Topic: Distribution of bitcoin wealth by owner - page 29. (Read 153396 times)

I'm still syncing my bitcoin-abe db (the process takes forever, many times longer than a blockchain download, currently at block 180,000, 3.3 million transactions (it's starting to slow down considerably, I guess satoshi dice is hitting hard around that time). I keep forgetting to resume it, turning it off when I use the machine because it clogs up all my IO), but once that's done I can offer to query pretty much any kind of statistics from the blockchain. Like number of coins that are moved "regularly", number of old coins never moved and such.

@rpietila:

This is an interesting thread, and I think you've done a great job with it. I have been wondering about the effect that 'strong hands' have on the price, and thought that maybe some of the results here could be used to try to make an estimation.

Many people here on the forums probably follow the 'buy and hold' strategy, at least to some extent. I have some BTC in cold storage which I'll be holding 'for the longest time', and I trade with the rest to try to increase my holdings (as well as to make a bit of extra spending money). This removes coins from circulation, leaving less BTC to be chased by the same money.

I wonder therefore, what the total amount of BTC actually in circulation might be? Could we estimate how many BTC are in cold storage, and unlikely to be sold in a panic when price drops X% over the weekend?

Imo gaussian is more realistic because it conforms to the distribution found among people investing in silver (Silvervault).

The previous distribution has an unrealistic number of small BTC0-0.1 users, not really found anywhere when you search for them. Such amount is so small that you would have just forgot about it (or sold it if you had access to markets).

Many claim that bitcoin users number in 1-2 millions. It does not seem that way to me; number of addresses used is in that ballpark, but an average/heavy user would have dozens of addresses, and even webwallets have more addresses than users.

So which distribution do you use to approximate rpietila? The Oct.26 one looks a bit Gaussian-skewed, while the Oct.22 seems very much like Pareto.

I guess the number of BTC0-0.1 people should be much larger, they are just not conspicuous enough.

U kidding me? It was way easier to buy than now when you have to jump through all the regulation hoops.

It is such a shame to belong to the world's 7,299,999,000 poorest...

Only about 1,000 Bitcoin downloads in all of 2009, so perhaps 100 active users. If some of them are still around, we can assume that they've had chance to mine huge BTC and still hold. If they are not around, it is more likely that they have sold the majority.

About 17,000 downloads in 2010/1-6, but the price in OTC was still same. I believe the OTC market did not reflect the increased interest (or perhaps it did, but I don't have the data). At this point is was still possible to mine shitloads, but not as easily.

As price started to increase since the opening of Mt.Gox in July 2010, the difficulty also went up. It did not immediately feel a good idea to buy at the exchange as price was rising very rapidly. Many sold. (I watched price go up from about .25 to a hundredfold without buying).

Perhaps you are right - when Bitcoin was small at .10 or $1, it mainly attracted $1,000 or less investments. Near the top at $15+ it may have attracted more serious money say $5k, $10k or $20k, but at this higher price they would only fetch you BTC1,000 more or less.

After the bubble all the way to this January, was a prime chance to buy. Bitcoin had survived the bubble and was cheap. Now the average investor of $2,500 could have bought BTC250-BTC500, median investor perhaps half of that, and a serious investor of $100k would have BTC10k or more.

Agreed. I threw 400 EUR at several points between $7 and $27 during the bubble. That was an amount I wasn't uncomfortable with. Unfortunately some economic woes later that year meant that I had to liquidate some coins near the bottom.

This is true. And even if you got in before May, you had to do it pretty decisively to acquire BTC 1000. It really was looking like an "online play money crypto experiment in some sort of bubble" and putting in $1000 took quite the insight and balls and/or stupidity really (unless you were wealthy and $1000 was irrelevant to you, which is unlikely for the kind of crowd bitcoin attracted at that time). I doubt a high percentage got in that "big". Most probably dropped 50 bucks or 200 on it. Only slowly scaling up when it was too late.

It was all about mining with GPU back then and difficulty blasted anyone pretty much out of the game in May/June when the gamer-kids joined, selling for fiat on the spot and feeding the new breed: people that decided that buying was the better option and who had a little more play money. (Bitcoin was looking good all of a sudden and reached a lot more people). But by then BTC 1000 cost > $10,000 which was a bit hefty again for what it was back then to most (hacker-drug-money).

So I'd go with something like BTC 100 to BTC 3,000 for people having joined in 2011, with heavy emphasis towards the former.

Heh... That assumption needs revision, or at least further precision. There's a big difference in how many bitcoin new users likely obtained before and after May/June 2011. Keep in mind that bitcoin has a large learning curve, and there weren't many good resources for it at the time. It took time and diligence to understand the technology as well as the implications. Furthermore, obtaining bitcoin typically involved using services that one might not readily trust with all that much money (dwolla and gox were both pretty new without long reputations), so even people who studied enough to become uber-bulls probably scaled up purchases slowly starting in the $100 range, as they became comfortable with bitcoin services/processors. If you started that in Feb/March 2011, yeah, you could have 1000s of BTC. If you started that in July/Aug 2011, it would've taken a couple orders of magnitude more $ commitment to get into the 1000s of BTC territory; that's a very relevant distinction.

With regard to mining, my own miscalculation on mining in 2011 was probably fairly common. Despite being tech-savvy, I concluded during summer 2011 that mining wasn't worth it, since the GPU-mining ecosystem was already pretty developed and pushing returns toward zero if you didn't *already* have the GPUs sitting around. So I, probably like many, hardly mined.

That is a concern but they aren't really destroyed.  And when I say incompetent an example would be someone buying an ASICMiner with BTC that won't ever earn that BTC back and those BTC flow to ASICMiner shareholders.

Incompetent needs a bit more defining, to me incompetent owners of Bitcoin lose them to the benefit of the network.
My biggest fear is not selling but destroying my Bitcoins.

All wallets are in a sense personal wallets.  Wallets that exchanges use "belong" to the exchange and the exchange owes users BTC upon demand that they might pay or not.  So those wallets are more concentrated and large owners wallets are more distributed.  Perhaps it averages out.  I don't think bitcoin will somehow negate the laws of human interaction.  BTC will flow from incompetent users to competent ones so concentration much like with other wealth is unavoidable.

Is it so difficult to analyze it properly?? 

This paper has been thoroughly discussed, and I think even debunked, due to authors making a few mistakes and wrong assumptions. I hope I remember this correctly (feel free to correct me if I'm wrong), but they assumed that large wallets belonging to exchanges and online wallet services were wallets of indiviidual wealthy owners, as opposed to belonging to many different owners, and even possibly lumped user's personal wallets together, if the users used the same address to trade on these exchanges. They also didn't take into account that wealthy bitcoin owners break up their wealth among many smaller accounts, and they linked a bunch of addresses together with the assumption that if one address sends money to another, both belong to the same person, despite the transaction possibly being between two people.

New thread about the 500 bitcoin richest opened.

OK, I tried to stop myself but i can't:

Answer:  On the other side of infinity.  

My apologies for the nerdy math joke.  Feel free to delete rpietila.  Loving the thread, BTW.

the paper can be downloaded here:
http://arxiv.org/abs/1308.3892v1

Where are all the addresses whose balance went down? Not in the chart above at least.. I haven't found the methodology yet.

they tracked just addresses' balances I guess. Seems feasible.
It's relevant as a trend of BTC wealth distribution, which seems even more important than a snap at any point in time.