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It's time for an inequality index for cryptocurrencies distribution

news.ycombinator.com

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Re: It's time for an inequality index for cryptocurrencies distribution

#61

Post by ArnoVW »

chrisco255 wrote: post #11
smoldesu wrote: post #5

> This concentration not only risks to threaten blockchain's own premises, but also exposes minor investors to risk of whales who lead the market and can easily speculate on prices since they can influence the price trends The problem is that you can only associate value with a wallet, not an individual, and even that doesn't really make the market any safer; it just further exposes how terrible cryptocurrency is as…

Price is a function of supply and demand, so trying to isolate one or the other doesn't make sense. Why does it matter how many people are associated with a particular wallet? The wallet with $150 worth of Bitcoin has the same amount of security as the wallet with $15M, and it's considerable. The protocol itself has never been hacked, despite holding nearly $1 trillion of value.

Arguably, if someone would hack BTC, he or she would have to make sure no-one found out.

Because if people knew that BTC was hacked, the bottom would fall out under it, and all your stolen coins would become worthless.

Not to say that I think it's been hacked....

Re: It's time for an inequality index for cryptocurrencies distribution

#62

Post by bogota »

Crypto will be the death of HN. OPs comment is something that has been talk about since 2012 and looking at one or two parent comments they cover the depth that is required to answer why this doesn’t matter or can’t be determined. However it’s crypto so now we have 50+ comments about why X thinks Y is stupid. Why crypto is a waste. Why crypto is the best. But its all 100% stupid unfounded word vomit.

HN has shows crypto is too polarizing of content to have intelligent discussion here.

IMO is should be banned from the site. You could replace these comments with comments from a reddit post that hit the front page and you wouldn’t know the difference.

Re: It's time for an inequality index for cryptocurrencies distribution

#63

Post by beloch »

atmosx wrote: post #13

> This concentration not only risks to threaten blockchain's own premises [...] BTC was designed specifically to avoid any kind of _state control_ and by _state control_ I mean something along the lines of a central bank. Adding protections here and there will inevitably lead to a system that is similar to current financial system with all the bells and whistles. I think you're missing the point: BTC tries to sell la…

Control by a few anonymous individuals with totally unknown interests is not an improvement on control by state entities whose interests are widely known.

Re: It's time for an inequality index for cryptocurrencies distribution

#64

Post by zepto »

ashwagary wrote: post #58
grey-area wrote: post #35

Earlier quoted context omitted.

It’s really not. It is highly correlated with high risk assets and growth shares. It is anything but an inflation hedge, which is why it has been plunging as inflation rises and will fall more if interest rates rise. If it were an actual currency things might be different, but instead it’s just another high risk speculative asset.

Just because BTC is temporarily correlated with risk assets, that doesnt mean it wont change. Also, it's better to look at charts by starting at the beginnning of this 4 year cycle, dont pick out a bearish 6 month period and falsely claim BTC fails the inflation test. Short termism and Bitcoin's monetary policy are incompatible.

It certainly fails the inflation test without any doubt today.

You seem to be saying that it might pass it in the future.

Re: It's time for an inequality index for cryptocurrencies distribution

#65

Post by sqrt17 »

mrtksn wrote: post #48
atmosx wrote: post #13

> This concentration not only risks to threaten blockchain's own premises [...] BTC was designed specifically to avoid any kind of _state control_ and by _state control_ I mean something along the lines of a central bank. Adding protections here and there will inevitably lead to a system that is similar to current financial system with all the bells and whistles. I think you're missing the point: BTC tries to sell la…

I’m baffled how people miss this even if it’s the mission statement of Satoshi himself: Bitcoin is a tool to prevent wealth re-distribution. It’s whole idea is to ensure that the accumulated wealth is preserved. In 2008 it was against the government bailing out the failed banks but it’s also against any government interventions, including easing the wealth inequality. In essence, the idea is that if a teenager in 201…

The difference being that BTC has no utility that people depend on. They can refuse to buy the BTC from the now-GenZer or even the Winklevoss twins if they'd rather have food or shelter or a chanel bag rather than BTC. The real world phenomenon that this corresponds to is consumer price inflation or asset price inflation (assuming your asset is production capacity and the medium of exchange is BTC) Being a landlord, or being an oil baron in an economy that is dependent on petrol, is different because people actually need those things. So antidemocratic aristocrats who inherited a land with substantial oil reserves can now buy lots of startups via softbank or build artificial cities because our cheapest way to acquire petrol is still to dig it out of the ground in those countries where reserves accumulated in the last millions of years, and pay local rulers for the permission to do it.

Re: It's time for an inequality index for cryptocurrencies distribution

#66

Post by ineiti »

mrtksn wrote: post #48
atmosx wrote: post #13

> This concentration not only risks to threaten blockchain's own premises [...] BTC was designed specifically to avoid any kind of _state control_ and by _state control_ I mean something along the lines of a central bank. Adding protections here and there will inevitably lead to a system that is similar to current financial system with all the bells and whistles. I think you're missing the point: BTC tries to sell la…

I’m baffled how people miss this even if it’s the mission statement of Satoshi himself: Bitcoin is a tool to prevent wealth re-distribution. It’s whole idea is to ensure that the accumulated wealth is preserved. In 2008 it was against the government bailing out the failed banks but it’s also against any government interventions, including easing the wealth inequality. In essence, the idea is that if a teenager in 201…

Wow - this is a really good description of Bitcoin. Similar to the tweet that said "Whenever I read 'decentralized', I think 'unregulated'."

Re: It's time for an inequality index for cryptocurrencies distribution

#67

Post by bee_rider »

atmosx wrote: post #13

> This concentration not only risks to threaten blockchain's own premises [...] BTC was designed specifically to avoid any kind of _state control_ and by _state control_ I mean something along the lines of a central bank. Adding protections here and there will inevitably lead to a system that is similar to current financial system with all the bells and whistles. I think you're missing the point: BTC tries to sell la…

Inequality can be measured by non-state entities, and would seem to provide (for example) useful signals to investors about the health of the ecosystem. I think bitcoins/cryptocurrency are largely bullshit and agree that their value proposition mostly comes from the promise to avoid regulation. But we shouldn't pretend that it is impossible for markets to do any sort of introspection without the force of law behind it. And in the case of bitcoin, they do at least know which wallets own which coins, right? Seems easier to track than cash.

Re: It's time for an inequality index for cryptocurrencies distribution

#68

Post by ashwagary »

zepto wrote: post #64
ashwagary wrote: post #58

Earlier quoted context omitted.

Just because BTC is temporarily correlated with risk assets, that doesnt mean it wont change. Also, it's better to look at charts by starting at the beginnning of this 4 year cycle, dont pick out a bearish 6 month period and falsely claim BTC fails the inflation test. Short termism and Bitcoin's monetary policy are incompatible.

It certainly fails the inflation test without any doubt today. You seem to be saying that it might pass it in the future.

Wrong, real inflation has been rising at an alarming rate for more than a decade, it didnt start in Q4 of 2021.

If you choose to measure BTCs performance poorly (3-6 month windows), you are just feeding yourself a false conclusion since Bitcoin had a 5,000,000x return over the past decade.

Re: It's time for an inequality index for cryptocurrencies distribution

#69

Post by kelseyfrog »

mrtksn wrote: post #48
atmosx wrote: post #13

> This concentration not only risks to threaten blockchain's own premises [...] BTC was designed specifically to avoid any kind of _state control_ and by _state control_ I mean something along the lines of a central bank. Adding protections here and there will inevitably lead to a system that is similar to current financial system with all the bells and whistles. I think you're missing the point: BTC tries to sell la…

I’m baffled how people miss this even if it’s the mission statement of Satoshi himself: Bitcoin is a tool to prevent wealth re-distribution. It’s whole idea is to ensure that the accumulated wealth is preserved. In 2008 it was against the government bailing out the failed banks but it’s also against any government interventions, including easing the wealth inequality. In essence, the idea is that if a teenager in 201…

Why would the majority of people want that?

Re: It's time for an inequality index for cryptocurrencies distribution

#70

Post by epgui »

marto1 wrote: post #46

So we have an asset that follows a Pareto distribution[1]. Now if one has spent any time and resources investing they'd notice that this holds true for a lot of assets. Bitcoin is really not exceptional in this. Are you after an asset that doesn't follow that distribution ? Do you consider this a good thing ? [1] https://en.wikipedia.org/wiki/Pareto_distribution

The pareto distribution has an alpha parameter. If alpha is large enough, then one person/wallet contains the totality of the wealth, and the rest all have exactly zero of it. This is illustrated plainly by the limit of alpha -> infinite in the graph.

I think it's obvious that this extreme case is very bad. So there must be a point where alpha goes from being in "good" territory to being in "bad" territory, or there must be some gradient of "least concerning" to "most concerning".

The question asked by OP is basically equivalent to "what is the value of alpha?" Considering the potential for concern, this seems like a useful thing to measure.

I don't want to speak for anyone else, but when most people talk about wealth/income distribution or inequality, they generally aren't advocating for a flat line (everyone has an equal amount of dollars), they are generally advocating for keeping Pareto's alpha at some reasonable level.

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