, that means there are only 3,000,000 other coins owned by 1,000,000 people....an average of 3 btc per holder.  It's just interesting to note that of the people on this board or in the general population, odds are pretty strong that they are in the vast majority of 99% who own an average of 3 btc.  No wonder people seem so invested in justifying valuations in the stratosphere.  If you have 3 btc, it is going to take quite a spike to really change your world long-term. 

So...help?  Are these distribution stats true or not?  If so, I'm afraid it will be impossible to refute my contrarian friend, but what arguments would you make?  I'll probably hold my btc for a strategic exit point, knowing that the market is subject to really easy manipulation.  I wouldn't buy more than I could afford to ride down to zero, anyway, but I will definitely be more cautious.