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Author Topic: Adi Shamir's paper on bitcoin  (Read 16237 times)
mcdett
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October 17, 2012, 09:29:29 PM
 #41

Why on earth would you think that a Bitcoin economy would be any different than a conventional economy in terms of wealth disparity?

Show me 1 (just one) modern, free economy in which .001% [1] of the people own 70% [2] of the wealth.  Just one.  Otherwise you're not thinking this through.


[1] assume cabal is 10 people and this number should reflect the percentage of those people against the number of people using btc today, so I may not have this number right, and someone can correct me
[2] 10MM btc in circualtion today 7MM is 70% of that
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October 17, 2012, 09:34:49 PM
 #42

And here come the news:

http://arstechnica.com/tech-policy/2012/10/78-percent-of-bitcoin-currency-stashed-under-digital-mattress-study-finds/

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October 17, 2012, 09:39:13 PM
 #43

Why on earth would you think that a Bitcoin economy would be any different than a conventional economy in terms of wealth disparity?

Show me 1 (just one) modern, free economy in which .001% [1] of the people own 70% [2] of the wealth.  Just one.  Otherwise you're not thinking this through.


[1] assume cabal is 10 people and this number should reflect the percentage of those people against the number of people using btc today, so I may not have this number right, and someone can correct me
[2] 10MM btc in circualtion today 7MM is 70% of that

lets say you're right and that .001% [1] of the people own 70% [2] of the wealth.  why do you assume, quite unnaturally, that they will hold those coins as the price level rises to your target?

as the price rises, these ppl will naturally start to sell at differing points on the way up until the "fair" price of Bitcoin is reached (whatever that is).  at that point the vast # of Bitcoins in circulation will be much more equally distributed and it will act more as a currency than as a store of wealth.
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October 17, 2012, 09:47:20 PM
 #44

Man, my laundering strategy in on there. Cry

That's crazy on how they analyzed all that data.  My bet is that they had a program to parse it.

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October 17, 2012, 09:54:31 PM
 #45

Why on earth would you think that a Bitcoin economy would be any different than a conventional economy in terms of wealth disparity?

Show me 1 (just one) modern, free economy in which .001% [1] of the people own 70% [2] of the wealth.  Just one.  Otherwise you're not thinking this through.


[1] assume cabal is 10 people and this number should reflect the percentage of those people against the number of people using btc today, so I may not have this number right, and someone can correct me
[2] 10MM btc in circualtion today 7MM is 70% of that

mcdett's assertion was that 30% of people controlling 70% of wealth is somehow unheard of.  In the US alone, 20% of people control 80% - 90% of the wealth (95% if you exclude home ownership and calculate only financial wealth).  


All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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October 17, 2012, 10:01:26 PM
 #46

Was I the only person to find odd that they would download/parse blockchain.info webpages instead of downloading the blockchain itself and working with it? lol

No, this is/was bizarre. I think one of the previous research papers even published a modified version of Gavin's code to do a full extract, not to mention there are open source tools for this now already. Maybe they didn't have time to download the Blockchain or didn't want to risk actually using the client for some reason.

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October 17, 2012, 11:01:02 PM
 #47

The hoarders are the true heroes of bitcoin who will save btc from the horrors of deflation once the 21million coin limit is reached by slowly adding their hoarded coins into the economy.  That or people who will break it even more by taking advantage of the horrors of deflation.
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October 17, 2012, 11:56:24 PM
 #48

Quote
Department of Computer Science and Applied Mathematics,
The Weizmann Institute of Science, Israel
{dorit.ron,adi.shamir}@weizmann.ac.il

Nary a word: http://www.weizmann.ac.il/pages/searching/weizmann_web?search=bitcoin#bitcoin

FYI: Dorit Ron is a woman.

~Bruno K~

mcdett
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October 18, 2012, 12:20:00 AM
 #49

mcdett's assertion was that 30% of people controlling 70% of wealth is somehow unheard of.  In the US alone, 20% of people control 80% - 90% of the wealth (95% if you exclude home ownership and calculate only financial wealth).  

My assertion (assumption) embodied a lot of unlikely (but not out of the realm of belief/dreams of this community).  When we reach 21mm btc they will own about 30% <-- that's where 30% comes from.  Today they own 70%

Don't put words in my mouth or twist my statements.

The future assumptions also envisioned mass adoption (market caps over 1 trillion).  If that sort of adoption occurs then the scales of economic distortions shift even more radically.  I'm not talking about some socialist scheme to level the playing field, I'm talking about a small group that can control virtually everything about btc, and we don't know who they are or what they want.
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October 18, 2012, 02:07:12 AM
 #50

21MM BTC is in 2140 !  Im I wrong ?

My guess, 10 to 20 % of all mined BTC to date are deleted, no more exist.  That leaves 50% hoarding.. IMO, 50% hoarded coin is high estimate..

I dont like this study, from CITI, by someone notarious.. It seems the begining of an operation to discredit/debunk/denigrate BTC in the eyes of the mass.. They could use this study to pretend a lot of false fact to the mass, pretend it's only a tool for criminal activity, money laudering, terr0r1st financing...   then vote BTC illicit, take aggressive illigitimate action.. justifiyed and accepted by the mass who listen to the news from TVs...   this could lead to destroying any chance for the BTC to become widely used by the mass !

This puke to me !

Still an interesting analysis of the data !  

I dont trust CITI, I'm worried of what they meant to do with this in the future !


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October 18, 2012, 04:34:22 AM
 #51

Why on earth would you think that a Bitcoin economy would be any different than a conventional economy in terms of wealth disparity?

Show me 1 (just one) modern, free economy in which .001% [1] of the people own 70% [2] of the wealth.  Just one.  Otherwise you're not thinking this through.


[1] assume cabal is 10 people and this number should reflect the percentage of those people against the number of people using btc today, so I may not have this number right, and someone can correct me
[2] 10MM btc in circualtion today 7MM is 70% of that

Money is not wealth.  Money is what you use to buy wealth.

(For simplicity, I'm including bitcoin as a subtype of money.)

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October 18, 2012, 04:38:26 AM
 #52

I will be keeping an eye on this thread ^^
sunnankar
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October 18, 2012, 05:02:39 AM
 #53

I'm talking about a small group that can control virtually everything about btc, and we don't know who they are or what they want.

Are you presuming that such totalitarian dystopia does not already exist?

If you look at the philosophy of liberty there are three time phases of past, present and future then there are three distinct classes for protecting that liberty, property, present liberty and life. This is why theft, slavery and murder are generally considered morally wrong; they infringe or eliminate freedom in one of these three time phases.

If anything BTC democratizes wealth because it is sound by being both defined and limited in amount. This stands as a protector of property rights by preventing confiscation through inflation which is a form of taxation without representation.

Given that the nation state can (1) infringe property rights easily with confiscation through inflation, (2) indefinite detention under the NDAA and (3) assassinate innocent children without even charging them with a crime therefore it seems like the dytopian situation you described already exists and is funded with the current monetary system.

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October 18, 2012, 07:01:27 AM
 #54

I'm talking about a small group that can control virtually everything about btc, and we don't know who they are or what they want.

As pointed out by Davout, the paper assumes shared wallets like mt gox are ONE owner of a lot of addresses. This logic is flawed.
Also, I do not understand how they sorted out change versus payout in the transactions. Therefore the conclusions are at best dubious, unsurprisingly for a bank-sponsored study (City, the largest bank in the world, is the sponsor through the Citi foundation).

The more obvious, unquestionnable reality is in the difficulty chart: in the first two years, only a small group of miners mined the first 2.5 million coins. After that, the difficuty has skyrocketed in a way that can only be explained by a lot of miners joining the fray  (not simply early adopters adding GPUs).
Some of the early coins were lost but its fair to say that probably 2 million were in the hands of early adopters.
In the end, it's a one time advantage over about 10% of the money supply, gradually vanishing with each sell out, nothing to worry about.

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October 18, 2012, 07:11:59 AM
 #55


As pointed out by Davout, the paper assumes shared wallets like mt gox are ONE owner of a lot of addresses. This logic is flawed.


Also - it seems a bit strange to count the 2Million+ sub 0.01 balance wallets as the poor end of some sort of wealth pyramid.
Many of these are surely people who just tried it out, e.g by getting some from a freebie site. They may or may not even have kept that wallet, let alone become engaged as an active Bitcoin user.

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October 18, 2012, 07:38:58 AM
 #56


As pointed out by Davout, the paper assumes shared wallets like mt gox are ONE owner of a lot of addresses. This logic is flawed.


Also - it seems a bit strange to count the 2Million+ sub 0.01 balance wallets as the poor end of some sort of wealth pyramid.
Many of these are surely people who just tried it out, e.g by getting some from a freebie site. They may or may not even have kept that wallet, let alone become engaged as an active Bitcoin user.

Some of those might be miners, collecting a lot of little bits of change.


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October 18, 2012, 07:59:24 AM
 #57

Emailed them, got a nice response :

Quote
Subject: A couple comments on "Quantitative Analysis of the Full Bitcoin Transaction Graph"

Dear sirs,

I've read your paper "Quantitative Analysis of the Full Bitcoin Transaction Graph" with great interest.

I am however quite surprised about the assumptions you make in order to analyze the collected Bitcoin network data and the conclusions that you draw from there.

Transactions can be trivially constructed from different senders, without sharing private keys. This makes your assumption of transaction construction legality wrong.

Secondly you completely discard the impact of shared wallets on the way ownership can be followed through the blockchain. Even though you might, at the macroscopic level, follow some large chunks of coins, you do not account for the fact that shared wallets completely break the chain of ownership by sending out different coins than the ones that came in.

I have access to the production database of Instawallet so I took on myself to check some of your conclusions in page 10. At the date of your extraction, Instawallet received Bitcoins on 103,513 different addresses (your paper mentions approximately 23,000).

You may also be interested in this document put online by Gregory Maxwell : https://en.bitcoin.it/wiki/Real_peer_review#Linking_transactions_to_identify_ownership

I think I can speak for the whole Bitcoin community when I thank you for your work.

Don't hesitate to contact me if you wish to further discuss this, you may also want to connect to the #bitcoin-dev IRC channel on Freenode.

Best regards,
David FRANCOIS


And their response :
Quote
Dear David,

We would like to thank you for your comments.

The main point you raised is that one cannot claim that different addresses participating as senders in the same transactions belong to the same owner. Our response consists of several observations:

1. We quoted from an official policy statement that this should be the case when transactions have multiple sending addresses.

2. We noted that knowledge of multiple private keys is required in this case, and while it is always possible that different owners will share their private keys, this is not likely to happen very often.

3. All the previous papers on issues of privacy in the bitcoin system which we quote in the bibliography make the same assumption, so this is not something that we invented.

4. The fact that some C++ code do not enforce this requirement is not a proof that this is not true in the vast majority of cases.

5. Most of our results are statistical in nature, and are not affected by a small number of exceptions. We are much more likely to underestimate the number of addresses which should be merged together (because we never saw those addresses in the same transactions) than to overestimate them because a few transactions had multiple owners as senders. You just demonstrated that our analysis indeed underestimated the number of addresses in which Instawallet received Bitcoins. We simply saw no evidence in the data suggesting that we should link the 103,513 different addresses you mentioned, so we gave the number of about 23,000 as a lower bound, not the real number which we had no way of knowing.

6. In particular, it is not clear why the issue of dormant coins would be affected by this issue. For example, we are counting how many old coins were sent to an  owner who did not initiate any outgoing transactions for three months. If we mistakenly add more addresses to that owner, we make it harder (and not easier) to satisfy this constraint, so we are underestimating the number of dormant coins.

7. Similarly, we do not understand why it would matter to mistakenly combine addresses in all our graphs. It's effect would be to make the graph look more reasonable, since it is easier to explain why someone would send bitcoinshamir to itself rather than send bitcoinshamir to many unrelated addresses only in order to receive them back at the end.

8. Finally, while one can be over cautious and never try to combine any addresses under any circumstances, this will give a greatly distorted picture about how many coins are kept and spent by owners. We believe that our methodology, which is clearly explained in the paper, gives a much better statistical picture even if a tiny number of decisions to unify addresses turn out to be incorrect.

We hope that this answer will clarify the situation.

Yours,

Adi Shamir and Dorit Ron

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October 18, 2012, 09:04:33 AM
 #58

Can't wait until they do the follow-up study on the Namecoin blockchain. Things must be real slow out there ....

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October 18, 2012, 10:17:57 AM
 #59


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[...]it is easier to explain why someone would send bitcoinshamir to itself rather than send bitcoinshamir to many unrelated addresses [...]


What the hell?

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October 18, 2012, 11:44:26 AM
 #60


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[...]it is easier to explain why someone would send bitcoinshamir to itself rather than send bitcoinshamir to many unrelated addresses [...]


What the hell?

Relax, it's probably just another autocorrect failure.

http://www.autocorrectfail.org/

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