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The Techspot article is a summary of this Bloomberg piece: https://www.bloomberg.com/news/articles/2021-10-25/bitcoin-s... which is itself reporting on this paper from the NBER: https://www.nber.org/system/files/working_papers/w29396/w293...
"We first document that 90% of transaction volume on the Bitcoin blockchain is not tied to economically meaningful activities but is the byproduct of the Bitcoin protocol design as well as the preference of many participants for anonymity."
"We show that the Bitcoin mining capacity is highly concentrated and has been for the last five years. The top 10% of miners control 90% and just 0.1% (about 50 miners) control close to 50% of mining capacity. Furthermore, this concentration of mining capacity is counter cyclical and varies with the Bitcoin price."
"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."
I haven't read the methods yet, but the idea that the authors were able to do this analysis is fascinating.
When you drive on the highway, every single driver in the oncoming traffic is in control of a car that would kill you if they just decide to move their steering wheel into your direction. Luckily, there is little incentive for them to do so. So driving is relatively safe.
When you invest into Bitcoin, there might or might not be people who could devalue it to some degree. Luckily, those are the people with a substantial investment in the same asset you are invested in. So there is no incentive for them to do so.
When you invest in fiat currency, the incentive of the people in power are completely misaligned with the holders of that currency. The people in power gain more power by printing fiat that they then can spend.
Soooo. . . you're saying a tiny fraction of the population controls the vast majority of the resource? You mean just like every other major resource on the planet? :)
> Soooo. . . you're saying a tiny fraction of the population controls the vast majority of the resource? You mean just like every other major resource on the planet? :) I understand the need to try to dismiss this problem, specially from those who have a dog in the race, but the dream of having a magical pseudo-currency that solves all problems and unexplainably makes everyone richer and richer just falls out flat if…
The article does not support the claim that the top investors and miners are engaging in cryptocurrency manipulation with bitcoin.
Earlier quoted context omitted.
Yes it is. But bitcoin has an even greater degree of inequality, way beyond. Almost all the bitcoin is in the hands of a few thousand people.
You can change that today by buying some. It’s an all you can eat buffet at $61,000 and those thousands will gladly sell you some.
Thing is, though, USD is controlled by an even smaller group. Between BTC and fiat, BTC seems like a safer choice at the moment - at the very minimum you can't just go ahead and double the supply. Obvs, not financial advice and all that.
You can't "control" a currency as widely used as the USD. The Fed (and other countries, and large enough institutions) can try to influence it. The chair of the Fed doesn't just wake up one morning and say "you know, I think I'll do X to the value of the USD."
US monetary policy in the very simplest sense is controlled by a small group (governors of the fed) but those people are nominated by the president, appointed by congress. We know who they are, and they do not operate in an isolation chamber. The president can remove them, though not without potential economic and political repercussions. Their actions have to pass muster with a lot of people - for example, investors on the stock market, other countries (ex: China holds a foreign reserve of over a trillion dollars. That is a fairly sizeable lever. But using that lever, again, has repercussions.)
The people who control Bitcoin and do the majority of the mining aren't even known. We have no idea how many of them there really are (as pointed out in the article, one person could have an unlimited number of addresses.) There are effectively no repercussions for their actions other than the value of BTC changing. We have no idea if they are colluding. There's nothing whatsoever anyone can do to influence them from taking action that are not in the best interests of stability, the currency, the people using the currency, etc.
Someone mentioned recently that a couple of years ago, some people coordinated enough between themselves that they were able to force a rollback of the blockchain...
Soooo. . . you're saying a tiny fraction of the population controls the vast majority of the resource? You mean just like every other major resource on the planet? :)
> Soooo. . . you're saying a tiny fraction of the population controls the vast majority of the resource? You mean just like every other major resource on the planet? :) I understand the need to try to dismiss this problem, specially from those who have a dog in the race, but the dream of having a magical pseudo-currency that solves all problems and unexplainably makes everyone richer and richer just falls out flat if…
That's not what's exciting about bitcoin. What's exciting is that it is the first digital, global money that isn't protected by the proof of violence of the state. The US dollar is the world reserve currency because the United States is the best in the world at deploying destructive power, and the British and French currency before that when they were at the height of their power.
It's a neutral currency that every nation state on the planet can be ok with, because the system is completely agnostic to who the participants are. The only thing it requires is that you have hash power and internet connectivity. Nation states will have proportional power in the system based on their respective abilities to deploy energy and compute power to the security of the network.
The Techspot article is a summary of this Bloomberg piece: https://www.bloomberg.com/news/articles/2021-10-25/bitcoin-s... which is itself reporting on this paper from the NBER: https://www.nber.org/system/files/working_papers/w29396/w293...
Interesting quotes from the first section of the paper: "We first document that 90% of transaction volume on the Bitcoin blockchain is not tied to economically meaningful activities but is the byproduct of the Bitcoin protocol design as well as the preference of many participants for anonymity." "We show that the Bitcoin mining capacity is highly concentrated and has been for the last five years. The top 10% of miner…
Earlier quoted context omitted.
> Soooo. . . you're saying a tiny fraction of the population controls the vast majority of the resource? You mean just like every other major resource on the planet? :) I understand the need to try to dismiss this problem, specially from those who have a dog in the race, but the dream of having a magical pseudo-currency that solves all problems and unexplainably makes everyone richer and richer just falls out flat if…
> magical pseudo-currency that solves all problems and unexplainably makes everyone richer and richer That's not what's exciting about bitcoin. What's exciting is that it is the first digital, global money that isn't protected by the proof of violence of the state. The US dollar is the world reserve currency because the United States is the best in the world at deploying destructive power, and the British and French…
No, not really. At all. You're trying to make it sound like everyone is just an anarchist activist trying to fight the power, when in reality it's just people scrambling to make a quick buck.
Let's be real and put it in perspective: do you feel that people such as the Winklevoss twins give a damn about theoretical concepts such as "proof of violence by the state"?