.01% of Bitcoin holders hold 27% of all Bitcoin(twitter.com)
twitter.com
.01% of Bitcoin holders hold 27% of all Bitcoin
https://twitter.com/MorePerfectUS/status/1527661935054962688
262 comments
> The only way you could possibly measure this ...
> This is obviously going to ...
> Analyses like these are a total joke.
Why is this obviously so? Watching the video, one realises that they refer to a WSJ article that is based on a 2021 NBER paper [1].
Do you think that the NBER, London School of Economics, and MIT harbour idiots that have not heard of exchanges?
On page 5 of the paper:
"Determining the concentration of ownership is more complicated than just tracking the holdings of the richest addresses, since many of the largest addresses belong to cold wallets of exchanges and online wallets, which hold Bitcoin on behalf of many investors. We develop a suite of algorithms based on graph analysis to classify addresses into those belonging to individual investors or those belonging to intermediaries. [...]
We show that the balances held at intermediaries have been steadily increasing since 2014. By the end of 2020 it is equal to 5.5 million bitcoins, roughly one-third of Bitcoin in circulation. In contrast, individual investors collectively control 8.5 million bitcoins by the end of 2020. The individual holdings are still highly concentrated: the top 1000 investors control about 3 million BTC and the top 10,000 investors own around 5 million bitcoins."
[1] https://www.nber.org/papers/w29396
[meta note: had to revise this post several times before posting to comply with HN guidelines.]
> This is obviously going to ...
> Analyses like these are a total joke.
Why is this obviously so? Watching the video, one realises that they refer to a WSJ article that is based on a 2021 NBER paper [1].
Do you think that the NBER, London School of Economics, and MIT harbour idiots that have not heard of exchanges?
On page 5 of the paper:
"Determining the concentration of ownership is more complicated than just tracking the holdings of the richest addresses, since many of the largest addresses belong to cold wallets of exchanges and online wallets, which hold Bitcoin on behalf of many investors. We develop a suite of algorithms based on graph analysis to classify addresses into those belonging to individual investors or those belonging to intermediaries. [...]
We show that the balances held at intermediaries have been steadily increasing since 2014. By the end of 2020 it is equal to 5.5 million bitcoins, roughly one-third of Bitcoin in circulation. In contrast, individual investors collectively control 8.5 million bitcoins by the end of 2020. The individual holdings are still highly concentrated: the top 1000 investors control about 3 million BTC and the top 10,000 investors own around 5 million bitcoins."
[1] https://www.nber.org/papers/w29396
[meta note: had to revise this post several times before posting to comply with HN guidelines.]
This is theoretically a fair criticism. But note that the 27% vs 0.01% never appears in the NBER paper. Further note the extreme limitations of any clustering based analysis. And finally, note that they do not actually identify individuals, they identify clusters, and they also treat mining pools as individuals.
I see no support for the headline number in this paper. What it appears that the people making this video did was take "1000 individuals" (which the paper defines as clusters of wallets) and divide by 68 million wallets in existence. What you actually get here when you do this is 0.001% vs 16%, which is reasonably close to the figured cited in the video, so is likely essentialy the calculation they did.
It should be obvious how absurd this is.
EDIT: Hah, actually the exact calculation they did is 10k/68mm and 5mm/18mm. That gives you exactly 0.01% and 27%. Discrepancy resolved. This is the exact ludicrious calculation the people in this video did.
I see no support for the headline number in this paper. What it appears that the people making this video did was take "1000 individuals" (which the paper defines as clusters of wallets) and divide by 68 million wallets in existence. What you actually get here when you do this is 0.001% vs 16%, which is reasonably close to the figured cited in the video, so is likely essentialy the calculation they did.
It should be obvious how absurd this is.
EDIT: Hah, actually the exact calculation they did is 10k/68mm and 5mm/18mm. That gives you exactly 0.01% and 27%. Discrepancy resolved. This is the exact ludicrious calculation the people in this video did.
The fact remains that cryptocurrencies are Ponzi schemes. Even the original inventor of Bitcoin said so.
https://www.thetimes.co.uk/article/craig-wright-i-invented-b...
Also, they are a way to fund criminal activity, of which ransomware is just one example.
Cryptocurrencies are barely used for legitimate payments. They are mostly used for speculation (gambling).
It's just bad news. Not the liberation we have been waiting for.
https://www.thetimes.co.uk/article/craig-wright-i-invented-b...
Also, they are a way to fund criminal activity, of which ransomware is just one example.
Cryptocurrencies are barely used for legitimate payments. They are mostly used for speculation (gambling).
It's just bad news. Not the liberation we have been waiting for.
The Times is the newspaper whose headline Satoshi referenced in his genesis block: "Chancellor on brink of second bailout for banks". So I would have thought even though all newspapers do a terrible job of reporting on Bitcoin, they might be a little more inclined to do it well.
And yet here they are uncritically repeating the claims of known plagiarist and con artist Craig Wright.
And yet here they are uncritically repeating the claims of known plagiarist and con artist Craig Wright.
"the inventor of bitcoin" hah. Don't believe everything you read, just like this post from OP.
"hot potato" asset is possibly a better description. sell it while it's still hot before it goes cold and nobody wants to buy it.
Whatever you think of them, it's extremely important to note that Craig Wright was absolutely not the inventor of Bitcoin.
Craig Wright is so obviously not the pseudonymous creator of Bitcoin ("satoshi") that the only people who maintain this typically have a financial interest, viz. the failed "BSV" fork.
I am 100% a crypto skeptic and don't own any coins, but it is incorrect to call them a Ponzi scheme[1], which is an investment fraud that uses funds from new investors to pay existing investors. You can make a very credible case that many coins were designed for pump and dump scams, but that is not a Ponzi scheme.
The crux of Bitcoins is that its value is derived from people's belief in its value. Lot's of assets and to an extent fiat moneys work this way. The "magic" of bitcoin et.al. is that they are finite, have clear chain of custody, and can be traded peer to peer. Those features can and do inspire confidence, but at the end of the day these coins have limited real world utility outside of money transfers and holding wealth. Those uses are directly tied to the faith of the market for those coins.
If someone asked me if they should buy and hold these coins, I would say no. However, speculation is somewhat in the eye of the beholder and turns on the risk of losing the investment. It's nearly impossible to predict future changes in asset prices, especially when an asset has been steadily increasing in value for years, but has a limited history.
TL;DR you're misusing the phrase "Ponzi scheme" which means something else.
[1] https://en.wikipedia.org/wiki/Ponzi_scheme
The crux of Bitcoins is that its value is derived from people's belief in its value. Lot's of assets and to an extent fiat moneys work this way. The "magic" of bitcoin et.al. is that they are finite, have clear chain of custody, and can be traded peer to peer. Those features can and do inspire confidence, but at the end of the day these coins have limited real world utility outside of money transfers and holding wealth. Those uses are directly tied to the faith of the market for those coins.
If someone asked me if they should buy and hold these coins, I would say no. However, speculation is somewhat in the eye of the beholder and turns on the risk of losing the investment. It's nearly impossible to predict future changes in asset prices, especially when an asset has been steadily increasing in value for years, but has a limited history.
TL;DR you're misusing the phrase "Ponzi scheme" which means something else.
[1] https://en.wikipedia.org/wiki/Ponzi_scheme
I disagree. You are right that the characteristic of a ponzi is that funds from new investors are used to pay existing investors.
But that is also a characteristic of crypto. You cannot buy anything for crypto without exchanging it for fiat, and for that you need a new investor to give you fiat for your cryptos. If all exchanges (incl. informal ones) close tomorrow, any crypto you hold is worthless.
Now, you could say that the same holds true for shares or real estate. But that is wrong. You can hold shares you bought ad infinitum, even if all stock exchanges close tomorrow, and would still receive your money's worth (approximately) in the form of dividends of the underlying company, or proceeds from the sale of said company, without ever selling those shares. You can live in a house or rent it out, and get your money's worth, without ever selling the house to someone else.
I don't see how you can get your money's worth with crypto without ever selling it to someone else.
But that is also a characteristic of crypto. You cannot buy anything for crypto without exchanging it for fiat, and for that you need a new investor to give you fiat for your cryptos. If all exchanges (incl. informal ones) close tomorrow, any crypto you hold is worthless.
Now, you could say that the same holds true for shares or real estate. But that is wrong. You can hold shares you bought ad infinitum, even if all stock exchanges close tomorrow, and would still receive your money's worth (approximately) in the form of dividends of the underlying company, or proceeds from the sale of said company, without ever selling those shares. You can live in a house or rent it out, and get your money's worth, without ever selling the house to someone else.
I don't see how you can get your money's worth with crypto without ever selling it to someone else.
> I don't see how you can get your money's worth with crypto without ever selling it to someone else.
Which is a characteristic it shares with fiat currency. Of course, fiat currency has people with guns making you accept it as payments for debts.
Which is a characteristic it shares with fiat currency. Of course, fiat currency has people with guns making you accept it as payments for debts.
Yes, and everyone must pay their taxes in fiat, which renders it valuable. Unlike crypto.
>> everyone must pay their taxes in fiat
Colorado is different. https://thehill.com/changing-america/resilience/smart-cities...
Colorado is different. https://thehill.com/changing-america/resilience/smart-cities...
Bitcoin is more like holding a piece of gold. If all gold exchanges are closed you can still trade your gold with someone in person. You don’t get your money without ever selling your piece of gold to someone else.
You can also make jewellery and tooth fillings and platings for electric contacts with gold. Not with crypto.
> You can also make jewellery and tooth fillings and platings for electric contacts with gold. Not with crypto.
Most of gold's value is because it's perceived as valuable. The industrial uses, etc, are small. Jewelry is a way to flaunt this value as ornamentation.
Most of gold's value is because it's perceived as valuable. The industrial uses, etc, are small. Jewelry is a way to flaunt this value as ornamentation.
The parent post was about trading/selling crypto for money without exchanges. Gold has indeed some other use cases.
It is however not possible to send physical gold over the internet. Gold is also difficult to verify. You'll probably need to rely on a broker/shop and their tools to test if it's real. Bitcoin is relatively easy to verify with software anyone can download for free.
It is however not possible to send physical gold over the internet. Gold is also difficult to verify. You'll probably need to rely on a broker/shop and their tools to test if it's real. Bitcoin is relatively easy to verify with software anyone can download for free.
> crux of Bitcoins is that its value is derived from people's belief in its value
brave, but .. fail. The crux of BTC is that it is secure to attacks while moving assets that are represented digitally. In order to succeed in that, the integrity of the chain is required. Popularism is a "nice to have."
brave, but .. fail. The crux of BTC is that it is secure to attacks while moving assets that are represented digitally. In order to succeed in that, the integrity of the chain is required. Popularism is a "nice to have."
> crux of Bitcoins is that its value is derived from people's belief in its value
brave, but .. fail. The crux of BTC is that it is secure to attacks while moving assets that are represented digitally.
Assets whose value is derived from peoples' belief in their future value.
A perfectly secure chain moving around assets that no one values isn't very interesting.
Assets whose value is derived from peoples' belief in their future value.
A perfectly secure chain moving around assets that no one values isn't very interesting.
gp > “belief in its value”
p > “assets that are represented digitally”
Those seem equivalent to me.
p > “assets that are represented digitally”
Those seem equivalent to me.
Yeah, that's kind of what I'm saying.
You're technically correct. But I think the label Ponzi scheme is colloquially used for a broader concept where initial players gain and later buyers lose. Buying stuff and investing in stuff is semantically very close. But you're right.
Yes, most people (even kids!) now use cryptocurrencies for speculation. Which is just a lottery in disguise, except now it funds criminal activity and harms the climate. And the winners somehow have bragging rights which means more advertising. This is a very sad development.
Yes, most people (even kids!) now use cryptocurrencies for speculation. Which is just a lottery in disguise, except now it funds criminal activity and harms the climate. And the winners somehow have bragging rights which means more advertising. This is a very sad development.
> But I think the label Ponzi scheme is colloquially used for a broader concept
Yes, incorrectly. It does nothing to clarify the topic and obscures the risks of actual Ponzi schemes.
> harms the climate
This seems dubious at best. It seems like a lot of mining is happening on hydro and solar power, and only shifts to carbon intensive electricity when the price is booming.
Yes, incorrectly. It does nothing to clarify the topic and obscures the risks of actual Ponzi schemes.
> harms the climate
This seems dubious at best. It seems like a lot of mining is happening on hydro and solar power, and only shifts to carbon intensive electricity when the price is booming.
> This seems dubious at best. It seems like a lot of mining is happening on hydro and solar power, and only shifts to carbon intensive electricity when the price is booming.
You're still warming the planet. And total energy use is so large that even carbon intensive part is significant.
You're still warming the planet. And total energy use is so large that even carbon intensive part is significant.
What is the comparison of BTC energy use v. top-5 global militaries?
And military engines delete emission controls.
And military engines delete emission controls.
By this definition of ponzi scheme, isn’t USD also a ponzi scheme?
Of course, as we all know, in crypto there's only one wallet per person and this is strictly enforced!
Yeah I mean the post is clickbait, but crypto (which can be bought with USD) unsurprisingly has similar inequality issues to USD. But the selling point of crypto was never curing inequality. It could have never done that. So the entire post is a bit of a straw man.
> the selling point of crypto was never curing inequality
The genesis block of Bitcoin disagrees with you completely.
The genesis block of Bitcoin disagrees with you completely.
With fiat money the cantillon effect [1] plays a big role.
In Bitcoin (fixed supply cap) that part is very very different.
One big difference is that fiat/political money (political because political decisions decide how money is created and spent first before it inflates and arrives to the rest of the population).
Like El Salvador: they use the Dollar. But do they get some of the newly (for free) created trillions? Or do they only see the consequence of that money, meaning seeing their money inflated away… their part of the pie stays constant while the rest of the pie got inflated/bigger.
[1]: just google “cantillon effect”. It is interesting (the power is not only in the hands of the money holders but also in the political decision makers and those who have good relationships with them… a bit like it used to be with religion and the state… but now still with money and the state)
In Bitcoin (fixed supply cap) that part is very very different.
One big difference is that fiat/political money (political because political decisions decide how money is created and spent first before it inflates and arrives to the rest of the population).
Like El Salvador: they use the Dollar. But do they get some of the newly (for free) created trillions? Or do they only see the consequence of that money, meaning seeing their money inflated away… their part of the pie stays constant while the rest of the pie got inflated/bigger.
[1]: just google “cantillon effect”. It is interesting (the power is not only in the hands of the money holders but also in the political decision makers and those who have good relationships with them… a bit like it used to be with religion and the state… but now still with money and the state)
Do you have any evidence that the Cantillon effect plays any significant role?
I hasten to add that BTC currently experiences money supply growth of 1.7% p.a. (though of course BTC inflation has approached 100% in the last half year).
I hasten to add that BTC currently experiences money supply growth of 1.7% p.a. (though of course BTC inflation has approached 100% in the last half year).
The genesis block includes a headline about bank bailouts not on inequality.
Inequality is implicit. If you believe the banking system is a mechanism for enabling plutocracy, you don’t want the banks bailed out. There’s that, and also all of the writings on the forums in which Satoshi hung out.
BTC solves the problem of techies not being as rich as bankers, not inequality. It simply shifts who is on top.
> BTC solves the problem of techies not being as rich as bankers
Wall Street is having a bonanza with crypto. It's normalized the plundering of retail investors to a level not seen in a century.
Wall Street is having a bonanza with crypto. It's normalized the plundering of retail investors to a level not seen in a century.
So what? The gold standard is known for driving inequality and bitcoin is modelled around it. Have you never wondered why abandoning the gold standard was inevitable the moment the global economy started growing? Maintaining a gold standard by force would be the same as never letting globalization happen and thereby abandon billions of people in their poverty.
> similar inequality issues to USD
Actually, cryptocurrency is almost two orders of magnitude more unequal. The top 1% owns 38.5% of the wealth: https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite..., compared with the top 0.01% of bitcoin owners.
Actually, cryptocurrency is almost two orders of magnitude more unequal. The top 1% owns 38.5% of the wealth: https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite..., compared with the top 0.01% of bitcoin owners.
Government money is a tool nations can use to further their own national interests.
While this isn’t without its downsides (though see Yanis Varoufakis on CBDCs [1]), the gains from it are socialized.
By contrast, an enormous percentage of bitcoin and all other major cryptocurrencies was mined (or worse, “premined”) in the first few years after launch. What nation of people benefits from this form of inequity? Cryptocurrency is entirely nationless.
[1]: https://the-crypto-syllabus.com/yanis-varoufakis-on-techno-f...
While this isn’t without its downsides (though see Yanis Varoufakis on CBDCs [1]), the gains from it are socialized.
By contrast, an enormous percentage of bitcoin and all other major cryptocurrencies was mined (or worse, “premined”) in the first few years after launch. What nation of people benefits from this form of inequity? Cryptocurrency is entirely nationless.
[1]: https://the-crypto-syllabus.com/yanis-varoufakis-on-techno-f...
> the selling point of crypto was never curing inequality
Sure it was. Definitely not the only selling point, but there is a ton of drivel out there about how it is supposed to liberate us from the big bad banks (banks are now replaced by Coinbase et al) How something that's supposed to be decentralized, consensus-based, not prone to manipulation by the greedy corporations, greedy individuals and governments is now actually turning out to be something else. And it even has some real equality-related use cases like wiring remittances to Argentina, or the failed El Salvador experiment. But overall trending in the opposite direction to equality.
Sure it was. Definitely not the only selling point, but there is a ton of drivel out there about how it is supposed to liberate us from the big bad banks (banks are now replaced by Coinbase et al) How something that's supposed to be decentralized, consensus-based, not prone to manipulation by the greedy corporations, greedy individuals and governments is now actually turning out to be something else. And it even has some real equality-related use cases like wiring remittances to Argentina, or the failed El Salvador experiment. But overall trending in the opposite direction to equality.
I think it's a bit of an oversimplification to define equality as 'current distribution of wealth.' A very important part of wealth is being able to actually use it, and there are many ways holders or would-be-recipients of USD are restricted in who they can transact with that are far from equal. Cryptocurrencies are not without restrictions of their own, but their restrictions are more objective/technical rather than the vaguely phrased, regularly changing, cultural nature of traditional 'laws' that govern USD transactions.
Ultimately, I agree with your assessment of the research avenue as a straw man.
Ultimately, I agree with your assessment of the research avenue as a straw man.
You might well want to criticise the paper, but I think the video is a fair representation of the contents of the paper.
Regarding the number of holders, the paper says: "While the original database has 896 million addresses, after we remove addresses in peeling chains we end up with 640 million addresses. Theses addresses belong to 189 million clusters, of which 116 million clusters are single-address clusters."
Not sure where the number of 68 million wallets comes from. Taking 189m as the number of holders, we'd have 0.005% of BTC holders holding 27% of all BTC. But even we take that 68m "wallet" number, and assume that each holder controlled multiple wallets, say 10 on average, we'd have 6.8m holders, and then 0.15% of holders controlling about 27% of BTC. Still enormous concentration.
More from the paper: "It is also important to note that this measurement of concentration most likely is an understatement since we cannot rule out that some of the largest addresses are controlled by the same entity. In particular, in the above calculations, we do not assign the ownership of early bitcoins, which are held in about 20,000 addresses, to one person (Satoshi Nakamoto) but consider them as belonging to 20,000 different individuals."
Another interesting part of the paper: "To the best of our knowledge, we have the most complete information about crypto entities that have been used in academic research up to this point. Our data cover 1,043 different entities. These include 393 exchanges, 86 gambling sites, 39 on-line wallets, 33 payment processors, 63 mining pools, 35 scammers, 227 ransomware attackers, 151 dark net market places and illegal services."
Regarding the number of holders, the paper says: "While the original database has 896 million addresses, after we remove addresses in peeling chains we end up with 640 million addresses. Theses addresses belong to 189 million clusters, of which 116 million clusters are single-address clusters."
Not sure where the number of 68 million wallets comes from. Taking 189m as the number of holders, we'd have 0.005% of BTC holders holding 27% of all BTC. But even we take that 68m "wallet" number, and assume that each holder controlled multiple wallets, say 10 on average, we'd have 6.8m holders, and then 0.15% of holders controlling about 27% of BTC. Still enormous concentration.
More from the paper: "It is also important to note that this measurement of concentration most likely is an understatement since we cannot rule out that some of the largest addresses are controlled by the same entity. In particular, in the above calculations, we do not assign the ownership of early bitcoins, which are held in about 20,000 addresses, to one person (Satoshi Nakamoto) but consider them as belonging to 20,000 different individuals."
Another interesting part of the paper: "To the best of our knowledge, we have the most complete information about crypto entities that have been used in academic research up to this point. Our data cover 1,043 different entities. These include 393 exchanges, 86 gambling sites, 39 on-line wallets, 33 payment processors, 63 mining pools, 35 scammers, 227 ransomware attackers, 151 dark net market places and illegal services."
> You might well want to criticise the paper, but I think the video is a fair representation of the contents of the paper.
I do have criticisms of the paper, but those are milder. They are inherent limitations of the methodology, which the authors seem to recognize. The headline in this HN post is not remotely a fair representation of anything whatsoever in the paper.
> Not sure where the number of 68 million wallets comes from. Taking 189m as the number of holders, we'd have 0.005% of BTC holders holding 27% of all BTC. But even we take that 68m "wallet" number, and assume that each holder controlled multiple wallets, say 10 on average, we'd have 6.8m holders, and then 0.15% of holders controlling about 27% of BTC. Still enormous concentration.
The 68 million number comes from here: https://www.statista.com/statistics/647374/worldwide-blockch... and when you use these figures with the ones from the paper, the results line up exactly with the headline here.
If you do the divisions I think it's pretty clear that the video divided 10k/68m and 5m/18m, which is completely illegitimate, considering the paper is discussing "clusters" of wallets.
As for your analysis, i'm not really sure what manipulation you're doing there. There is no coherent way to adjust for the number of wallets owned by an individual, because you don't know the composition of that ownership. Unless you can identify who owns which groups of wallets, you can't back out wealth inequality here under the assumption of multiple wallet ownership. That's exactly why the paper tries to do this clustering analysis that it does. Its purpose is to group wallets presumed to be owned by one person.
> More from the paper: "It is also important to note that this measurement of concentration most likely is an understatement since we cannot rule out that some of the largest addresses are controlled by the same entity. In particular, in the above calculations, we do not assign the ownership of early bitcoins, which are held in about 20,000 addresses, to one person (Satoshi Nakamoto) but consider them as belonging to 20,000 different individuals."
This cuts both ways, though. It may be that a huge number of the low balance wallets are duplicates controlled by individuals as well. People that programmatically created wallets, e.g. for the purpose of anonymization, and left tiny bits of dust in them. They aren't filtering by low balance in any way I can observe.
> Another interesting part of the paper: "To the best of our knowledge, we have the most complete information about crypto entities that have been used in academic research up to this point. Our data cover 1,043 different entities. These include 393 exchanges, 86 gambling sites, 39 on-line wallets, 33 payment processors, 63 mining pools, 35 scammers, 227 ransomware attackers, 151 dark net market places and illegal services."
I'm sure this is all true, and i'm sure it is the most complete academic dataset used to date. That doesn't really mean it is complete though. Note that they enumerate an impressive list of entities, but we have no idea how complete their coverage of those entity's wallets is. And as someone that has done this kind of analysis, I do not trust academic econometricians just trying to publish their next paper to do a good job of it. Chainalysis is hard and inherently quite fuzzy. It's also an adversarial environment, intermediaries often intentionally try to mask their activity, as do individuals.
Let's look at the actual content of their methodology, though in the paragraph directly above:
> To link address clusters to real entities we scrape cryptocurrency blogs and websites, such as Reddit, Blockchain.info, bitinfocharts.com, bitcointalk.org, walletexplorer.com, and Matbea.com for all publicly available addresses of prominent Bitcoin entities such as exchanges, payment processors, gambling sites, and others. We supplement this information with the state-of-the-art database of crypto entities from Bitfury Crystal Blockchain. Bitfury Crystal Blockchain is one of the leading providers of anti-moneylaundering tools and analytic solutions in the crypto space
Does this sound comprehensive to you? The only wildcard here is this "Bitfury" thing which i've certainly never heard of, but we can quickly look at their customers page to get a gauge of how serious they are:
https://crystalblockchain.com/due-diligence-tool-for-crypto-...
Everyone on that list i've also never heard of. There is a company that dominates this space, and it's https://www.chainalysis.com/ Compare Chainalysis's customer list to Bitfury's. Every name on there is a serious entity that you've probably heard of.
Why aren't they using data from Chainalysis? Or data from someone else reputable? We have no insight into what "Bitfury"s methodology is, so I can't explicitly critique it, but there are really good reasons to be very suspiciuos of its quality.
Finally, I note that they make no mention of mixers or contracts like WBTC, which can hold enormous quantities of coins, and can also create tons of fragmentation in the address space, which is very likely to significantly frustrate any clustering based methodology or naive chainalysis attempt.
I do have criticisms of the paper, but those are milder. They are inherent limitations of the methodology, which the authors seem to recognize. The headline in this HN post is not remotely a fair representation of anything whatsoever in the paper.
> Not sure where the number of 68 million wallets comes from. Taking 189m as the number of holders, we'd have 0.005% of BTC holders holding 27% of all BTC. But even we take that 68m "wallet" number, and assume that each holder controlled multiple wallets, say 10 on average, we'd have 6.8m holders, and then 0.15% of holders controlling about 27% of BTC. Still enormous concentration.
The 68 million number comes from here: https://www.statista.com/statistics/647374/worldwide-blockch... and when you use these figures with the ones from the paper, the results line up exactly with the headline here.
If you do the divisions I think it's pretty clear that the video divided 10k/68m and 5m/18m, which is completely illegitimate, considering the paper is discussing "clusters" of wallets.
As for your analysis, i'm not really sure what manipulation you're doing there. There is no coherent way to adjust for the number of wallets owned by an individual, because you don't know the composition of that ownership. Unless you can identify who owns which groups of wallets, you can't back out wealth inequality here under the assumption of multiple wallet ownership. That's exactly why the paper tries to do this clustering analysis that it does. Its purpose is to group wallets presumed to be owned by one person.
> More from the paper: "It is also important to note that this measurement of concentration most likely is an understatement since we cannot rule out that some of the largest addresses are controlled by the same entity. In particular, in the above calculations, we do not assign the ownership of early bitcoins, which are held in about 20,000 addresses, to one person (Satoshi Nakamoto) but consider them as belonging to 20,000 different individuals."
This cuts both ways, though. It may be that a huge number of the low balance wallets are duplicates controlled by individuals as well. People that programmatically created wallets, e.g. for the purpose of anonymization, and left tiny bits of dust in them. They aren't filtering by low balance in any way I can observe.
> Another interesting part of the paper: "To the best of our knowledge, we have the most complete information about crypto entities that have been used in academic research up to this point. Our data cover 1,043 different entities. These include 393 exchanges, 86 gambling sites, 39 on-line wallets, 33 payment processors, 63 mining pools, 35 scammers, 227 ransomware attackers, 151 dark net market places and illegal services."
I'm sure this is all true, and i'm sure it is the most complete academic dataset used to date. That doesn't really mean it is complete though. Note that they enumerate an impressive list of entities, but we have no idea how complete their coverage of those entity's wallets is. And as someone that has done this kind of analysis, I do not trust academic econometricians just trying to publish their next paper to do a good job of it. Chainalysis is hard and inherently quite fuzzy. It's also an adversarial environment, intermediaries often intentionally try to mask their activity, as do individuals.
Let's look at the actual content of their methodology, though in the paragraph directly above:
> To link address clusters to real entities we scrape cryptocurrency blogs and websites, such as Reddit, Blockchain.info, bitinfocharts.com, bitcointalk.org, walletexplorer.com, and Matbea.com for all publicly available addresses of prominent Bitcoin entities such as exchanges, payment processors, gambling sites, and others. We supplement this information with the state-of-the-art database of crypto entities from Bitfury Crystal Blockchain. Bitfury Crystal Blockchain is one of the leading providers of anti-moneylaundering tools and analytic solutions in the crypto space
Does this sound comprehensive to you? The only wildcard here is this "Bitfury" thing which i've certainly never heard of, but we can quickly look at their customers page to get a gauge of how serious they are:
https://crystalblockchain.com/due-diligence-tool-for-crypto-...
Everyone on that list i've also never heard of. There is a company that dominates this space, and it's https://www.chainalysis.com/ Compare Chainalysis's customer list to Bitfury's. Every name on there is a serious entity that you've probably heard of.
Why aren't they using data from Chainalysis? Or data from someone else reputable? We have no insight into what "Bitfury"s methodology is, so I can't explicitly critique it, but there are really good reasons to be very suspiciuos of its quality.
Finally, I note that they make no mention of mixers or contracts like WBTC, which can hold enormous quantities of coins, and can also create tons of fragmentation in the address space, which is very likely to significantly frustrate any clustering based methodology or naive chainalysis attempt.
> Does this sound comprehensive to you? The only wildcard here is this "Bitfury" thing which i've certainly never heard of
If you operate in this industry and haven’t heard of Bitfury, you may have less of a grasp of the landscape than you think. It was created by some of the main insiders and has employed many former government officials. I would have a rethink of my authoritative stance if I were you.
From everything I know about crypto, the linked paper checks out. A lot of people discuss these issues — I think Vitalik recently lamented that cryptocurrencies seem to devolve into feudal dollars.
If you operate in this industry and haven’t heard of Bitfury, you may have less of a grasp of the landscape than you think. It was created by some of the main insiders and has employed many former government officials. I would have a rethink of my authoritative stance if I were you.
From everything I know about crypto, the linked paper checks out. A lot of people discuss these issues — I think Vitalik recently lamented that cryptocurrencies seem to devolve into feudal dollars.
> If you operate in this industry and haven’t heard of Bitfury, you may have less of a grasp of the landscape than you think. It was created by some of the main insiders and has employed many former government officials. I would have a rethink of my authoritative stance if I were you.
Employing government officials is not an index of seriousness. I should have been more clear, i've heard of Bitfury in the context of mining and ASICs, but I was unaware they had started a chainalysis product, and I don't take their efforts there seriously. I think the advertised customer list for this product speaks for itself.
> From everything I know about crypto, the linked paper checks out. A lot of people discuss these issues — I think Vitalik recently lamented that cryptocurrencies seem to devolve into feudal dollars.
I'm not denying that the basic idea is correct: that ownership inequality is high. It's just not as high as this headline is indicating.
Remember, the paper does not anywhere assert this 0.01% vs 27% stat. That is created by combining the paper's data on wallet clusters with crypto.com estimate of bitcoin owners. If you read the crypto.com whitepaper on how they computed this, they note that a limitation of their analysis is that they cannot count people who bought Bitcoin at one time, and have since sold it. That means that if you accept everything else about their analysis (which I don't), the denominator they're using counts literally everyone who has ever owned any non-zero fraction of a Bitcoin, ever.
Employing government officials is not an index of seriousness. I should have been more clear, i've heard of Bitfury in the context of mining and ASICs, but I was unaware they had started a chainalysis product, and I don't take their efforts there seriously. I think the advertised customer list for this product speaks for itself.
> From everything I know about crypto, the linked paper checks out. A lot of people discuss these issues — I think Vitalik recently lamented that cryptocurrencies seem to devolve into feudal dollars.
I'm not denying that the basic idea is correct: that ownership inequality is high. It's just not as high as this headline is indicating.
Remember, the paper does not anywhere assert this 0.01% vs 27% stat. That is created by combining the paper's data on wallet clusters with crypto.com estimate of bitcoin owners. If you read the crypto.com whitepaper on how they computed this, they note that a limitation of their analysis is that they cannot count people who bought Bitcoin at one time, and have since sold it. That means that if you accept everything else about their analysis (which I don't), the denominator they're using counts literally everyone who has ever owned any non-zero fraction of a Bitcoin, ever.
Which part do you think is absurd? It looks like they used the 10,000 number from the NBER paper as the numerator and the crypto.com estimate of 114M people with Bitcoin as the denominator to come up with the 0.01% figure [1].
Do you find it hard to believe that ~100M people hold Bitcoin? This seems at least in the right ballpark when you cross-reference it with survey data [2].
[1] https://www.wsj.com/articles/bitcoins-one-percent-controls-l...
[2] https://www.pewresearch.org/fact-tank/2021/11/11/16-of-ameri...
Do you find it hard to believe that ~100M people hold Bitcoin? This seems at least in the right ballpark when you cross-reference it with survey data [2].
[1] https://www.wsj.com/articles/bitcoins-one-percent-controls-l...
[2] https://www.pewresearch.org/fact-tank/2021/11/11/16-of-ameri...
Are they counting that the first wallet owns ~5% of BTC?
With this in mind - it's less surprising that the remaining 0.01% own 22%.
This isn't TOO far off of regular inequality.
IIUC, the top 0.01% globally own >12% of wealth: https://www.chicagobooth.edu/review/never-mind-1-percent-let...
Given that crypto had such absurd hyper growth - I'm actually shocked inequality isn't far worse.
With this in mind - it's less surprising that the remaining 0.01% own 22%.
This isn't TOO far off of regular inequality.
IIUC, the top 0.01% globally own >12% of wealth: https://www.chicagobooth.edu/review/never-mind-1-percent-let...
Given that crypto had such absurd hyper growth - I'm actually shocked inequality isn't far worse.
> Do you think that the NBER, London School of Economics, and MIT harbour idiots that have not heard of exchanges?
Not idiots, just people who want to publish something that will turn into a juicy headline, and don't care much about how closely it aligns with reality.
Not idiots, just people who want to publish something that will turn into a juicy headline, and don't care much about how closely it aligns with reality.
Oh come on, you don't think the parent poster didn't think about this and read the article? You think they only spent a couple of seconds thinking about it before posting "what they reckon"?
> Do you think that ... London School of Economics ... harbour[s] idiots
I've seen a lot of dumb takes coming out of people from LSE, and as such will have to say "yes".
(Haven't read the study but am not surprised by the conclusion)
I've seen a lot of dumb takes coming out of people from LSE, and as such will have to say "yes".
(Haven't read the study but am not surprised by the conclusion)
In the world of crypto, where people keep repeating the "not your keys, not your coins" mantra, crypto exchanges are very much the owners of all the coins they hold. But I agree, it's absurd.
Ironically their customers trust them because just like other businesses around the world, the customers rely on the jurisdictions of where the exchanges are incorporated to uphold the law and make sure the exchanges don't rob them. The same jurisdictions many crypto-diehards think need to disappear...
Would you trust an exchange name "Uncle Vlad's Russki Crypto Exchange"? Probably not, right? Because if they take your money, and you call the Russian version of the FBI, they'll just laugh at you. So you think your money is safer in a crypto exchange where the founders would be arrested if they blatantly stole your money...
Would you trust an exchange name "Uncle Vlad's Russki Crypto Exchange"? Probably not, right? Because if they take your money, and you call the Russian version of the FBI, they'll just laugh at you. So you think your money is safer in a crypto exchange where the founders would be arrested if they blatantly stole your money...
This is the main thing that has always seemed odd to my about much of enthusiasm for crypto.
People seem to conflate "it works like physical cash but it's electronic" with "no banks no laws no regulation" when its very obvious that banks and governance are still necessary.
People seem to conflate "it works like physical cash but it's electronic" with "no banks no laws no regulation" when its very obvious that banks and governance are still necessary.
Not that much of a joke if you consider that crypto is supposed to be decentralized and permissionless in opposition to fiat that the banks hold.
I really don't understand why people don't get the idea of "digital native".
Just because verbal agreements worked for thousands of years doesn't make written contracts pointless.
Similarly the banking industry technically does "online banking" but they still have to process each transaction through archaic practices that mimic physical transactions.
Just because verbal agreements worked for thousands of years doesn't make written contracts pointless.
Similarly the banking industry technically does "online banking" but they still have to process each transaction through archaic practices that mimic physical transactions.
Sorry, I'm not following how what you posted related to my comment.
Let me take a crack at interpreting it: your comment of "crypto is meant for decentralization, lots of people use exchanges, exchanges are centralized like banks, ergo crypto is just as bad as the legacy financial system" presents a false dichotomy.
Crypto adoption does not need to be a binary decision, and crypto enthusiasts are not hypocrites if they still have a bank account or if they still use exchanges when it suits them.
The important thing about crypto is optionality. Crypto/web3 gives us the option (but not the obligation) of managing our own wealth. This is something that "digital natives" understand better than old timers.
Crypto adoption does not need to be a binary decision, and crypto enthusiasts are not hypocrites if they still have a bank account or if they still use exchanges when it suits them.
The important thing about crypto is optionality. Crypto/web3 gives us the option (but not the obligation) of managing our own wealth. This is something that "digital natives" understand better than old timers.
> Crypto/web3 gives us the option (but not the obligation) of managing our own wealth. This is something that "digital natives" understand better than old timers.
Before crypto/web3 one couldn't manage one's own wealth? C'mon.
Before crypto/web3 one couldn't manage one's own wealth? C'mon.
Simple exercise: go to your bank today and try to withdraw $100k.
Alternatively: go apply for a mortgage if you have 80% for a down payment, a way to prove the legitimacy of the funds, but little-to-no credit history.
Alternatively: go apply for a mortgage if you have 80% for a down payment, a way to prove the legitimacy of the funds, but little-to-no credit history.
Why would a lender want to do any less due diligence if your downpayment was in crypto vs cash or gold or bonds or similar?
Because the risk of default (assuming contracts used are correct and safe) is smaller or zero
What? Why?
We're talking about taking out a loan where you don't have 100% of the amount in advance.
You could lose your job, your business could go south, you could ditch for another country and never use whatever bank account or wallet you had your downpayment in again, all those things that are basically currency-independent. Breaking a contract is a people issue, turning paperwork into "smart" code doesn't actually tie a chain around someone's ankle, and it certainly doesn't guarantee their future income.
We're talking about taking out a loan where you don't have 100% of the amount in advance.
You could lose your job, your business could go south, you could ditch for another country and never use whatever bank account or wallet you had your downpayment in again, all those things that are basically currency-independent. Breaking a contract is a people issue, turning paperwork into "smart" code doesn't actually tie a chain around someone's ankle, and it certainly doesn't guarantee their future income.
> where you don't have 100% of the amount in advance.
This is not what I said. Willing to put 80% on down payment does not mean not having ways to pay things in full.
- You might have the cash, but not interested in becoming totally illiquid.
- You might be interested in getting a mortgage for the tax deductions.
- You might have only the cash the downpayment, but use another property that you already own as collateral.
- You might have only the cash for the downpayment, but you are going to buy the house to rent it.
Point is, with "traditional" finance, you can only do these things if you are negotiating the whole package with the same bank, and this is how they "get" you. If people could actually manage their own wealth, there would be no strings attached.
And let's not even get into the other kinds of issues such as bank's "rules" that seem totally reasonable but end up making the life of marginalized groups more difficult.
This is not what I said. Willing to put 80% on down payment does not mean not having ways to pay things in full.
- You might have the cash, but not interested in becoming totally illiquid.
- You might be interested in getting a mortgage for the tax deductions.
- You might have only the cash the downpayment, but use another property that you already own as collateral.
- You might have only the cash for the downpayment, but you are going to buy the house to rent it.
Point is, with "traditional" finance, you can only do these things if you are negotiating the whole package with the same bank, and this is how they "get" you. If people could actually manage their own wealth, there would be no strings attached.
And let's not even get into the other kinds of issues such as bank's "rules" that seem totally reasonable but end up making the life of marginalized groups more difficult.
Ok, so a secured loan? Those exist, sure. What does crypto get you in most of those cases?
In the "all I've got is a million bucks in gold I stole from a vault and can't show a paper trail" case: I don't care. Not a valuable use case for me. That reason alone doesn't move the needle on crypto for me.
In other cases: seems like you're gonna have an easy time getting a loan. lending to people who don't need it is the easiest sort of loan to make.
(In most of these cases, e.g. multiple properties or non-liquid assets, I'm not sure why I want to put down more collateral anyway...)
Edit: you added something about how with traditional banks you have to do it all-or-nothing with a single bank and that's how they "get" you. I'm not sure how anyone's being "gotten," especially in recent times where rate competition has resulted in cheaper money than ever before. But it's also not true in most of the cases you outlined. If you have multiple sorts of assets that you want to borrow against instead of securing the loan with the property itself, you can take out a bunch of other loans on those other assets and pay cash for the property.
Then you bring up historically marginalized communities and such... If you could sell me on the benefits for most of the folks in the world, people who may only have 5% down compared to a traditional bank... that would be a different convo, but "additional ways for people with assets to borrow money" doesn't sound so interesting, as it is.
In the "all I've got is a million bucks in gold I stole from a vault and can't show a paper trail" case: I don't care. Not a valuable use case for me. That reason alone doesn't move the needle on crypto for me.
In other cases: seems like you're gonna have an easy time getting a loan. lending to people who don't need it is the easiest sort of loan to make.
(In most of these cases, e.g. multiple properties or non-liquid assets, I'm not sure why I want to put down more collateral anyway...)
Edit: you added something about how with traditional banks you have to do it all-or-nothing with a single bank and that's how they "get" you. I'm not sure how anyone's being "gotten," especially in recent times where rate competition has resulted in cheaper money than ever before. But it's also not true in most of the cases you outlined. If you have multiple sorts of assets that you want to borrow against instead of securing the loan with the property itself, you can take out a bunch of other loans on those other assets and pay cash for the property.
Then you bring up historically marginalized communities and such... If you could sell me on the benefits for most of the folks in the world, people who may only have 5% down compared to a traditional bank... that would be a different convo, but "additional ways for people with assets to borrow money" doesn't sound so interesting, as it is.
Try to get a loan in crypto with 80% collateral and then we can talk
Crypto “loans” are just loans against existing assets and are all collateralized heavily - 150% is the standard.
There is still absolutely no way to get a real loan with crypto so far - one where you actually borrow more than you have.
Crypto “loans” are just loans against existing assets and are all collateralized heavily - 150% is the standard.
There is still absolutely no way to get a real loan with crypto so far - one where you actually borrow more than you have.
There are two separate things here: one is the ability to manage your own assets, the other the ability to enter in a contract.
I am talking about only the first one. The problems with banks is that they are intermediaries between you and your money.
> Try to get a loan in crypto with 80% collateral and then we can talk
First: a mortgage is overcollaterized. A bank will take the whole house from you if you default, not just what is due. They are taking your downpayment and effectively keeping control over the property.
Second: that is not even the point. The point is that a bank will not give you a mortgage even if you are good for it. Why, because they don't have proper systems in place to assess risk?
Yeah, sure, undercollaterized loans require a system that both parties can agree on and that can solved in case of breach of aggreement. IOW, it is not a trustless system. So it would not happen on the blockchain.
But you know what could happen on the blockchain? I could make a loan with someone I know using the current institutions, add that to my funds to get a overcollaterized loan and then I still don't need a bank. To go back to my first comment on this thread, adoption of crypto does not imply an all-or-nothing approach.
I can be a "web3 enthusiast" and still make use of the current institutions when they suit me. It's the increased optionality that interests me.
I am talking about only the first one. The problems with banks is that they are intermediaries between you and your money.
> Try to get a loan in crypto with 80% collateral and then we can talk
First: a mortgage is overcollaterized. A bank will take the whole house from you if you default, not just what is due. They are taking your downpayment and effectively keeping control over the property.
Second: that is not even the point. The point is that a bank will not give you a mortgage even if you are good for it. Why, because they don't have proper systems in place to assess risk?
Yeah, sure, undercollaterized loans require a system that both parties can agree on and that can solved in case of breach of aggreement. IOW, it is not a trustless system. So it would not happen on the blockchain.
But you know what could happen on the blockchain? I could make a loan with someone I know using the current institutions, add that to my funds to get a overcollaterized loan and then I still don't need a bank. To go back to my first comment on this thread, adoption of crypto does not imply an all-or-nothing approach.
I can be a "web3 enthusiast" and still make use of the current institutions when they suit me. It's the increased optionality that interests me.
> First: a mortgage is overcollaterized. A bank will take the whole house from you if you default, not just what is due. They are taking your downpayment and effectively keeping control over the property.
Uh, no. They are required by law to sell the property at a balance between timeliness and recovery of owed monies. And they are required to return to the mortgagee funds in excess of what was owed.
Uh, no. They are required by law to sell the property at a balance between timeliness and recovery of owed monies. And they are required to return to the mortgagee funds in excess of what was owed.
They decide how to sell, the value that is owed and so on. In effect, until the house is not fully paid, the "owner" is anything but.
You will have no problem withdrawing 100K, and substantially more, depending on branch you might need to call ahead of time, a many years ago there was poker night somewhere on wall street with 600K cash bonus, yep actual cash in office on table.
Ok bigshot, you are missing the forest for the tree. Try doing the same on the equivalent amount with a bank from Brazil or Greece.
At least most banks across the world have liquidity requirements, and most have some insurance for limited amounts, for example if you want to open your own bank in Cayman's you need to have 30-50 million in liquid assets such bonds and gold deposits, it is similar for US banks, if recall correctly.
You might be able to transfer bitcoins from valet to valet, but they will be effectively useless, if banks stop releasing cash, cash will be the most valuable commodity, not digital bits. Furthermore, during the 90's (the really crazy times) in Russia many were doing bond trading just fine without any issues and without internet, this not some story, it happens so I met a few survivors from that time.
On another hand, the only useful thing I find for bitcoin that is "legal" is contributing to sci-hub projects, nothing else, for this reason and other reasons such as drugs and money laundering, bitcoin is here to stay.
You might be able to transfer bitcoins from valet to valet, but they will be effectively useless, if banks stop releasing cash, cash will be the most valuable commodity, not digital bits. Furthermore, during the 90's (the really crazy times) in Russia many were doing bond trading just fine without any issues and without internet, this not some story, it happens so I met a few survivors from that time.
On another hand, the only useful thing I find for bitcoin that is "legal" is contributing to sci-hub projects, nothing else, for this reason and other reasons such as drugs and money laundering, bitcoin is here to stay.
Ah yes, using examples of currency trade being halted as an example of how crypto is a solution of some sort.
Ok, seems like people really don't read the whole thread before making the same used up retort: https://news.ycombinator.com/item?id=31463534
Things might have changed since I bought property a few years ago, but back then I just took a screenshot of my bank account and tried to keep a straight face when giving it to my realtor.
Gotcha. You have the option to manage your own NFT-s or BTC, but if 99% of the users are accessing the ecosystem thru centralized actors, then sooner than later you'll have issues interacting with those users. Think running your own mail server and trying to send an email to a friend on Gmail. Coinbase might put a hold on the BTC you send to a friend because it was coming from an untrusted source. We are back to web2.
No, you missed the point. There is no divide between "those using an exchange" and "those using their own wallet". No one is forced to exclusively use one or other.
The divide is along the line of "how much of each individual's portfolio is on a CEX?". I can have 10% of my crypto holdings (for occasional trading or on/off ramping) on an exchange and the rest on my own wallet (for DeFI).
You can not do that on a bank. If you think a bank is in trouble, you can only move your funds to another bank. If one exchange starts acting up, its users will learn how to move more to their own wallet. It is not a random example: go to /r/loopringorg and see all the screenshots of the people who finally learn how to use the Loopring protocol/wallet and taking their holdings from Coinbase. Now imagine if there were rumors that an exchange would start unilaterally trying to control what users could do? They would lose their customers. They are centralized, but the balance of power is in favor of the us users because we have options.
The divide is along the line of "how much of each individual's portfolio is on a CEX?". I can have 10% of my crypto holdings (for occasional trading or on/off ramping) on an exchange and the rest on my own wallet (for DeFI).
You can not do that on a bank. If you think a bank is in trouble, you can only move your funds to another bank. If one exchange starts acting up, its users will learn how to move more to their own wallet. It is not a random example: go to /r/loopringorg and see all the screenshots of the people who finally learn how to use the Loopring protocol/wallet and taking their holdings from Coinbase. Now imagine if there were rumors that an exchange would start unilaterally trying to control what users could do? They would lose their customers. They are centralized, but the balance of power is in favor of the us users because we have options.
"If you think a bank is in trouble, you can only move your funds to another bank."
or to land, or to gold, or to stocks, or to bonds, or to foreign assets, or to cash, or to guns, or to Pokemon cards... all sorts of "not in a bank" options are available. Banks have competition with not just other banks but the whole financial ecosystem. And if a government is after you, some of those are actually harder to trace than crypto.
or to land, or to gold, or to stocks, or to bonds, or to foreign assets, or to cash, or to guns, or to Pokemon cards... all sorts of "not in a bank" options are available. Banks have competition with not just other banks but the whole financial ecosystem. And if a government is after you, some of those are actually harder to trace than crypto.
Your first five items are simply not available for poorer people. It's basically "let them eat cake".
Holding cash can lead a whole community to what happened in India.
Guns are not liquid.
Pokemon cards are easy to be counterfeit.
Holding cash can lead a whole community to what happened in India.
Guns are not liquid.
Pokemon cards are easy to be counterfeit.
Not to mention how to determine what coins are lost forever. I know of several addresses that are mine but the keys are unfortunately lost forever.
And additionally you might have coins that haven’t moved in 8 years that is considered lost but i just haven’t had a reason to move them. Im sure someone could come up with a decent methodology for figuring this out but this isn’t it.
And additionally you might have coins that haven’t moved in 8 years that is considered lost but i just haven’t had a reason to move them. Im sure someone could come up with a decent methodology for figuring this out but this isn’t it.
It also does not consider wrapped bitcoin... this is just on ETH... but it is on all the various L2's as well...
https://wbtc.network/dashboard/order-book
https://wbtc.network/dashboard/order-book
It does consider it actually. WBTC is offchain but the btc it corresponds to is still on chain though it may be miscounted as the custodian wallet.
From the perspective of btc, not your keys not your coins still applies and those coins belong to the custodian wallet, not to WBTC holders.
From the perspective of btc, not your keys not your coins still applies and those coins belong to the custodian wallet, not to WBTC holders.
Some (if not all) exchanges have normal addresses for bitcoin, each client has a bunch of them.
For example coinbase has that.
Also, Satoshi's wallets
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Several issues with using this metric to measure wealth inequality for crypto currencies, especially those with smart contracts like Ethereum.
- A single address might be a contract like WETH, which can hold tens of billions of dollars worth of tokens despite all users in the network having access to it. Similar with centralized exchanges holding many tokens. Addresses are not users.
- This metric often confuses “inequality of interest” with “inequality of wealth.” A user holding $10,000 of ETH and another user holding $100 of ETH may be in similar fiat-wealth brackets, but one is more interested & invested in crypto than the other.
- It is very easy to spin up a new wallet as it’s effectively just a random unique number. A single user might have 10-20 wallets with almost-zero tokens leftover, and all of their assets concentrated on one or two accounts, which further skews this stat.
- A number of tokens in the network are inaccessible due to being locked in a contract or sent to a burn address. The standard ETH burn address has $250M worth of tokens.
There is a lot of crypto disparity and inequality but this stat at face value is fairly meaningless.
- A single address might be a contract like WETH, which can hold tens of billions of dollars worth of tokens despite all users in the network having access to it. Similar with centralized exchanges holding many tokens. Addresses are not users.
- This metric often confuses “inequality of interest” with “inequality of wealth.” A user holding $10,000 of ETH and another user holding $100 of ETH may be in similar fiat-wealth brackets, but one is more interested & invested in crypto than the other.
- It is very easy to spin up a new wallet as it’s effectively just a random unique number. A single user might have 10-20 wallets with almost-zero tokens leftover, and all of their assets concentrated on one or two accounts, which further skews this stat.
- A number of tokens in the network are inaccessible due to being locked in a contract or sent to a burn address. The standard ETH burn address has $250M worth of tokens.
There is a lot of crypto disparity and inequality but this stat at face value is fairly meaningless.
The fact is still that the crypto sphere is even more unequally owned than the economy or the stock market, which is already extraordinarily unequal.
When I was first excited for bitcoin, it was because of its revolutionary capacity for people to transact without governments and banks, and to own and control that means themselves. Well that really hasn't panned out at all.
When I was first excited for bitcoin, it was because of its revolutionary capacity for people to transact without governments and banks, and to own and control that means themselves. Well that really hasn't panned out at all.
I'm sure this is true, but it's still not a good reason to put out bogus statistics. There are other ways to argue this point without hurting your credibility by lying about it.
> When I was first excited for bitcoin, it was because of its revolutionary capacity for people to transact without governments and banks, and to own and control that means themselves. Well that really hasn't panned out at all.
This has panned out. This is the exact reality of crypto right now. It has nothing to do with inequality whatsoever. Solving inequality has not panned out, but it was never expected to, nor possible.
This has panned out. This is the exact reality of crypto right now. It has nothing to do with inequality whatsoever. Solving inequality has not panned out, but it was never expected to, nor possible.
Huh? I'm sending Bitcoin without involving any government. You're doing something wrong if you feel like you need to involve them.
Except come tax time you need to declare your crypto..
Fortunately I live in a country where such thing is a big tabu. I only need to declare my gains (and only in case I'm holding less than a year) - and there are none if I am simply using BTC to send cash.
So btc has only gone down since you bought it?
If you buy btc, and value goes up, and you use it to "send cash" that is a gain.
If you buy btc, and value goes up, and you use it to "send cash" that is a gain.
BTC has stayed the same price for the duration of my transfers. It's just a few hours most of the time. There is also allowance in the law for this case - I don't need to declare anything unless I profit over $1k/year.
> The fact is still that the crypto sphere is even more unequally owned than the economy or the stock market, which is already extraordinarily unequal.
What are the specific figures & sources you derived this claim from? Last time I looked into this it was somewhat surpising, but there are huge problems with the methodology (e.g. assuming that 1 address = 1 person is a really broken assumption)
https://www.frontiersin.org/articles/10.3389/fbloc.2021.7301... is a good attempt, but still flawed methodology. It's latest estimate for bitcoin is gini index on wealth per account at ~0.45
Which if it was a country would make it one of the least high in terms of wealth inequality which is hard to believe.
https://en.wikipedia.org/wiki/List_of_countries_by_wealth_in...
What are the specific figures & sources you derived this claim from? Last time I looked into this it was somewhat surpising, but there are huge problems with the methodology (e.g. assuming that 1 address = 1 person is a really broken assumption)
https://www.frontiersin.org/articles/10.3389/fbloc.2021.7301... is a good attempt, but still flawed methodology. It's latest estimate for bitcoin is gini index on wealth per account at ~0.45
Which if it was a country would make it one of the least high in terms of wealth inequality which is hard to believe.
https://en.wikipedia.org/wiki/List_of_countries_by_wealth_in...
> Several issues with using this metric
Which metric are you referring to?
The authors of the paper on which the statement is based are fully aware and address most of issues you enumerate.
See my other comment.
https://news.ycombinator.com/item?id=31460346
Which metric are you referring to?
The authors of the paper on which the statement is based are fully aware and address most of issues you enumerate.
See my other comment.
https://news.ycombinator.com/item?id=31460346
They are referring to the metric they imagined was in use based upon reading the title.
Thanks for the link. The paper mostly only addresses one issue I that mentioned: attempting to distinguish intermediaries from individuals. It does not make any conclusions about how adoption of crypto as a whole will result in 100x more unequal wealth distribution than the regular economy which is what the OP tweets seem to be implying based on this 0.01% statistic.
The paper does point to the fact that holdings are skewed; 400,000 individuals control almost half of the circulating supply, so—like with the stock market—a very small handful of players stand to benefit if the price continues to appreciate significantly. This is particularly a problem for crypto currencies like Bitcoin that have a fixed supply capacity and are primarily used as a store of value. (Disclaimer: I own no BTC and feel it has inherent problems.)
Another study comparing Bitcoin, Ethereum and other coins to real world Gini coefficients finds similar results: that a small number of addresses hold a significant sum of tokens, but that overall wealth distribution in crypto currencies is often in-line with that of real economies.[1] The idea that crypto holdings mirror the wealth inequality of real economies is hardly surprising considering this is where the investors are coming from.
Two more interesting points raised by [1] worth noting:
> Results from both Bitcoin-like and Ethereum-like cryptocurrencies suggest that the wealth distribution is initially poor likely due to only a select few participants controlling the majority of the wealth. But this concentration often dissipates as more participants join the system, as observed in Bitcoin and Ethereum.
> Bitcoin-like coins often have capped supply, i.e., the number of these coins are algorithmically limited to a predefined quantity to provide intrinsic value to the asset. Ethereum, on the other hand, does not impose a strict limit on the supply of Ethers. ... Thus the figures reported in this subsection will likely change significantly over time, unlike Bitcoin-like currencies in which a large proportion of wealth is already distributed.
[1] https://ulir.ul.ie/bitstream/handle/10344/11073/Sai_2021_Cha...
The paper does point to the fact that holdings are skewed; 400,000 individuals control almost half of the circulating supply, so—like with the stock market—a very small handful of players stand to benefit if the price continues to appreciate significantly. This is particularly a problem for crypto currencies like Bitcoin that have a fixed supply capacity and are primarily used as a store of value. (Disclaimer: I own no BTC and feel it has inherent problems.)
Another study comparing Bitcoin, Ethereum and other coins to real world Gini coefficients finds similar results: that a small number of addresses hold a significant sum of tokens, but that overall wealth distribution in crypto currencies is often in-line with that of real economies.[1] The idea that crypto holdings mirror the wealth inequality of real economies is hardly surprising considering this is where the investors are coming from.
Two more interesting points raised by [1] worth noting:
> Results from both Bitcoin-like and Ethereum-like cryptocurrencies suggest that the wealth distribution is initially poor likely due to only a select few participants controlling the majority of the wealth. But this concentration often dissipates as more participants join the system, as observed in Bitcoin and Ethereum.
> Bitcoin-like coins often have capped supply, i.e., the number of these coins are algorithmically limited to a predefined quantity to provide intrinsic value to the asset. Ethereum, on the other hand, does not impose a strict limit on the supply of Ethers. ... Thus the figures reported in this subsection will likely change significantly over time, unlike Bitcoin-like currencies in which a large proportion of wealth is already distributed.
[1] https://ulir.ul.ie/bitstream/handle/10344/11073/Sai_2021_Cha...
What is the equivalent of this metric for physical gold, or even dollars?
Gini coefficient is often used in traditional markets:
https://vitalik.ca/general/2021/07/29/gini.html
https://vitalik.ca/general/2021/07/29/gini.html
None of these make this stay meaningless at face value.
Almost all of your points apply to non-crypto as well, but nobody is denying wealth inequality there.
Almost all of your points apply to non-crypto as well, but nobody is denying wealth inequality there.
An invalid statistical argument that appears to support the truth is still invalid. Just like a proof for a mathematical theorem can be invalid even if the statement turns out to be provably true by other means.
Nobody is "denying wealth inequality" here either, the point is just that the headline statistic may be a bad way to measure wealth inequality in crypto.
There is no doubt crypto includes wealth inequality as the network exists within our capitalist society. If 10% of the world population were to purchase crypto today, it would mirror the same wealth inequality we see in our fiat economy.
But claims that crypto networks display 100x more wealth inequality is not supported by this statistic, and articles should not be basing their arguments on this stat without understanding the implications.
But claims that crypto networks display 100x more wealth inequality is not supported by this statistic, and articles should not be basing their arguments on this stat without understanding the implications.
>Addresses are not users.
Mmmmhmmmm. Welcome to the User-Agent problem. Unfortunately, Society will take your idea and massage it until the rest of society "safely" (to their thinking) can make that assumption.
Mmmmhmmmm. Welcome to the User-Agent problem. Unfortunately, Society will take your idea and massage it until the rest of society "safely" (to their thinking) can make that assumption.
The crypto economy does not automagically solve all the old problems, but it does allow them to be more transparent and visible.
Get in your car and drive to the bad part of town. Pretty visible no?
I'd like to see the methodology. I guarantee you they can't actually determine the claim.
Beyond that, bitcoin wasn't designed to "decentralize wealth and power", it is a disingenuous claim made by an agenda poster. Bitcoin was created to take a step towards a future where economic power is not synonymous with political power. The natural distribution of wealth is not at issue, so long as it's just that: natural.
Beyond that, bitcoin wasn't designed to "decentralize wealth and power", it is a disingenuous claim made by an agenda poster. Bitcoin was created to take a step towards a future where economic power is not synonymous with political power. The natural distribution of wealth is not at issue, so long as it's just that: natural.
> I'd like to see the methodology.
https://www.nber.org/papers/w29396
https://www.nber.org/papers/w29396
Is that the research cited in the tweet?
The video in the tweet is based (at least partially) on a WSJ article that is based on that paper.
Decentralizing "money" or "currency" cannot happen unless the ownership of the same is not less concentrated than what we already have.
In the bitcoin world ownership is lot more concentrated than in the real world, which makes truly decentralizing anything else hard if not impossible.
In the bitcoin world ownership is lot more concentrated than in the real world, which makes truly decentralizing anything else hard if not impossible.
How do you figure? A currency no central authority has a monopoly on deciding supply is on it's face more decentralized, and an improvement on the social front, regardless who has what.
A currency entirely owned by one person isn't a currency, and people actually using it causes dispersal to a naturally occurring Pareto distribution over time.
A currency entirely owned by one person isn't a currency, and people actually using it causes dispersal to a naturally occurring Pareto distribution over time.
Currency’s is not wealth , most wealth is not stored as a currency or cash [1] it is stored in assets.
If you see how actual physical cash [2] i.e. dollar bills ownership then it won’t be distributed in a typical Pareto curve.
If I don’t have access to notes and coins. I won’t use them so government makes sure I have access . They still will mint it even a at loss like the penny.
Also all power distributions are not Pareto distributions, bitcoin is lot steeper than the standard ones used in economics , that is what this article implies /shows in its analysis .
——
[1] including other cash equivalents like bank accounts not just literal printed money. Accounting standards has well understood definition of cash equivalents
[2] comparing against only physical cash (M0) because there is finite fixed amount of bitcoins available at any given point It is not possible to increase bitcoin M1/M2 supply like with fractional reserve banking so you cannot compare against narrow money let alone broad money(M3/M4)
If you see how actual physical cash [2] i.e. dollar bills ownership then it won’t be distributed in a typical Pareto curve.
If I don’t have access to notes and coins. I won’t use them so government makes sure I have access . They still will mint it even a at loss like the penny.
Also all power distributions are not Pareto distributions, bitcoin is lot steeper than the standard ones used in economics , that is what this article implies /shows in its analysis .
——
[1] including other cash equivalents like bank accounts not just literal printed money. Accounting standards has well understood definition of cash equivalents
[2] comparing against only physical cash (M0) because there is finite fixed amount of bitcoins available at any given point It is not possible to increase bitcoin M1/M2 supply like with fractional reserve banking so you cannot compare against narrow money let alone broad money(M3/M4)
A negative interest rate decentralises money because your balance no longer grows automatically through interest and capital gains just because you have a lot of money, which is a self reinforcing feedback loop that concentrates ever more money at the top. If you want money, you are going to have to earn it yourself instead of letting others earn it on your behalf.
Of course, once you have solved the money question you notice that it is not just money that needs to be decentralised. Everything else, housing and the land it sits on must be decentralised. CO2 emission rights must be decentralised. Resource extraction rights must be decentralised. Intellectual property must be fixed. Taxes must be decentralised. Income earning/education opportunities must be decentralised.
It is kind of funny how solving all these challenges would get you to something one could call true anarchism, yet actual anarchist movements aren't even anywhere close to solving them or consider them important enough to solve. They just change the governance model and assume that the aforementioned problems will resolve themselves once people get to organize their society in this way.
All of this would bring us closer to a free(as in freedom) market. As it stands right now, most capitalists are happy calling this broken mess a free market. You're free to choose to not be allowed to legally exist. The truth is that it is a free market as in free of cost as there are so many tax loopholes to be exploited.
Of course, once you have solved the money question you notice that it is not just money that needs to be decentralised. Everything else, housing and the land it sits on must be decentralised. CO2 emission rights must be decentralised. Resource extraction rights must be decentralised. Intellectual property must be fixed. Taxes must be decentralised. Income earning/education opportunities must be decentralised.
It is kind of funny how solving all these challenges would get you to something one could call true anarchism, yet actual anarchist movements aren't even anywhere close to solving them or consider them important enough to solve. They just change the governance model and assume that the aforementioned problems will resolve themselves once people get to organize their society in this way.
All of this would bring us closer to a free(as in freedom) market. As it stands right now, most capitalists are happy calling this broken mess a free market. You're free to choose to not be allowed to legally exist. The truth is that it is a free market as in free of cost as there are so many tax loopholes to be exploited.
What in god's name does this even mean... The rich (and I don't care what fucking currency they use) are going to give up their political power? The same power that they used to get rich in the first place?
They won't willingly give it up, no. Sometimes the only answer is to pull their funding out from under them.
Interesting. Can you please clarify what is meant by "natural" in this context?
From a birds eye view, a Pareto distribution.
From the ground, so long as nobody with political power influences the distribution of wealth and it flows with the market it is a natural distribution.
From the ground, so long as nobody with political power influences the distribution of wealth and it flows with the market it is a natural distribution.
If I understand correctly, this means that a natural distribution of wealth should have exactly zero correlation with distribution of political power, is that right?
Ideally, yes.
There are those that argue that correlation between economic and political power is natural, and in a world where you can buy guns, that's somewhat true. But the creation of an artificial peaceful political system occurs in part to decorrelate the two. Money should buy you trinkets, political power should be democratized, at least if you believe in governments.
There are those that argue that correlation between economic and political power is natural, and in a world where you can buy guns, that's somewhat true. But the creation of an artificial peaceful political system occurs in part to decorrelate the two. Money should buy you trinkets, political power should be democratized, at least if you believe in governments.
Or should correlate exactly with population.
Unless some people are somehow worth less than others, which would be an interesting assertion to make.
Unless some people are somehow worth less than others, which would be an interesting assertion to make.
It's an interesting demand to claim that everyone should have exactly the same amount of money and if that's not the case there's some moral failure. Reframing it as people who don't believe this believe people aren't equal is dishonest.
Assets more concentrated than even diamond mines but it’s going to democratize finance for humanity. Notice concepts such as PoS would make it even more concentrated.
If you have enough bitcoin you could also buy and run many bitcoin miner, it’s PoS with extra steps.
Yep, folks dont realize that proof of work and proof of stake converge at the limit. The only difference is quantity of environmental externalities.
That's simply not true. The cost of the bitcoin miner itself is insubstantial (a small percentage of its total lifetime cost), the primary cost of mining is the commodity energy cost.
If you had a lot of capital, you could also deploy that capital completely outside of crypto, multiply it, then come back into crypto to have a larger stake in the crypto assset than you started. So your comment is true, but really applies to every freely traded economic asset.
Anyway, the mining/staking in crypto isn't primarily about increasing wealth, it is about defending the blockchain. In this aspect, there is a huge difference between the PoW and PoS. If someone has >50% of a PoS token, there is no way to usurp their control of the blockchain unless they willingly sell their tokens. With PoW, because the mining uses a different resource (energy), it is always possible to invest more capital to usurp the control of the blockchain by creating a larger hashrate. The ownership structure of the actual PoW token doesn't really matter, because outside capital can be introduced into the system.
Anyway, the mining/staking in crypto isn't primarily about increasing wealth, it is about defending the blockchain. In this aspect, there is a huge difference between the PoW and PoS. If someone has >50% of a PoS token, there is no way to usurp their control of the blockchain unless they willingly sell their tokens. With PoW, because the mining uses a different resource (energy), it is always possible to invest more capital to usurp the control of the blockchain by creating a larger hashrate. The ownership structure of the actual PoW token doesn't really matter, because outside capital can be introduced into the system.
Why would it converge when we are already starting with concentration? PoS would only work if we all started with nothing from t=0 which NO ONE in the crypto space would concede to because they don’t want to give up their wealth. So in the end, you end up with something even worse than current state of capitalism.
Yeah, I agree with that assessment.
I'm just saying that 'staking' in proof of stake isn't materially different than taking your Bitcoin and purchasing a share of a company that mines Bitcoin. [edit] you can always un-stake by selling your share.
I'm just saying that 'staking' in proof of stake isn't materially different than taking your Bitcoin and purchasing a share of a company that mines Bitcoin. [edit] you can always un-stake by selling your share.
Staking is similar to buying lottery tickets at the store, except you need never leave your home or pay any money for the tickets. It’s all about passive income generation.
Mining is a business, with real costs and logistics to fret about.
People should really stop doing the mental gymnastics to make push-button passive income generation seem extraordinarily challenging and, even more egregious, extremely equitable (“it’s _at least_ as fair as Bitcoin”).
Mining is a business, with real costs and logistics to fret about.
People should really stop doing the mental gymnastics to make push-button passive income generation seem extraordinarily challenging and, even more egregious, extremely equitable (“it’s _at least_ as fair as Bitcoin”).
Buying shares in a mining company eliminates all the challenges you describe for the would-be PoW “staker.”
And that would constitute buying an equity. We’re not mining in your example, we’re buying shares in a mining company.
You own part of the mining entity - you’re mining.
anyone who has run a validator node on a slashing network knows there are real costs and logistics to pos staking.
You’d have to be doing something seriously wrong in your staking endeavours to break even due to “staking costs” even over the course of 1000 years.
The primary cost of staking is the initial investment in the stake, handedly.
The initial investment in the stake dwarfs the cost of even the most sophisticated staking infrastructure.
The primary cost of staking is the initial investment in the stake, handedly.
The initial investment in the stake dwarfs the cost of even the most sophisticated staking infrastructure.
how does the capital cost being mining hardware and electricity rather than a pos token make the system more equitable?
> how does the capital cost being mining hardware and electricity rather than a pos token make the system more equitable?
Every well known proof of stake system today was either premined, ICO’d, sold to investors in private rounds at “special” prices, or some combination of these.
Naturally, if you were autoyielding passive income by staking pos coins you had a cost basis of effectively zero in, either because you participated in an ICO, or worse, because you had the right connections, or exploited your privileged position as developer to hard code coin balances for yourself into your own ledger prior to launch, you’d _love_ proof of stake and trumpet its supposed equity and fairness in public.
In reality, the most privileged and exploitative of investors who have the lowest entry price get the highest rate of return on staking (effectively ∞ in the case of premine recipients).
To insinuate this situation is “equitable” is beyond ridiculous.
Every well known proof of stake system today was either premined, ICO’d, sold to investors in private rounds at “special” prices, or some combination of these.
Naturally, if you were autoyielding passive income by staking pos coins you had a cost basis of effectively zero in, either because you participated in an ICO, or worse, because you had the right connections, or exploited your privileged position as developer to hard code coin balances for yourself into your own ledger prior to launch, you’d _love_ proof of stake and trumpet its supposed equity and fairness in public.
In reality, the most privileged and exploitative of investors who have the lowest entry price get the highest rate of return on staking (effectively ∞ in the case of premine recipients).
To insinuate this situation is “equitable” is beyond ridiculous.
no one in this thread is promising utopia. i am merely pushing back against assertions of bitcoin being "most equitable".
late entrants add value to networks, and some of that value accrues to early entrants. this is the same for any network. a publicly accessible ico is just as equitable as someone mining btc with their cpu on low difficulty.
once the price of the token goes up, the difference between someone who was invited there early versus found their own way in does not matter to the new adopters. the inequity is felt purely based on the token price difference rather than the security mechanic.
late entrants add value to networks, and some of that value accrues to early entrants. this is the same for any network. a publicly accessible ico is just as equitable as someone mining btc with their cpu on low difficulty.
once the price of the token goes up, the difference between someone who was invited there early versus found their own way in does not matter to the new adopters. the inequity is felt purely based on the token price difference rather than the security mechanic.
> no one in this thread is promising utopia. i am merely pushing back against assertions of bitcoin being "most equitable".
Fairly launched proof of work systems are a great deal more equitable than PoS premined ICO coins. This is just a fact.
> a publicly accessible ico is just as equitable as someone mining btc with their cpu on low difficulty.
No, absolutely not. Obviously someone has to get the ICO money. How on earth is that “just as equitable” as anyone in the world being able to use any old Windows computer to mine coins on demand. With proof of work, money isn’t being transferred from end users to developers, or their many Swiss foundations.
Fairly launched proof of work systems are a great deal more equitable than PoS premined ICO coins. This is just a fact.
> a publicly accessible ico is just as equitable as someone mining btc with their cpu on low difficulty.
No, absolutely not. Obviously someone has to get the ICO money. How on earth is that “just as equitable” as anyone in the world being able to use any old Windows computer to mine coins on demand. With proof of work, money isn’t being transferred from end users to developers, or their many Swiss foundations.
Conflating the two things like this is completely ignorant.
Buying Bitcoin miners at first requires you to spend the Bitcoin.
Mining may help you gain Bitcoin, but it doesn't much allow you to control Bitcoin.
Pos literally gives you voting power over the currency's ecosystem just by having more of it. It completely concentrates control, and then it also returns gains to those with the larger stake (more wealth in said currency).
Buying Bitcoin miners at first requires you to spend the Bitcoin.
Mining may help you gain Bitcoin, but it doesn't much allow you to control Bitcoin.
Pos literally gives you voting power over the currency's ecosystem just by having more of it. It completely concentrates control, and then it also returns gains to those with the larger stake (more wealth in said currency).
If you have significant fiat capital you can easily purchase mining power in PoW. Similar with purchasing validator power in PoS. The two are equal in that regard. Where they differ is that PoS is more resilient to 51% attacks of this nature than PoW is.
> PoS is more resilient to 51% attacks of this nature than PoW is.
Pretty sure you got that backward.
Pretty sure you got that backward.
Bitcoin is not completely decentralized in the sense that every inhabitant in the world has the exact same share, but it's the most or one of the most decentralized assets.
Those 0.01% don't have the same control over Bitcoin that the Fed has over the dollar. That is, that 0.01% wouldn't have been able to engineer the enormous inflation we have today for the dollar, but for Bitcoin.
I don't think Bitcoin is about democratizing anything, it's about maybe you don't want your share to be diluted by 2-10% every year.
Those 0.01% don't have the same control over Bitcoin that the Fed has over the dollar. That is, that 0.01% wouldn't have been able to engineer the enormous inflation we have today for the dollar, but for Bitcoin.
I don't think Bitcoin is about democratizing anything, it's about maybe you don't want your share to be diluted by 2-10% every year.
What is the practical difference between your "share being dilluted" (dollar inflation) and "your share depreciating in value" (bitcoin price crashing)?
That's like you asking me what's the practical difference between making $1M or winning the lottery and getting $1M.
But to answer your question: the same difference that there is between chance and intention, for example, the same difference that there is between someone being murdered and that person dying accidentally. This difference is very important for most people and can have direct consequences in you life.
In addition, the dollar is guaranteed to be diluted, meanwhile for Bitcoin, there's no such certainty.
But to answer your question: the same difference that there is between chance and intention, for example, the same difference that there is between someone being murdered and that person dying accidentally. This difference is very important for most people and can have direct consequences in you life.
In addition, the dollar is guaranteed to be diluted, meanwhile for Bitcoin, there's no such certainty.
>In addition, the dollar is guaranteed to be diluted, meanwhile for Bitcoin, there's no such certainty.
People having to HODL tell themselves whatever they need to to feel confident in their so-called investment. Frankly, people that bought towards the top in Bitcoin are still massively down and that lack of certainty isn't exactly a comfort.
Besides, although I tend to think of your comment painting USD in a poor light, the USD is actually working as designed; to be nominally inflationary to encourage spending and investment in productive aspects of society and business and not to encourage hoarding. The USD is doing exactly what it's supposed to do.
People having to HODL tell themselves whatever they need to to feel confident in their so-called investment. Frankly, people that bought towards the top in Bitcoin are still massively down and that lack of certainty isn't exactly a comfort.
Besides, although I tend to think of your comment painting USD in a poor light, the USD is actually working as designed; to be nominally inflationary to encourage spending and investment in productive aspects of society and business and not to encourage hoarding. The USD is doing exactly what it's supposed to do.
> Frankly, people that bought towards the top in Bitcoin are still massively down
Isn't this the case with almost any other asset at the moment?
> The USD is doing exactly what it's supposed to do.
The current levels of inflation weren't planned. But lowering interest rates it's so tempting and easy, and rising them so unpopular.
The US debt has bee doubling every 8-9 years in the XXI century. The current approach is not sustainable and nobody wants to be the one to stop it. I don't foresee a bright future for the dollar and I fear the day our debtors demand actual stuff for our dollars.
Isn't this the case with almost any other asset at the moment?
> The USD is doing exactly what it's supposed to do.
The current levels of inflation weren't planned. But lowering interest rates it's so tempting and easy, and rising them so unpopular.
The US debt has bee doubling every 8-9 years in the XXI century. The current approach is not sustainable and nobody wants to be the one to stop it. I don't foresee a bright future for the dollar and I fear the day our debtors demand actual stuff for our dollars.
> Notice concepts such as PoS would make it even more concentrated.
That is a common misconception, it seems to me. Assume a PoS scheme in which the probability that you get the reward is proportional to your share of all coins. Yes, large holders are more likely to get the reward, but if they get the reward, it basically increases their share by close to nothing. If a small holder gets the reward, they get a substantial boost. It averages out.
It is a bit like a savings account. Everyone gets X% interest a year, so the big holders get more interest than the small holders, sure. But the proportions of wealth stay constant.
That is a common misconception, it seems to me. Assume a PoS scheme in which the probability that you get the reward is proportional to your share of all coins. Yes, large holders are more likely to get the reward, but if they get the reward, it basically increases their share by close to nothing. If a small holder gets the reward, they get a substantial boost. It averages out.
It is a bit like a savings account. Everyone gets X% interest a year, so the big holders get more interest than the small holders, sure. But the proportions of wealth stay constant.
With PoS, every staker (on average) just maintains their fraction of the total supply. So PoS just enshrines the wealth inequality that exists at the time PoS starts.
Similar to how PoW distributes rewards: those with the capital to purchase mining power will reap benefits.
This model unfortunately also exists in stock markets and most aspects of a capitalist society. Arguably PoS returns in crypto networks may be slightly more equitable long-term as it is not a permissioned and closed-door system (validator queues cannot discriminate based on class, race, credit score, region, and family for example).
This model unfortunately also exists in stock markets and most aspects of a capitalist society. Arguably PoS returns in crypto networks may be slightly more equitable long-term as it is not a permissioned and closed-door system (validator queues cannot discriminate based on class, race, credit score, region, and family for example).
Last time I checked a big PoS currency, you needed a very large amount of it to even be allowed to stake.
Oh, that changes the analysis then... those above the threshold would steadily gain over those below. Hmmm, a bit like the real world.
To stake your own node, and run your own hardware, you need 32 ETH.
If you don't have that, you can pool your ETH the same way you can pool compute for PoW.
e.g. https://rocketpool.net/
If you don't have that, you can pool your ETH the same way you can pool compute for PoW.
e.g. https://rocketpool.net/
I'm amazed anyone is actually surprised by this factoid. Wealth has always wound up concentrated into a small minority of the populous. Why would it be any different with Bitcoin?
Bitcoin did not start out being distributed to "the masses" in an even manner. It was mostly picked up by folks in the tech world who typically have excess wealth to engage in speculation. Then when it went big, you had the investor class (ie: Winklevoss types) jump into the fray.
Bitcoin, stocks, SPACs, 2nd homes... It's all the same. Stuff owned by rich people.
Bitcoin did not start out being distributed to "the masses" in an even manner. It was mostly picked up by folks in the tech world who typically have excess wealth to engage in speculation. Then when it went big, you had the investor class (ie: Winklevoss types) jump into the fray.
Bitcoin, stocks, SPACs, 2nd homes... It's all the same. Stuff owned by rich people.
Wealth distribution, with the bigger part owned by an extremely small percentile is like the history of human kind. We should take into account properties and any kind of ownership, such as national territory as well. Humans like to own as much as they can -- this is why wars happen.
Regarding to bitcoin as a currency, as I read in some comment here:
1) You can't demand your money from your bank at any time given. This gives the banks the leverage to maintain and/or invest your money however they seem possible, rendering them a complete "Ponzi" machine (lending all the time in order to invest and make more money while paying out whatever you want to withdraw within calculated timelines).
2) Bitcoin can't print money as it is designed to have a fixed number of distribution. You can't inflate it. You have the capability to become your own autonomous, independent bank. With a fiat such as USD, job wages do not increase in correlation to the USD volume. This promotes poverty, inequality and is completely unethical -- regardless if that effect is intended or not. There must be a public mathematically proven metric that constitutes as a stable currency, this is what Bitcoin is trying to solve. A so-called mathematical gold.
3) Different problems arise, such as: (a) incapability for consistent day-to-day payments due to processing inefficiency, (b) early birds get the bag, (c) global warming (hi tesla).
Regarding to bitcoin as a currency, as I read in some comment here:
1) You can't demand your money from your bank at any time given. This gives the banks the leverage to maintain and/or invest your money however they seem possible, rendering them a complete "Ponzi" machine (lending all the time in order to invest and make more money while paying out whatever you want to withdraw within calculated timelines).
2) Bitcoin can't print money as it is designed to have a fixed number of distribution. You can't inflate it. You have the capability to become your own autonomous, independent bank. With a fiat such as USD, job wages do not increase in correlation to the USD volume. This promotes poverty, inequality and is completely unethical -- regardless if that effect is intended or not. There must be a public mathematically proven metric that constitutes as a stable currency, this is what Bitcoin is trying to solve. A so-called mathematical gold.
3) Different problems arise, such as: (a) incapability for consistent day-to-day payments due to processing inefficiency, (b) early birds get the bag, (c) global warming (hi tesla).
People that already have money can buy a bunch of bitcoin
Along with early miners
How is that controversial?
There is zero mechanism to change that reality and not an issue bitcoin was claiming to solve. Whichever frothing at the mouth enthusiast told you otherwise can just be ignored.
This is only news because people never made their own analysis after hearing someone else be excited for the wrong reasons.
Along with early miners
How is that controversial?
There is zero mechanism to change that reality and not an issue bitcoin was claiming to solve. Whichever frothing at the mouth enthusiast told you otherwise can just be ignored.
This is only news because people never made their own analysis after hearing someone else be excited for the wrong reasons.
Because shills say that it will democratize finance better than banks/USD/WTO/ and make a more equitable future. Which of course is bogus, and data like this is needed to contradict the lies
I think it already has, I could never get a flash loan elsewhere, or trade in some ways that I like. The closest I could get was access to some favorable margin systems.
I don't think that has anything to do with bitcoin or any cryptocurrency’s distribution. Its a boon, to me, that it functions like any other asset class, no reason to hold it up to fictional higher standards to discredit it.
I don't think that has anything to do with bitcoin or any cryptocurrency’s distribution. Its a boon, to me, that it functions like any other asset class, no reason to hold it up to fictional higher standards to discredit it.
My main takeaway from concentration is that it indicates potential price volatility if a whale makes a move.
We can judge market depth in fairly real time though so we know what size of order can and does move
Doesn't this include large cold storage wallets of exchanges and mining pools? I don't know what the "appropriate" number is
Comparing this to other assets misses the point. Dollars have (imperfect) democratic governance. Whereas the entire ideology of crypto is to throw away what little feedback loop we do have.
The best Bitcoin could hope to achieve is mirror the wealth inequality in fiat. But the nature of the emission, with half of all supply emitted in the first 4 years, has exacerbated the inequality. One cannot imagine one person holding several percent of all fiat.
Did somebody just discover the power law?
Does this really matter? Bitcoin is freely available on the market, there's is nothing stopping someone with enough money from acquiring an arbitrary share of the existing bitcoins.
No it doesn't really matter. Inequality by itself does not make anyone else worse off.
How many of those are exchanges or dead accounts?
That statement is not the focus of the video, which is an overview of the history of Bitcoin.
Also, these estimates of wealth distribution all suffer from the same flaw: addresses do not correspond to users.
A single address might lock the funds of thousands of people. For example, this is how exchanges operate.
A single user can control thousands of addresses or more.
It's extremely difficult to nail down how addresses relate to users. And that's by design.
Also, these estimates of wealth distribution all suffer from the same flaw: addresses do not correspond to users.
A single address might lock the funds of thousands of people. For example, this is how exchanges operate.
A single user can control thousands of addresses or more.
It's extremely difficult to nail down how addresses relate to users. And that's by design.
That's the exact right amount they idealists should own. Exactly .01% owning 27%. But tell me, what is the value for which x% own (100-x)%? That is the figure of merit.
It actually has mathematical meaning. For instance, if you take a single example at exactly the x percentile, that particular person gets a fair share.
For instance, if there's 100 people and it's 80-20, 20% of the people get 80% of the wealth, then the person at exactly the 80th percentile gets 1% of the total. For him specifically, it might as well be shared equally.
Tell me where that x percent gets 100-x percent equilibrium is!
It actually has mathematical meaning. For instance, if you take a single example at exactly the x percentile, that particular person gets a fair share.
For instance, if there's 100 people and it's 80-20, 20% of the people get 80% of the wealth, then the person at exactly the 80th percentile gets 1% of the total. For him specifically, it might as well be shared equally.
Tell me where that x percent gets 100-x percent equilibrium is!
"Holders" is defined how? I have the feeling by address?
If you add assets under management for all banks in the USA, you will probably get to an even more extreme distribution.
Bank of America alone has $1.55 trillion under management.
If you add assets under management for all banks in the USA, you will probably get to an even more extreme distribution.
Bank of America alone has $1.55 trillion under management.
Thank goodness Bitcoin wealth isn't distributed evenly among everyone who holds it. Show me a system where that's true (or even close to true), and I'll show you a system controlled by tyrants.
Wealth equality != fairness. Effort, sacrifice, and contribution to the well-being of society is not – and never will be – equal for everyone, so rewarding everyone equally would be inherently unfair.
Wealth equality != fairness. Effort, sacrifice, and contribution to the well-being of society is not – and never will be – equal for everyone, so rewarding everyone equally would be inherently unfair.
“Thank goodness Bitcoin wealth isn't distributed evenly among everyone who holds it. Show me a system where that's true (or even close to true), and I'll show you a system controlled by tyrants.”
yeah that makes a lot of sense
yeah that makes a lot of sense
"Crypto, which was supposed to decentralize wealth and power, has just made it worse." Crypto was never about an equitable distribution of wealth. And Bitcoin uses Proof of Work so wealth does not equal to power. You can have as many bitcoin as you want you still can't issue new ones or change the consensus algorithm.
Even if this were accurate, is it meaningful?
Can we infer how close we are to X% of holders having 50._% and what is X% is as an absolute number?
Can we infer how close we are to X% of holders having 50._% and what is X% is as an absolute number?
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This actually wonderful news. It means bitcoin is close to the point where it can easily be declared worthless since as a "currency" that isn't backed by anything there's no inherent value. Once a few players have the majority of the coin, there's no reason to play with them.
This is fine.
The point of Bitcoin is "they" cannot print more of it, they have to earn it fair and square.
The point of Bitcoin is "they" cannot print more of it, they have to earn it fair and square.
"They" (for even wider values of "they") can just make a new token instead of printing more of BTC. If people accept that that second one has value, that's gonna inflate prices since it's more money sloshing around.
Not if it's a PoW crypto.
You can't mine Bitcoin and Ethereum at the same time. You can't use electricity for two tasks at once.
Conservation of energy --> conservation of money.
You can't mine Bitcoin and Ethereum at the same time. You can't use electricity for two tasks at once.
Conservation of energy --> conservation of money.
People think there are 21M Bitcoin, but they have no idea how many millions have been lost forever already, and how many will continue to be lost going forward.
I wonder how many of those 27% are lost.
I wonder how many of those 27% are lost.
This has long been one of the top 5 issues with bitcoin and cryptocurrencies as a whole.
the gene pool is too shallow. It makes them too brittle and way too susceptible to co-ordinated abuse.
the gene pool is too shallow. It makes them too brittle and way too susceptible to co-ordinated abuse.
There's better break downs videos on YouTube which go into far more detail including over time.
The top 9/10 are exchanges so it's not too surprisingly.
The top 9/10 are exchanges so it's not too surprisingly.
Methodology aside, would it be surprising if most of Bitcoin belonged to 1%? How would this asset be fundamentally different from other assets?
Except wealth isn't power with Bitcoin. That's the entire point of PoW. PoS is a little different.
Someone buying or selling 5% of all Bitcoin wouldn’t have any impact on its exchange value?
If they made a bad investment and lost that 5% they couldn't ask their friends in the Bitcoin corporation for a bailout.
No politician could write a few lines of code and grant them a one-time issuance of new coins.
No matter what percentage of coins one person, corporation, or government holds they have gained zero control over the network.
Equality of rules, not equality of wealth.
No politician could write a few lines of code and grant them a one-time issuance of new coins.
No matter what percentage of coins one person, corporation, or government holds they have gained zero control over the network.
Equality of rules, not equality of wealth.
Of course it would, even if a little. It looks like that is typically less than the daily traded volume. But if you added another 5% on top of it surely it would affect prices. But my point is the ability to affect the price a bit doesn't equal power in terms of control over Bitcoin itself.
Large stakers in PoS don't necessarily have more power over governance than large miners in PoW. Some PoS chains have on-chain governance that give special voting power to stakers, but Ethereum's PoS chain for example does not.
Just to make sure I understand correctly, Eth2 stakers have no “voting” power, but are relied upon in a core capacity to ensure the continued functioning of the network?
Something about this explanation seems incomplete.
Something about this explanation seems incomplete.
Of course with bitcoin wealth is power - you can use your bitcoin to influence people to do what you want, or to give you access to goods and services that people with less bitcoin / wealth can't access.
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In PoW you can purchase miners. In PoS you can purchase validators. But PoS is easier than PoW to defend against a 51% attack as the offending validator set can be targeted.
Miners do not have all the power in PoW. Nodes and miners form a symbiotic relationship.
Also it is in a miner's best interest to not disrupt the system as their livelihood and profitability depend on it.
Also it is in a miner's best interest to not disrupt the system as their livelihood and profitability depend on it.
Those arguments can also be made for PoS.
> PoS is easier than PoW to defend against a 51% attack as the offending validator set can be targeted.
Who decides which validators are malicious?
Who decides which validators are malicious?
Depending on the type of attack, this defence is either part of the protocol, or can be coordinated by users in the network. Further reading here:
https://vitalik.ca/general/2020/11/06/pos2020.html
https://vitalik.ca/general/2020/11/06/pos2020.html
> or can be coordinated by users in the network
Phone-a-friend consensus aka “weak subjectivity” doesn’t meaningfully differ from the administration of centralized Git repositories. If your blockchain requires human intervention to resolve disputes, as do all pure proof of stake implementations, you probably never needed a blockchain to begin with.
Phone-a-friend consensus aka “weak subjectivity” doesn’t meaningfully differ from the administration of centralized Git repositories. If your blockchain requires human intervention to resolve disputes, as do all pure proof of stake implementations, you probably never needed a blockchain to begin with.
All blockchains require social coordination. How do you think Bitcoin operates? A protocol is developed and some facet of society decides to build a client to support that. Somebody adds a new BIP and the network of users may decide to coordinate in order to upgraded the protocol (soft or hard fork).
> All blockchains require social coordination. How do you think Bitcoin operates?
That’s a great question, and one Jude C. Nelson — who has a PhD in distributed systems from Princeton — is better equipped to answer [1] than me (or you, probably):
“PoW requires less proactive trust and coordination between community members than PoS -- and thus is better able to recover from both liveness and safety failures -- precisely because it both (1) provides a computational method for ranking fork quality, and (2) allows anyone to participate in producing a fork at any time. If the canonical chain is 51%-attacked, and the attack eventually subsides, then the canonical chain can eventually be re-established in-band by honest miners simply continuing to work on the non-attacker chain. In PoS, block-producers have no such protocol -- such a protocol cannot exist because to the rest of the network, it looks like the honest nodes have been slashed for being dishonest. Any recovery procedure necessarily includes block-producers having to go around and convince people out-of-band that they were totally not dishonest, and were slashed due to a "hack" (and, since there's lots of money on the line, who knows if they're being honest about this?).”
[1]: https://news.ycombinator.com/item?id=26810619
That’s a great question, and one Jude C. Nelson — who has a PhD in distributed systems from Princeton — is better equipped to answer [1] than me (or you, probably):
“PoW requires less proactive trust and coordination between community members than PoS -- and thus is better able to recover from both liveness and safety failures -- precisely because it both (1) provides a computational method for ranking fork quality, and (2) allows anyone to participate in producing a fork at any time. If the canonical chain is 51%-attacked, and the attack eventually subsides, then the canonical chain can eventually be re-established in-band by honest miners simply continuing to work on the non-attacker chain. In PoS, block-producers have no such protocol -- such a protocol cannot exist because to the rest of the network, it looks like the honest nodes have been slashed for being dishonest. Any recovery procedure necessarily includes block-producers having to go around and convince people out-of-band that they were totally not dishonest, and were slashed due to a "hack" (and, since there's lots of money on the line, who knows if they're being honest about this?).”
[1]: https://news.ycombinator.com/item?id=26810619
I haven’t looked through the entire thread but the challenge of recovering from a PoW 51% attack is that the attacker still holds ASIC mining power and can re-attack each new fork. The same is not true in PoS where the attacker’s funds can be targeted and effectively depleted in a fork, leaving it prohibitively expensive for the attacker to continually attack each new fork.
See the “spawn camping” description and defence in my prior link.
See the “spawn camping” description and defence in my prior link.
Wait, so Bitcoin isn't being handed out equally to every person on earth?
I thought the rule is we each will be given same amount?
/s.
I thought the rule is we each will be given same amount?
/s.
Saw this earlier https://www.youtube.com/watch?v=u1_gAgDBnOo
and my immediate thought was the crypto tumblers are not working which then made me wonder if this is an in-plain-sight money laundering exercise using the power of celebrity!?!
Elon Musk is definitely in market moving territory and sailing close to the window for things like buying Twitter and then pulling out, I wonder how many puts and shorts existed in dark pools? LOL
and my immediate thought was the crypto tumblers are not working which then made me wonder if this is an in-plain-sight money laundering exercise using the power of celebrity!?!
Elon Musk is definitely in market moving territory and sailing close to the window for things like buying Twitter and then pulling out, I wonder how many puts and shorts existed in dark pools? LOL
It is a scam, you send tokens and they send you nothing back in return.
I'm surprised it's not 99% considering I figured most of it is in exchanges or coinbase.
Very misleading.
The fact that Binance or Coinbase holds 10% of bitcoin doesn't mean that it owns 10% of bitcoin.
You can say something similar about any fiat currency, because almost all USD for example lives on the balance sheet of the big banks - JPM, Chase, BoA, ...
The fact that Binance or Coinbase holds 10% of bitcoin doesn't mean that it owns 10% of bitcoin.
You can say something similar about any fiat currency, because almost all USD for example lives on the balance sheet of the big banks - JPM, Chase, BoA, ...
At one point crypto was about decentralization, and having advantages over the current banking system. But to your point it seems like it is no longer for most people, for most people crypto is about the price going up, regardless of centralization or usefulness.
The internet is decentralized. At the same time, 99% of the internet traffic passes through 15 or so tier 1 networks.
Being decentralized doesn't mean that there are not huge entities which control most of the system.
Being decentralized doesn't mean that there are not huge entities which control most of the system.
But the internet was never promoted as having value due to a large number of tier 1 networks.
Bitcoin was created specifically as a way to counteract centralize control of money. The fact that many people store their crypto in central exchanges implies that they don't actually care about the advantage of decentralized money.
Bitcoin was created specifically as a way to counteract centralize control of money. The fact that many people store their crypto in central exchanges implies that they don't actually care about the advantage of decentralized money.
It doesn't matter what the internet was promoted for.
Do you believe it's decentralization has value or not? Despite the fact that the vast majority of people use it just for Facebook and Instagram.
Do you believe it's decentralization has value or not? Despite the fact that the vast majority of people use it just for Facebook and Instagram.
The internet is valuable even though most of the traffic goes to a few sites. But that has nothing to do with decentralization. No one ever promoted the internet as useful because no site would ever be super popular.
The value Bitcoin provides is that it allows you to bypass government controls and other monopolies on transferring money. If you put that Bitcoin on an exchange you no longer have that ability to bypass government controls because Coinbase will lock your account if the government tells them to do so.
The value Bitcoin provides is that it allows you to bypass government controls and other monopolies on transferring money. If you put that Bitcoin on an exchange you no longer have that ability to bypass government controls because Coinbase will lock your account if the government tells them to do so.
And the government can lock you internet access too if it wants, see China.
You are ok with 99% of people using only a couple of sites on the decentralized internet, but not ok with 99% of people keeping the crypto on a couple of exchanges on the decentralized bitcoin.
You are ok with 99% of people using only a couple of sites on the decentralized internet, but not ok with 99% of people keeping the crypto on a couple of exchanges on the decentralized bitcoin.
The internet has never been decentralized. ICANN and the government have always been central authorities that can control or shut it down. I'm not saying that it is good that Zuck has so much power or good that Google has a monopoly on search.
I'm saying that crypto exists to bypass authorities and people putting crypto on a centralized exchange proves that it is only about making money trading, not about doing anything useful.
I'm saying that crypto exists to bypass authorities and people putting crypto on a centralized exchange proves that it is only about making money trading, not about doing anything useful.
The ability to move your assets at any time elsewhere, into your own custody or to another provider is exactly what you get for sake of not having centralized control.
It's fair to say that they likely care about it less than someone not using those services... but so what? The world isn't just black and white.
It's fair to say that they likely care about it less than someone not using those services... but so what? The world isn't just black and white.
https://www.nber.org/system/files/working_papers/w29396/w293...
The authors are well aware of this, the analysis excludes these exchange accounts holding 5.5 M Bitcoin and is only about what is held in individual accounts which collectively own 8.5M bitcoin.
The authors are well aware of this, the analysis excludes these exchange accounts holding 5.5 M Bitcoin and is only about what is held in individual accounts which collectively own 8.5M bitcoin.
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.01% of USD holders probably own 27% of USD
Sounds like our traditional economy then.
Seems kinda centralized?
Mmmhmm, I just can't wait until proof of stake. That's going to fix everything. /s
The funny thing is that none of those whales can cash out without tanking the price.
Occupy the blockchain
for all we know, 99% could be in one guys hand.
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but that doesn't matter to Bitcoin?
* addresses
which means it could be even worse.
Coinbase cold storage holds billions of dollars for millions of people. Do you understand how bad this metric is now?
The study excluded all the exchange wallets [1], that makes the metric if anything more conservative than it is actually.
[1] https://www.nber.org/system/files/working_papers/w29396/w293...
[1] https://www.nber.org/system/files/working_papers/w29396/w293...
Is there a benefit to consolidating all those coins into bulk wallets?
Why not have an address associated with each user?
Why not have an address associated with each user?
Yes consolidating outputs significantly reduces transaction fees
Not your keys, not your coins.
Or maybe better. In the first days of bitcoin nobody cared about a lost key. A few thousand bitcoin on an account nobody has access to? These bitcoin shouldn’t count, but it’s hard to count them. Maybe declare all bitcoins that didn’t move since eight years as lost?
And this is a stupid metric too. I have utxos that old that will be unspent for another 5y+
I don’t care about Bcash and other worthless forks and I could tell it was an attack to unmask old utxos.
I don’t care about Bcash and other worthless forks and I could tell it was an attack to unmask old utxos.
It's probably not. Exchange hot and cold wallets hold insane amounts, but most of that money doesn't belong to them, it's their clients'.
Or less worse.
Kinda like a pyramid scheme.
Who’s the Bernie Sanders of Bitcoin?
how does this compare to dollar?
> That’s 100x the wealth concentration of the regular economy
sauce?
> That’s 100x the wealth concentration of the regular economy
sauce?
For starters, what "regular economy"? The global one? The one on the books, or the real thing?
Cool. Let them sink with it
So much effort put into FUDing Bitcoin. Just don’t buy it.
Or do, and ignore the same people that said it was stupid for the last decade and will probably say the same for the next. Meanwhile, those that understand the internet know that protocols are extremely long lived and might even outlast them.
Don’t tell the rest of them that. More for the rest of us.
It's time for me to unveil my Bitcoin0x11, where instead of hashes having to have a certain amount of leading zeros, it needs ones.
It would be 0xFF.
That's not how it works.
This analysis I saw says something else? https://twitter.com/woonomic/status/1512433154875101198 Which one is right? I haven't looked into it carefully.
Here is the paper https://www.nber.org/system/files/working_papers/w29396/w293...
It'd be like counting JPMorgan as a single person when computing wealth inequality in the US. Analyses like these are a total joke.