Topic: Distribution of bitcoin wealth by owner - page 5. (Read 153365 times)

Risto, this week has been amazing for me:

https://bitcointalksearch.org/topic/m.12140971

That is concerning:

• Instant 0-conf transactions that can't be double-spent with any of the typical attacks on Bitcoin.
• Holy grail of on chain anonymity (superior to Cryptonote).
• No more 51% attack possible.

Those claims are so incredible, I doubt anyone will believe me until they see white papers. And they should not until they do.

My belief is that the prolonged decline has increased the largest holdings and made the wealth pyramid more steep. The real biggies (banksters, etc) can effortlessly buy more BTC as it becomes available, and some of the early guys need to/want to sell to preserve some of their gains.

The lower end of the distribution should behave similarly as before, my thinking is only that the big, manipulative end has grown bigger.

Bitcoin is firmly in bankster control (which it possibly was in 2013, but not sure). I still believe it will increase in value 100x or more, but the ideological fervor to own a coin that will make the difference has in my case migrated to Monero and perhaps other good coins if such become available in the future (so far only 2 coins, BTC, XMR have met my criteria for investment).

Yeah, surely, it is possible to make a lot of money on some of the alt coins, including Monero.  Nonetheless, BTC remains the main game in town, and will likely remain the main game in town for several years into the future. 

In that regard, it would be nice to know how the distribution is being affected by these ongoing loss of enthusiasm for BTC ..... and then how that lack of enthusiasm affects BTC distribution. 



In essence from the first post of this thread, you can see that the theory is, more or less, that if there happens to be about 1 million bitcoin users,

1) fewer than 100,000 hold 10 or more bitcoins

2) about 250k people hold 1-10 BTC

3) about 650k people hold less than 1 BTC.


With ongoing BTC market manipulations, sometimes it is reasonable to question how those potential manipulations are affecting BTC distribution... and whether the manipulations cause fewer and fewer people (or entities) to hold the large quantity of coins (because they frustrate a large number of regular people regarding price performance and conceptions of BTC profitability).

For example, when the price is so low (less than $300) and the means to obtain BTC has become so easy, it seems very possible that a large number of people could easily buy and hold around 10 BTC - for less than a $3k investment... that is if they have enough confidence and/or enthusiasm in order to make such a leap into the bitcoin scene.

I continue to be fairly confused about a lot of these kinds of questions regarding who is holding BTC because frequently, we hear news about people in various countries beginning to invest in BTC because they are concerned about retaining value when they have value being held in their own currency.

Just today, I saw a reference to an article about demand being up in Greece by 600% in the past few weeks  (http://www.reddit.com/r/Bitcoin/comments/3gyynx/greek_crisis_spurs_bitcoin_demand_btcgreece_newly/)   ... Whatever that is supposed to mean?

I haven't been too much into BTC lately, the development is so frantic. Monero (XMR) and CryptoKingdom (CK) are my spearhead now, as you can see from my latest posts. And what is better, both are so small that even a small diversification from BTC achieves total hedging (XMR marketcap about 0.1% that of BTC).

Hey Risto:

Do you believe that the last 6 months of downturned BTC market has significantly affected bitcoin distribution?   Is there a possible projected distribution update coming out, or has such update been posted in another thread?

Since you are considering the full distribution, could you also please post the Gini coefficient?

The only estimate of Gini that I've found so far is from 2011: https://bitcointalksearch.org/topic/bitcoin-wealth-distribution-bitcoinica-data-51011

Reading the thread might help...

Hi guys,

Just wrote something on the future distribution of coins. Would appreciate your thoughts.

https://bitcointalksearch.org/topic/how-many-coins-is-a-lot-finally-answer-inside-946938

Also, very curious about how you calculate the distribution and the number of holders. That's a complete mystery to me. It's not just the gox leak, right? How then will you know the number in the future?

I would expect a connection like that.   While there are certainly many exceptions, a person who has N bitcoins in total should have at least one address that contains a significant fraction of those N bitcoins.   For example, a person who has 10 BTC will probably have at least one address with 1 BTC in it.

There are many users who leave most of their BTC in Coinbase, Circle, or some exchange, and some users who split their coins into hundreds of small addresses; they will be undercounted by this method.  On the other hand, there are many users who own two or more addresses with significant balances; they will be overcounted.  @Jehst's comparison suggests that the two errors are not too large, and/or they mostly cancel each other.

My observation is that the address-based data closely mirrors the Mtgox leak of user data which is the basis of your estimate. For example, according to your estimate, there are ~70 users with 10,000 bitcoins or more. If you look at the pure address data, there are ~94 addresses with more than 10,000 bitcoins. Roughly 15,000 addresses have 100 or more bitcoins according to the pure address data. This is roughly the same as in your estimate. The same goes for the other categories. So although these addresses do not correspond to individual users, we nevertheless find that the distribution of addresses mirrors the distribution of users. I cannot explain why this is the case, but it is the case. I cannot prove it, but It's my guess that if bitcoins are being more concentrated among top addresses, then they are also being concentrated among top users. It's probably not appropriate to readjust your estimates based on this guess.

So you use the address-based data to draw conclusion on users. Can you share the methodology?

(If you can express the method in a limited text of plain English, I can feed it to my distribution generator and get results.)

No, I'm talking about users.

You are talking about addresses whereas rpietila is talking about users...

http://bitcoinrichlist.com/charts/number-bitcoins-owned-by-richest

Of course, many of the Top 100 or so addresses are exchanges, but the holdings of the Top 500 addresses are increasing their holdings even more compared to the Top 100. Some may say that you can draw no conclusion from this information, but I don't think so. I think bitcoin newcomers who have seen their holdings decrease by 70 or 80% are divesting and I think the bitcoin Old Guard are accumulating even more.

Please share this analysis in public! It will help the thread readers

Blockchain analysis indicates that bitcoin holdings become more concentrated during a downtrend. I wouldn't be surprised if the number of bitcoin users has been halved in bitcoin's current economic climate.

The problem is that the model is built on the distribution to small hands that follows when price shoots up. This has been analyzed in quite a detail ever since the first exchange opened, from the trade logs that have been available.

It is considerably more difficult to model the cross-effects of whale accumulation when the price again drops (as viciously and persistently as has happened in the whole of 2014) while also the real-world usage has grown more than ever, in connection - or not! - with the small positions of the users.

In sum, giving any numbers should be based on a decent model, which I don't have for a downtrend

There is a nice list in the OP. Can we have the 2015 update ? The last one is more than 6 months old now...

I didnt see your answer, thanks!

I don't know who had the idea first to create a game to drive interest in crypto-currency. I know I mentioned it early this year on the forums and probably also in passing in discussions with you or smooth et al. I hope you realize that one game doesn't make a movement. Rather need a paradigm shift in game development.

Any way, IMO your myopia is always consistent. You believe the way to effect change is by organizing capital and then applying that capital to build certain features or set rules of engagement via stake.

Afaics you still apparently don't understand the distinction between that and a paradigm shift which is typically born from chaotic experimentation by numerous uncontrollable entities[1]. And the difference in the rate of scaling between the two[2]. A paradigm shift is where the natural forces have been altered and no one is directing the capital nor rules, they just shift because of the fundamental change in the structure of the incentives (in terms of game theory). I presume you naturally resist such an understanding, because it means all your stored wealth is mostly irrelevant. Paradigm shifts are black swans, you can't finance them into existence.

So afaics (although I don't know all your et al thoughts and plans) you are still 10 steps behind me at least in terms of what needs to be done in crypto-currency.


[1] One could argue Tor (onion routing) was born in a Navy funded lab and the initial internet funded by government grant. But it is what the chaotic innovation did with these events that mattered.

[2] Bottom up scales at Metcalf's law square of the number of users, i.e. network effects take over. Top-down is rigor mortis.

Edit: add these two linked posts to footnote [2].