Topic: Distribution of bitcoin wealth by owner - page 34. (Read 153396 times)

I rephrase the original question:

A Bitcoin holder is one who knowingly holds a positive balance of bitcoins. The bitcoins may be held in blockchain via wallet software or in paper wallets, or with a 3rd party if the business of the 3rd party is strictly to hold them for you. Bitcoin loans for use other than safekeeping are counted as bitcoin balances of the borrower, not of the lender. Bitcoin stocks or any other instruments denominated as bitcoins, are not bitcoins. Altcoins or anything else are not bitcoins.

And post a new estimate that takes into account the research I have done:

25. Oct 2013:

#People	#Bitcoins	#TotalBitcoins
73	BTC10k+	4.0M
1070	BTC1k-10k	3.0M
8600	BTC100-1k	2.4M
50k	BTC10-100	1.4M
147k	BTC1-10	0.5M
250k	BTC0.1-1	0.1M
133k	BTC0-0.1	0.0M

Total: 11.4M bitcoins, 590k owners
110,000 people own bitcoins that are valued at more than $1,000 (BTC5 or more).

This is not very difficult to compile, only 2 things that are needed:
- Make it somehow provable to disclose a bitcoin holding
- Make it somehow profitable to disclose a holding.

Due to concerns of privacy, it is likely that a large number of large holders wants to opt out (or downplay). Let them do it.

If you look at the Forbes' Billionaires, the highest echelons do not appear there. The people on this list do not have much power, the people who are claimed to have power do not have much money => the logical conclusion is that people who have both money and power (I even statistically estimated this cohort to be between 200-1000 people) do not appear on the list.

With bitcoin, it is all much easier. Total wealth or total power (or even total amount of fiat money) is hard to determine, also the money is debt -issue confuses matters. With bitcoin, you cannot have a large hall full of the richest holders hiding unaccountable. The absolutely known total number of bitcoins, public blockchain and statistical methods let you remain pseudonymous but not anonymous, by design.

Quoting OP: The intention of this thread is not to uncover any names who don't want to be uncovered.

Ah...

Deduct
Deduce

When saying "deduction" it is hard to distinguish

I suppose it is best to try to deduce the known large holdings, and use this information to estimate the top-heaviness of the distribution, then deduct the known lost coins. After this deduction and subsequent deduction, we have a better estimate. Right? 

rpietila, great posts, very informative.


I can't wait til the Bitcoin 500 or 1000 (like Forbes 500) comes out!

What I mean is to deduct known big holdings before estimating the distribution

That's because rpietila forgot point # 5:

5. The expression on the face of the sly feline he uses for an avatar gives it all away...  

Interesting deductions. I'll add more info, in case it helps you with the rest of your guesswork:


There are quite a few people with accounts that old who were big fans of bitcoin from a political/sociological standpoint, but who didn't actually have the money to buy any coins or mining equipment (the prodigal teenage bitcoiner basement dwellers). Personally, my mining operation consisted of two 300MHash/s GPUs, which I bought soon after joining the forum. Throughout their entire life (I stopped mining when reward halved to 25BTC), I think they mined me something like 100BTC. Probably less, since they weren't always working. Other than that, I have admitted to using Bitcoin as a long-term savings account for things I don't need to pay for right away, but have used those coins to pay for a few trips and vacations (including to Europe), and a few phones and tablets. I didn't actually have all that much cash to invest into bitcoin to begin with, either ($100 at $10/BTC exchange rate only nets you BTC10, and I couldn't put in more than a few hundred every month)


That entire amount actually came from a large purchase at about $10-$13 that was done using a large loan just a few month prior to the sale (borrowed over time during September and October, sold in January). So it wasn't from long-term holding at all. Actually, the story is that I wanted to buy a BFL ASIC rig, and needed $30,000 for it. I had a bit of my own money, but needed to borrow a significant amount to be able to afford that thing. However, due to $5,000 Dwolla balance limitations and 3 to 7 day bank transfer times, I was limited to converting USD to BTC at $5,000 a week, meaning it took me from late August to late October just to transfer enough money into BTC. By the time I had enough in BTC to afford to purchase that rig, BFL claimed that they will start shipping in 2 weeks or so. So I decided to hold off on preordering, and buy a rig when they are sold outright (this was around the end of October). Once January came around, and the price started to go way up (and BFL still wasn't shipping), I decided to sell off the borrowed bitcoin at $22, pay off the loan, and use the remaining profits to buy a new car instead (the Prius with the BITCOIN license place, to replace my old '99 civic had 250,000+ miles on it). Actually, I even had to go a bit out of pocket, since the profit didn't cover the entire cost of the car.
As for the director position, I'm the director of the Bitcoin100 charity fundraiser. All that means, really, is that I'm entrusted with the money, and am volunteering my time to doing accounting, somewhat-directing what charities we try to give that money to, and send the money. The actual Bitcoin100 account only has BTC149 in it, none of which are actually mine.


I'd like to think I have played wisely, since I didn't do any bitcoin loans, ponzies, gambling, or stocks (which ultimately couldn't get a bigger return than bitcoin itself). But I was forced to sell a lot at times, just because that's the only money I had to use to pay for travel and other large expenses. I *WISH* I had $3,000  


Obviously we all buy back, but I only buy back with the money I have. If I have spent it, I no longer have it, and am right back to only buying with what I have earned while working at my job. Consider that some of us are only able to put, say, $200 into BTC every month, and have one or twice a year expenses of $500 to $1,500. I just ran this hypothetical using MtGox prices, and even if the person buys $200 a month worth since June 2011, and never spent any of those coins, they would only have about BTC650BTC at this point. If they had to spend, say, $1,000 twice a year, once in Spring and one in Autumn, they would only have at most about BTC200BTC. That's nowhere near BTC1,000, and definitely not BTC10,000. I think you need to really reduce your estimations for old members, since many of us aren't wealthy enough to dump thousands into bitcoin.


I won't dispute, or confirm that (other than the Countess part   ) but hopefully my example shows that this isn't such a cut-and-dry conclusion.

why would you want to deduct satoshis holdings? He's the top of the pyramid.

Can't count it as he might have really sold or spent most of it

knightmb once admitted to owning 371,000 BTC.

https://bitcointalksearch.org/topic/--564

However later he made up a long story about how people asked for money and that he ended up giving away everything and donating the rest to wikileaks.

I checked the Silvervault numbers a bit more carefully and found out that the median holding is roughly $1000. Translated to Bitcoinworld, we would have equal number of people involved in Bitcoin, with a holding above BTC5 than we have below BTC5. If this is true, the whole bitcointhing would rest on very few shoulders.

What could cause it to be untrue?
- Faucets, donations, etc. combined with difficulty to sell (can these people be counted users? If you evangelized your friends by giving them a bitcoin in 2011, it is easily forgotten and lost) In Silvervault people can easily sell if they want out so this explains a small number of small holdings.
- ...

I also arranged the Silvervault data in log-scale brackets (I used 1-2, 2-4, 4-8, ... (AGD) for granularity) and found out that the greatest density of people is in the bracket with holding value of $3,000. If we apply this, the largest number of bitcoin holders would be in BTC10-BTC100 category, followed closely by BTC1-BTC10.

Silver is currently lagging behind. Bitcoin otoh is in its ATH. After a steep runup we do well to take into account that the bitcoin holders paid a lot less for their coins than what their price now is. It might lead to a top-heavy situation with inordinate number of excessive positions. Right now I see no special need for this, since most of the bitcoin holders by number have started in 2013, and the price has been roughly stable this year at $100 as well as 2012 investors can be approximated to have bought at $10.

Here is a list of bitcoin-related activity. I would like to have better estimates available also, so please refer them here. Anyway, according to this one, bitcoin is overwhelmingly a first world thing (second world is now part of first FYI), and due to its highly technological nature, it is likely to appeal to the rich in medium and low-income countries.

A corollary would be that people who have bought bitcoins are wealthy, and therefore it is reasonable to conclude that they buy with rather large sums. My guesstimate of a typical first buy would be $100-$10000 with rather few buying either less or more. I run a precious metals shop, and also an automated silver depository. I have access to the statistical distribution of our customers' holdings, which has inspired this analysis.

Before this year, $100 would have fetched you an average of BTC10, and $10,000 would translate to BTC1,000. In 2013, $100 is about BTC1 and $10,000 would net you BTC100.

The important thing is that only a minority of people who have invested into bitcoins have less than BTC1. To fall into that category, one would have to be both poor and extremely conservative (yet willing to invest the time to learn..) and have bought in March or later, this year. All other scenarios lead to higher balance.

The history of mining can be divided into two periods: mining with existing equipment and mining with specialized equipment. When existing equipment was used, mining generated essentially free coins, and lots of them. Therefore all such miners have large balance (if any - we will later analyse the sold out phenomenon). After mining became an industry with investment calculations and GPU/FPGA/ASIC farms, the investments have generally been on par with the expected number of bitcoins generated. This kind of activity also produces rather large holders.

I have no knowledge if the bitcoin faucets and similar things have ever produced new bitcoin users/holders. I don't know what has generated the 1.5 million dust addresses (please help me!), but I doubt that it corresponds to many actual users.

On the other hand, services such as Easywallet or Instawallet (defunct) can host many users and mask their activity from the blockchain. Also exchanges can obscure the relationship between their cold wallets and the customers' balances that are stored there.

After delving into this matter in the last 1-2 days, I am tempted to drastically reduce the total number of bitcoin users, because I haven't found the mechanism that actually would have produced millions of sub-BTC1 holders so far. The number of investors will likely stay quite much the same after the update.

The same analysis applied to my original proposal yields the following results:

Bracket	#TotalBitcoins	log(total)	1 derivative	2 der.
10k+	BTC5.50M	6.74
1k-10k	BTC2.88M	6.46	0.28
100-1k	BTC1.60M	6.20	0.26	-0.03
10-100	BTC1.00M	6.00	0.20	-0.05
1-10	BTC0.50M	5.70	0.30	0.10
0.1-1	BTC0.30M	5.48	0.22	-0.08
-0.1	BTC0.03M	4.48	1.00	0.78

Now, this is my guess, and it is now verified to behave quite well (smooth 2nd derivative) according to what we would expect from a statistical distribution (I will iron out the kinks hopefully today to have a revised model, but that will not alter much - the parameters are more significant now and there is much to be done).

Very interesting. Do you think all of these guys are still somewhere around? Will they ever sell it?

Now we are using this data.

I have converted your table to the "standard format" to put it in the same kind of "validity test" as Molecular's data:

Bracket	#TotalBitcoins	log(total)	1 derivative	2 der.
10k+	BTC2.35M	6.37
1k-10k	BTC3.15M	6.50	-0.13
100-1k	BTC2.49M	6.40	0.10	0.23
10-100	BTC1.20M	6.08	0.32	0.22
1-10	BTC0.35M	5.54	0.54	0.22
0.1-1	BTC0.05M	4.75	0.79	0.25
-0.1	BTC0.01M	3.90	0.85	0.07

Have a look at the 2nd derivative! This is the kind of behavior that is expected from a probabilistic process. I can conclude that Molecular's data is wrong, and your data is valid.

Now, the original question remains: how to parse a table of the bitcoin holdership, as opposed to address balance distribution.

In my opinion, this one gives us a great deal of hint of the parameters of the distribution though. Eg. the averages per bracket is good to know:

24k, 2.2k, 251, 29, 2.85, 0.38 - there is a certain logic in these also.

D'oh I forgot. So above listing include all 50 BTC outputs, the following one doesn't :

The logic is as follows:

Evidence

1. Your forum account is created in June-2011.

2. You have been forum active ever since and are Director in bitcoin-something.

3. You told you sold more than BTC1000 at $22 (Feb. 8, 2013)

Deduction


1. It is very rare to have a Jun-2011 account. This points to a person who has (with good probability) been able to mine/buy large amounts with
small cash outlay. (Hardly anyone creates an account without having the coins already.)

2. Being able to sell a significant amount at $22 points to me a long-term holding:

i) A believer who had bought recently would not have sold but bought more after being proven right. But you have been in all along.

ii) A newcomer who does not believe, would have likely sold more than a part after a quick double. Probably all of it. The newcomer would not be here today with thousands of messages though. And would probably not have had BTC1,000 in the first place.

iii) For a person with a good stash, who is in it for the long term, it makes perfect sense to sell a part after a quick double, after waiting for so long. Selling a part means selling at most half, which leaves at least half remaining. (The proceeds are enough to live from that day even until this day so no need to sell more.)

3. It is a lower bound that you would have BTC1,000 today. If you play wisely, you only sell a little at a time, and can earn BTC every year, so that your current holdings should be at least BTC3,000. The upper bound is that you resort to borderline lying, where you downplay the amount sold, and forget to tell that you bought back, and sold after very tight analysis only 10% of your holdings, then you might have BTC10,000 or more. I assume that anyone whose forum account is from 2011 or earlier, has BTC1,000-BTC10,000 unless proven otherwise.

4. Yes I know that bitcoin is not life and life can go wrong and you lose most of your bitcoins to bad bets as you don't realize how precious they are. But even in this case, considering your position, I think here we have a 4-figure Countess.

Thanks, very good! Might it be possible to have the sums also, so that:
#bracket, #totalBtcInBracket

This would verify my above thesis about the "well-behavior" constraint for the distribution, and also be useful for calculating the average holding inside a given bracket. These all matters are interrelated.

Unless it is difficult, you could leave out unspent 50 BTC:s from this one.