Bitcoin Forum

This simple research was done on Bitcoinica clients that have traded at least once and kept a positive account net value. It's generally consistent with overall Bitcoin wealth distribution.

Perhaps this data is useful for people who are curious about Bitcoinica clients' trading activity.

% Population      % Wealth
10.0%   0.0%
20.1%   0.0%
30.1%   0.0%
40.1%   0.0%
50.1%   0.1%
60.2%   0.3%
70.2%   0.8%
80.2%   2.2%
85.1%   3.7%
90.0%   7.3%
92.0%   10.1%
95.1%   17.7%
95.9%   20.4%
97.7%   32.0%
97.9%   34.3%
98.2%   36.8%
98.5%   41.0%
98.7%   45.4%
99.0%   50.0%
99.2%   55.7%
99.5%   65.2%
99.7%   80.5%
100.0%   100.0%

Gini Coefficient = 0.87709

We welcome other exchanges/e-wallets to publish stats like this as well.

So 1% of the people have half the wealth!??!  That's not FAIR!!!!

::grabs pitchfork and heads for Singapore::

We should Occupy Bitcoin

Here's some hand signals we can adapt?

http://allthingsd.com/files/2011/11/1611.gif

That sort of ties in with my data.... http://www.thebitcointrader.com/2011/10/is-it-time-to-occupy-bitcoin-street.html

In the whole Bitcoin world, it's the same - 1% owns half.

Same the whole picture.

It's not the same.

In the Bitcoin World 1% may own 50% of all coins, however, unlike in the "Real World" they didn't acquire those 50% through swindles, frauds and crimes.

.

When bitcoin was one day old, 1 person owned 100%. I'd say the market seems to be evening things out.

I think such comparisons are a bit moot at this point. The price of Bitcoin is so low that almost everybody can be a part of the 1% if he/she wants to. There are simply not that many people wanting to hold Bitcoin as an investment. Also, if the price would rise, I'd expect some of the larger holders to cash out.

As I keep saying: Bitcoin won't make the inequalities of this world to magically disappear!
But as Bitcoin does not have a mechanism built in that constantly worsens this inequality, the long term prospects are surely much better than with traditional currencies.

The other message you could take away from this data is that only 1% of the people are careless enough to leave large amounts of BTC on a trading site.

So it's safe to say that 50% of bitcoinica's users lost all their money?

D*mn that 1%!  they should be Zhoutawnged!

Yeah, most people lose or withdraw all their money, it's not that interesting.

LOL, perfect!

Wow, that's quite interesting to see. That would mean 0.3% actually owns 20% of the Bitcoins if I'm reading the statistics right?

True.. Lack of guarantees

The proper way to read "wealth distribution" statistics is simply to replace the word "own" with the word "produce," for in a market economy the money one owns he (typically) had to produce something for, in order to obtain that money. The worker produces labor and trades it. The merchant produces transportation and logistics and trades it. The manufacturer produces physical items. The cook produces dinner, the politician produces problems, etc.

One's wealth measured in dollars is thus a rough proxy measurement of what they produced, as valued by the person who previously owned that money and traded it in return.

So, properly read, a stat like "the top 1% own 50% of the wealth" should be understood as "the top 1% produced 50% of the wealth"... and then with that understanding it quite quickly shows the folly of policies which punish, tax, and otherwise hinder such people. It also illustrates the sheer productive uselessness of vast swaths of the population.

Not under a system which permits usury and 'employment'

That's irrelevant for bitcoin though. But be warned: Angy mobs normally lynch people who express this kind of attitude publicly...

Hehehehe you'd prefer a system which prohibited employment and forbid one man from offering his wealth to another man at a mutually-agreed price for the opportunity cost of the usage of that wealth?

I am against the prohibition of anything except violence. I was more referring to a systematic approach where such a relationship would be undesirable and unnecessary.

Yes I think it should be unlawful to charge interest. (Law as mutually agreed ethics, and there is a wide historic agreement on this subject)
Interest imo is a kind of financial violence.

Indeed.  History shows that wealth does get distributed periodically through one means or another.  I'm a Socialist very much for practical reasons associated with the frequency and manner in which the deed ends up getting done.

Hmmmm is interest only "financial violence" when it's applied to money? Or to any commodity?

Meaning, if I have a bag of seeds and can be productive in the quantity of X with them, but you can be productive with the seeds in the quantity of X+Y. Am I being financially violent by asking for X+ (Y/2) seeds back at a future date?

I have never understood the intense antagonism toward interest. It is merely the price asked for in return for use of a commodity. Most importantly, it's voluntary... what's the problem?

That's great in a real economy where people actually produce something (usually) to earn wealth. What about bitcoin?

The problem is considering competition and compound interest. Suddenly this seemingly innocent act becomes a major influence on behavior. It's mainly a cultural issue.... A weak comparison: In some places the age of consent is 14 in some 16, in some 9...

Now I attribute the to lender a similar responsibility an adult has in respect to sex with younger partners. Understood?

I assumed we were discussing behavior between "consenting adults"... let's say two 35 year old men. Why is interest "financial violence"?

And is it immoral of me to ask my bank to pay me interest in return for letting them borrow my money? (let's assume honest banks operating under sound money, not gov-subsidized banks operating under fiat)

I just wrote some site content for a guy and was paid in Bitcoin. What are you talking about?

hehe, you are arguing around my point.
The lender automatically is in the stronger position.

So when I lend money to the bank for cumulative interest, you are suggesting that I am automatically in the stronger position?

I'm really trying to understand why interest is immoral in your opinion, because you're not the only one who says that and I'm totally confused.  To me it's just a mutual exchange by two interested parties, and whether one has a "stronger position" or not is irrelevant if both parties believe themselves better off by the trade.

Please help me to understand.

That is something born out of the current system, only possible because the existence of banks and compound interest. If the banks weren't already in the position to lend money (and factor out derivatives) you wouldn't be able to get into this position.
The charging of interest is a self perpetuating mechanism which works both ways. If nobody charges interest and only relies on trust and/or compassion it is no longer needed.

But anyway: I recon, that lending for interest might not be feasible to prohibit but rather only provide the legal right to get back the loan without interest. On the other hand the lender might come up with other, yet prohibited ways to collect interest which is why it might be wise to prohibit it in the first place.
 

PS: All these considerations are theoretical in nature, since I have no idea how it would be like living in a system without usury. It is only the way I personally think thing should work and it might not be feasible in current society. I attribute myself to parts of syndicalist and primitivist schools of anarchism with a spice of futurism, so it might be understandable that my views might seem a little ''far fetched' or 'conflicting' but it makes sense to me ;)

Let's examine this a bit further...

-Assume we live in a free society where some commodity like gold or bitcoin has become the general money
-Assume I have lots of this money, and another guy wants some of it as capital to start his business... he wants a loan from me.
-I am willing to loan him the money at 10% interest per year until principle + interest is paid back
-He is willing to take that offer and agrees to the terms

Now... what part of that is immoral?? You call it "usury". By what right do you decide for either of us what is the "acceptable" price of money? Under what justification do you tell the man he may not borrow my money, or tell me I must refund the interest after the debt is paid?

Where is the harm? Your idea doesn't seem "far fetched"... it just seems "wrong." For if it's immoral to loan a man a money-commodity at a price, then it ought to be immoral to loan other commodities at a price... such as seeds or lumber or xbox games.

Why is it okay to loan a man one seed in return for two later, but it's not okay to loan him one dollar in return for two later?

It might be something different with a (self!) reproducing good like seeds or chickens (would be debatable but I would still advise against it), but for a limited commodity or money I don't see it as ethical. In my opinion lending should rely on trust and compassion only.

It is my opinion that interest pushes society further apart, and that as a lender you would have greater benefit from the bonding and reputation within society than from the interest. Usury (as refereed to as charging of any interest in the traditional definition) results in the general feeling of disconnectedness which is commonly believed in our society as professionalism which is just another illusion that the exploitation of others would yield in a long term personal benefit.

The harm is mainly substantiation for this connection by means of currency, and to a lesser extent the tendency to increase the steepness of the wealth pyramid. So while there may be a case where no subjective exploitation takes place, in a systematic view I still consider it harmful.

Electric, does what you mentioned in the PM to me have anything to do with the JAK lending system? I think it's a great idea, but I don't see how it can really work on a global scale or be provided by a currency itself.

Well, I haven't really considered that the currency aspect of the system. And it could, if bitcoin just suffers from growing pains be based around it. (If the issues we both agree on are solved)

A global scale system would try to incorporate recent developments like bitcoin, ripple,  community networks and decentralized production with open source ecology into something known as in the 80s as the Abundance data entry software. A system written to enable charities to create an abundance of food, water and shelter on the planet.
Only this time not rely on any institution but rather make it profitable for everyone to contribute to the effort. The whole thing would be a gargantuan task if attempted in the way systems are currently developed so we need a new system for collaboration first.

This is all very difficult to summarize and I need to write something down soon, it's about time...  :)

Electric... if you believe lending at interest to be immoral and wrong, that is a fine opinion to have. But trying to force your morality on other people who disagree with you seems antagonistic to the "trust and compassion" you use to justify your position.

Personally, I've loaned money, and I've borrowed money at interest. Both behaviors made me better off, and they made the person on the opposite side of the trade better off as well. Far from "pushing society apart," interest-bearing loans help society to flourish, for resources which may be more profitably used by others are able to be acquired in a free and open bidding process... an "interest rate" is simply the price that such a process results in, at any given time.

Your alternative of "only relying on trust and compassion" for lending is a great policy among friends, but limits the scope of the marketplace for money solely to close groups of friends.

If your policy were implemented as law, I promise you society would be impoverished for its lack of "usury."

All currencies inherently favor an arbitrary group of people, and so corrupts that group. Any system that requires one person to submit to another in any fashion is going to develop into a corrupt and tyrannical one given enough time. Learning to use our technological capabilities for the benefit of all people would obviate the need for any currency, and therefor any need for submission or slavery.

The root of the problem is human nature.. not methods... Bitcoin just removes another instrument in arsenal of power.
Leaving more radical methods the only options... There will be blood - definitely...

Things like Bitcoin just haste development of the people and everything will come down to... If you wanna live - change yourself from inside.. ( and no technology will ever help you with this no matter how developed it is)

Well I wouldn't make it illegal, just only provide the legal right from a contract to get back the loan itself.
So if then anyone decides to give back a surplus it would be arbitrary and voluntary.

I'd imagine the cases were this would actually happen would be quite frequent, I would like to think of it like giving a tip at the restaurant.

True true..

This might be viable for short-term loans, but it the case of long-term loans it would mean that the lender is getting back less in real value than they loaned.  They'd literally be better of financially letting their money sit in a savings account at low interest or investing it elsewhere than directly loaning it to another person.  Few people are in the financial position where they can afford to have their net worth eroded by using their money to give interest-free loans of any size.  The majority of people will have inadequate funds for their retirement as it is - they need their money to be earning them more money.

Then I need a system where long term loans aren't necessary. Shouldn't be that hard .

I perfectly understand the 'need' for loans in the current system, It's just not the system I want to live in.
Also missing out interest on a system which doesn't give you the right on it would be kind of not possible, you'd just have to loan your money to someone who likes you more. ;)

The whole concept of long term loans.. Borrow something for 10-20 years, might as well own it. IMO these kind of arrangements are only necessary in a system where it is the norm that some debts are never payed off. (like greece, or what about the usd? lol  :-X)
In a system in which debt is all there is (fiat money) it is perfectly understandable interest is necessary, but we are heading to the end of the game and the people who are sitting on vaults of gold ain't gonna give tem back.

+1!  Interest, if seen as, and if charged as simply compensation for the declining value of the fiat currency cannot be seen as immoral.

What about Bitcoins?  Theoretically, with a fixed number of Bitcoins and a growing use/desire/need/price for them if I borrow 1000 BTC from you today and promise to pay them back to you in 10 years or over the next 10 years I may be contracting to give you back a HUGE amount of value over the original loan amount.  This "interest" may be very high and is in fact almost unbounded.  So it may be reasonable in the future to contract to pay back LESS than the original loan amount.

We currently compensate for the loss in value over time of the fiat currency by charging interest.  Wouldn't it make sense that we will have to account for the rising value of the Bitcoins over time with a corresponding "negative interest"?

Would you consider these "negative interest" contracts to be unethical?

Who in their right mind would ever loan at negative interest?

Loan money, lose coins. Hoard money, keep coins. Where is the incentive?

Why bother with long term loans in the first place?

I can't think of any use for them except in cases where the scarcity of essential things forces people into this predicament. It is my belief that in a system without draconian control the general productivity would be so high that the average person could acquire the wealth for a house in one year and the wealth for a car in a month.
This statement will probably have wide opposition, but I think that 99% of all productivity is wasted currently.

I guess that was my (muddy) point.

I guess my question would be more clear as:  Since you believe interest is immoral then, given a rising BTC value, do you consider the simple act of lending any amount of BTC with no interest to be immoral?  I think you would have to considering the "built in interest" in the loan.

I agree that it might seem irrational at first, but only as long as you think of money as being the only incentive to do things in this world. Unfortunately many people often think like that.

For example, I would readily lend money at negative interest to a member of my family or a close friend.
I would also lend money to a shop that is about to open in the street I live or to my local community in order to build a school. I might also lend to some company I'd like to see succeed for a number of reasons (eg. medical research, space exploration,...).

In short, people would lend money to people and projects they would now be willing to donate some money. While this would sure slow down economic growth, I'd argue that those projects or companies not falling in this category are maybe not _that_ useful to society after all.

To what draconian control are you referring? On the supply of money? Saying that 99% of productivity is wasted has to be wrong. If you say that in regards to the financial system it might be accurate, but in just about everything else it is certainly not. You have to be a little careful before declaring that the war between classes is for naught. Trying to improve society in the name of making money is not necessarily a bad thing, you know. It drives innovation. However, there are many cases you can make where greed becomes the main factor and society actually hurts because of it. But these are more on a case-by-case basis (hello big pharma). Blanket statements such as all productivity is bad is just wrong.

That's all well and good, but this is possible without deflation. And it is less of a risk. Yet very few if any people do it. So what makes you think the bigger risk of doing it with deflation will suddenly spur this type of activity?

Very few if any? Socially responsible investing is a $3 trillion market in the US alone! The people investing in such funds accept the usually significantly lower gains and often even a net loss in purchasing power because of inflation.

Besides, I never said that people would be willing to lend more in a deflationary environment but non-ethical companies would simply have a harder time getting a loan, therefore I'd expect the percentage of ethical investments to rise.

I don't have the numbers to calculate the exact figures and look through the obscurification of terms to figure out what to calculate. But productivity going into shipping products over wide distances, financing autocracy and bureaucracy, building destructive machinery and then destroying it (military weapons), and paying for other superfluous industries along with taxes and interest on the whole thing, I'll bet that's over 99%.

Ok, fine...


Any company would have a harder time getting a loan. Ethical or not. That is no basis for speculating that ethical investments would rise. By what logic will the self-serving measure of holding money to increase its value suddenly be thwarted by that measure? That people will be more generous just because? That is about all your argument amounts to. Money should strive to be neutral. Silly effects like price deflation is at worst likely only to encourage greed, at best be no different from inflation. Deflation is not going to make people more ethical.


Where is the draconian control? How is shipping unproductive? Do you think that trade with different nations or far away places is unproductive? As far as bureaucracy, do you think we should live in anarchy? I don't believe bureaucracy is very efficient, but it certainly is not less than 1% efficient. It does accomplish something. While military productivity is certainly debatable, world peace isn't going to magically arrive with the diverse cultures that exist on this planet. I'm not saying I agree or disagree with it, but it is very likely that someone is going to always try to control someone else, so you might want to have somebody out there to prevent that from happening. And you've glossed over someone who flips burgers for a living. Is that unproductive? Should we go back to farm life and be self-sustainable? What exactly do you want from the world?

(emphasis added)

Please read my post again - I never said anything about ethical investments rising - I said that the percentage of ethical investments will rise. The overall amount of investments and lending will surely decline and I thought to have sufficiently acknowledged that fact by stating that...


That's about all my argument amounts to.

Then what is the reasoning behind your logic? You think innovation is bad because it creates a system where some people are wealthier than others? Do you disagree that living longer, healthier lives with less fear is a good thing? Do you disagree that understanding how the universe works is a good thing? Do you disagree that some people are more intelligent or more driven to accomplish things than others, and should be rewarded for it? Should we simply stop growing as a species because it's not fair to everyone?

(sorry this is kind of a mix of questions directed at you and electric, but the questions are about stifling economic growth which you both seem to agree on)

I don't have all the answers but as for you questions:

Yes I think a tribal system founded upon anarchistic principles and self sustainability would be preferable to today's society. I'm not for the abolishment of technological achievements and scientific knowledge. On the contrary.
Every person should own their own means of production whenever feasible. An engineer should own their own workshop, a farmer their own combine and a worker their own robots. When the technology absolutely requires centralization there should be unions or networked tribes. The end goal would be to archive a level of technology were nature can return to it's native state while Man has something like 'The Seed' as described in Neal Stephenson's The Diamond Age.

If a farmer should own his own combine, should not the eater own his own farm? And then what purpose would there be for a farmer?

Or, looking in the other direction, should the farmer own not only the combine, but also the combine factory, the mines by which metals for such factory are pulled from the earth, and the powerplant by which energy for that production is created?

You are seeing the economy perfectly backwards, my good sir.

At some point possibly yes. Once it is technically and logistically feasible, not in the current state of technology though. However there still will be professions so it might not be desirable even then.
Every profession has it's tools/means of production which defines it...

But I am getting the impression that you understood perfectly but your response is mainly cynical.  :-\

I'm beginning to question the quality of my English lessons - I obviously express myself in way that makes you continuously read things I never wrote :)

I merely suggested that some of the companies or endeavours  that nobody would be willing to donate something to, might not be that beneficial to society and I stand by that statement.

I am of the opinion that our current pace of development is unsustainable in the long run - not only because it largely relies on some finite resources, but also because I already see large parts of our economic growth only being upheld with new ventures that are not really contributing to the better of humanity. This is my personal view and you may of course disagree on that.

My point is, that a deflationary environment would favor economic growth more in those parts that are deemed beneficial by society for reasons other than personal monetary gains. Overall the economy might as well grow slower but a reduction of the economic growth rate, together with a stronger bias towards worthy projects is not that bad given the current mess we managed to drive ourselves into IMHO.

I'm not against innovation and I'm not against people profiting from their work. I fully acknowledge the differences of human beings in their talents and willingness to accomplish things. I also never said that I think we should stop growing as a species because it's not fair to everyone. We will certainly continue to grow and thrive as humans - I just don't think that such a fundamental property of our nature could be reversed by a mere fixed money supply.

If you think that our current economic growth rate is sustainable and that every kind of economic growth is equally desirable or just that stopping to print money is the beginning of the end of mankind as we know it then we can agree to disagree.

Also, this thread has long since derailed into the midst of the Economy subforum and I apologize for my part in this - maybe it's time for a split/move.

I am merely asking questions to get to the heart of the matter of your argument. I didn't assume you believed any of those things, that's why there was a question mark at the end of each sentence. Sometimes it takes going to the extreme side of things to get someone else to flesh out what they're saying. :P


And I stand by my position that the currency has (should have) nothing to do with this. You are promoting what you think is best for the society and the world through manipulating how the wealth of this world is exchanged. That is folly. People will just do it in a different way. If that involves a different currency to facilitate this process, then so be it. You aren't going to be able to stop them.


What I disagree with is that this can somehow be managed by currency.


Focus on changing the way people think, not how they store their wealth. A much tougher task that does not allow for some band-aid like deflation.

Too many arguments I see for deflation are based on "THIS IS WUT DA GUBMENT DOES." I think everyone on this board agrees that how currency is managed by governments is far from ideal. It allows for too much unproductive exchanging of wealth. Rather, transferring of wealth. This is why I'm so against Bitcoin. It is doing the same thing. This is why, at a voluntary cost of my own time which is important to me, I have spent many hours coming up with a system that makes the supply of money less vulnerable to manipulations. In a fixed supply of money, those with more money can "group think" or "prisoner's dilemma" themselves into transferring wealth to them from everyone else in an absolutely unproductive way. It doesn't matter if there are early adopters or not. And it is the same result as typical fiat currency; someone benefits for nothing.

Let's fix that first, then perhaps we can see what society can do when trying to manipulate money no longer can cloud our judgments.

Isn't Gini coefficient (or anything else meant to quantify economic equality) supposed to include all forms of material wealth, not just the savings in dollars or bitcoins? If you have a problem with 1% holding 50% of bitcoins, why don't you (1) ask yourself what they can do with those bitcoins and if they would rather have a house or an hour worth of massage or a juicy steak, and (2) offer some goods or services in exchange for those coins?

I haven't read all this thread so excuse me if someone has done this already, here's the same list showing the % of the population holding a % of the wealth from wealthiest downwards, it's just an inverse of Zhou's stats which I hope is a valid thing to do

Population  Wealth

0.3%         19.5%
0.5%         34.8%
0.8%         44.3%
1.0%         50.0%
1.3%         54.6%
1.5%         59.0%
1.8%         63.2%
2.1%         65.7%
2.3%         68.0%
4.1%         79.6%
4.9%         82.3%
8.0%         89.9%
10.0%       92.7%
14.9%       96.3%
19.8%       97.8%
29.8%       99.2%
39.8%       99.7%
49.9%       99.9%
59.9%      100.0%

Lets do away with all those useless people with two jobs who still can't make ends meet.

I prefer simply removing the institutionalized impediments that hinder their becoming more productive.

Let's start by getting rid of a global monetary scheme that unnecessarily profits private bankers and politicians at the expense of those not-the-most-productive citizens.