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It's time for an inequality index for cryptocurrencies distribution

news.ycombinator.com

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It's time for an inequality index for cryptocurrencies distribution

#1

Post by pog92 »

It is quite famous that 95% of Bitcoin is owned by 2% of accounts. 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.

Is there any crypto inequality index? I thought that Gini index could work too!

I would like to find an inequality index in the cryptocurrency description on CMC and similar, it would help me make better investment choices.

What do you think?

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

#2

Post by nbaksalyar »

> 95% of Bitcoin is owned by 2% of accounts

The problem is, how do you measure this reliably? I'd wager that a large chunk of 95% of Bitcoin is either irrevocably lost or owned by Satoshi (estimate is at "between 750,000 and 1,100,000 bitcoin" -- and arguably these TXs will never be spent).

Simply put, there's no way to differentiate between coins that are just sitting there unspent and coins which no one can access anymore because of lost wallet keys (and there's no shortage of such stories).

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

#5

Post by smoldesu »

> 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 an investment asset. Gold is valuable due to it's scarcity. Diamonds are popular due to their demand. Cryptographic hashes are valuable because of their transient demand and abundant supply.

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

#7

Post by chrisco255 »

nbaksalyar wrote: post #2

> 95% of Bitcoin is owned by 2% of accounts The problem is, how do you measure this reliably? I'd wager that a large chunk of 95% of Bitcoin is either irrevocably lost or owned by Satoshi (estimate is at "between 750,000 and 1,100,000 bitcoin" -- and arguably these TXs will never be spent). Simply put, there's no way to differentiate between coins that are just sitting there unspent and coins which no one can access…

The bigger problem is that addresses are not measures of people. A lot of addresses are purposely generated as throwaway accounts, never to be used again. A single person may have or use dozens of wallets. Or a single wallet may be used by a large exchange which represents thousands of depositors.

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

#8

Post by wmf »

nbaksalyar wrote: post #2

> 95% of Bitcoin is owned by 2% of accounts The problem is, how do you measure this reliably? I'd wager that a large chunk of 95% of Bitcoin is either irrevocably lost or owned by Satoshi (estimate is at "between 750,000 and 1,100,000 bitcoin" -- and arguably these TXs will never be spent). Simply put, there's no way to differentiate between coins that are just sitting there unspent and coins which no one can access…

There will eventually be 21M BTC and Satoshi mined 1M which is around 5%. Some people have estimated that ~20% of BTC is lost. That leaves 70% controlled by whales and exchanges.

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

#9

Post by hiq »

nbaksalyar wrote: post #2

> 95% of Bitcoin is owned by 2% of accounts The problem is, how do you measure this reliably? I'd wager that a large chunk of 95% of Bitcoin is either irrevocably lost or owned by Satoshi (estimate is at "between 750,000 and 1,100,000 bitcoin" -- and arguably these TXs will never be spent). Simply put, there's no way to differentiate between coins that are just sitting there unspent and coins which no one can access…

That, and the fact that anyone can own an unlimited number of wallets.
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