Distribution of bitcoin wealth by owner

[bucktotal]

i think Multibit states that there are 250k active weekly wallet users.

what % of the bitcoin world uses multibit?
(i use it)
 
A) 10%
B) 25% <-- my guess
C) 50%
D) 75%
E) other...

[cr1776]

Note that I am for fair taxation

I think everyone is for "fair" taxation.  The problem is that people disagree as to what is fair.

• For some, no taxes at all is the only fair system.
• For some, Fair taxes are where everyone pays in the same amount.
• For some, flat taxes (everyone pays in the same percentage of their wealth) are ideal.
• Some hold that progressive taxes (where the rich pay not only more than the poor, but a larger percentage of what they have) are best.
• Some say that the more even the wealth distribution is, the fairer it is, with communism being the only truly fair system.

I think that when most people talk about fair and vote for politicians who promise it will be "fair" when it gets right down to it, they mean they want someone else to pay and they do it by voting rather than coming right out and showing up at Bill Gates' door with pitchforks.

In short, they want someone with more income than they have to be forced to pay for something they want, but don't want to pay for.   Then they use lots of excuses to justify it.

:-)

[Adrian-x]

Fair in economic terms is collective cooperation where we reward individuals according to there contribution, where the grey comes in is who gets support when they can't contribute and how do we effectively motivate those who are lucky enough to control resources to use them for the collective good, when manipulation brings about disproportionate reward.

[teukon]

My own idea of balancing social ideals and long term economic growth for everyone, is to favor consumption taxes, not taxes on capital.

Yes, this would probably do the US economy a lot of good (I'm not American).

Alas, despite the popular belief in the USA that the rich escape taxation, the burden of local, state and federal taxation progressively falls upon the wealthy. Almost half of US citizens pay no federal income tax, and the poor, disabled and elderly especially profit from government transfer payments.

Yes it does.  Not only do most of the rich work very productively to become so rich in the first place (making the country a better place), but they shoulder the lion's share of the tax burden, and have to endure great hatred by the masses.

Although capital gains and estate taxes will gain revenue from the sudden new bitcoin $billionaires and $trillionaires, that tax revenue will be realized only when they sell or die. I have a belief, growing stronger, that holders will regard bitcoin as precious to the extent that many large holders will be loath to sell. An analogy would be medieval land estates - never sold, only inherited.

That is why I believe taxes on bitcoin holdings will follow the precedent set by taxes on land property here in the USA.

Is it a problem if most of all Bitcoin wealth is never used, only inherited?  I don't see the problem.

[SlipperySlope]

Is it a problem if most of all Bitcoin wealth is never used, only inherited?  I don't see the problem.

The new rich will not spend much bitcoin, thus avoiding capital gains taxes / sales taxes. The new rich will be predominately young, and will not soon die, thus avoiding estate taxes.

The problem is that tax authorities and popular opinion may seize upon property taxes as the precedent for taxing the new bitcoin-holding rich.

"(2020) A US citizen: Its not fair that I work two jobs, pay taxes and the Winklevoss twins bought bitcoin for $11 million back in 2013 that is now worth $1 trillion - and they don't pay any taxes on it!"

[nikke]

Hello everyone! I am a Finnish statistician and student of economics. I am working for rpietila and analyze data related to the distribution of Bitcoin wealth by owner.

i think Multibit states that there are 250k active weekly wallet users.

what % of the bitcoin world uses multibit?
(i use it)
 
A) 10%
B) 25% <-- my guess
C) 50%
D) 75%
E) other...

Is this data how truthful? The previous upward biased estimates of users where based on false customer data, most notably on the untruthful claims provided by Mt Gox. Therefore we have to be very critical on the information provided by services to avoid similar mistakes.

If we would obtain the real percentage of how many Bitcoin users use Multibit (the actual percentage you are estimating in your poll), we would get the total amount of Bitcoin users. I would say your guess of 25% might be pretty close, but that is entirely based on my assumption that there are 1 million Bitcoin users in total. Therefore, just guessing a percentage is not really fruitful, since it is totally based on a previous assumption.

While estimating the total amount of Bitcoin users is important, the most beneficial data that we could obtain from services such as Multibit would be related to the distribution among their clienteles: we would need detailed data on how quantities of possessions are distributed among their users. In addition, we would need to be confident that the data is real and factual to avoid biased estimates such as the ones based on Mt Gox data.

It is up to the community to get our estimates more exact. Any crumbs of knowledge would help get us closer!

[rpietila]

Despite that Nikke (above) is working hard to find out the objective figures concerning the number of users, I will post new results that pretty much assume that the number of users is 1.0 million (discussion upthread after the Mt.Gox numbers came out). The new information is in the distribution parameters that were updated based on the Mt.Gox data.

22. Apr 2014

#People	#Bitcoins	#TotalBitcoins
70	BTC10k+	3.6M
930	BTC1k-10k	2.2M
13k	BTC100-1k	3.0M
85k	BTC10-100	2.3M
250k	BTC1-10	0.8M
340k	BTC0.1-1	0.1M
230k	BTC0.01-0.1	0.0M
90k	BTC0.002-0.01	0.0M

Total: 12.2M bitcoins (0.5M bitcoins assumed lost)

The changes from previous estimate:

- Total number of holders revised down from 2.0 million to 1.0 million. This did not change much in the distribution of coins. If new users are added, the large holders do sell according to an experimentally derived rate of 17% per doubling in price, but some newish holders also add to their positions. All-new entrants can come to any bracket, because no amount of coins is yet too expensive to buy. The perceived static totals of the analysis hide the fact that Bitcoin trade is quite brisk and the people who consist of a bracket do change all the time.

- Number of 10k+ holders recalculated because we now know better the average number of coins in each bracket (thanks to Mt.Gox data). So the large holders still have the same number of coins in total, but there appears to be more of the holders.

- Same for 1k+ and 100+. More people but approx the same number of total coins.

- 10+ category turned out to be larger than previously estimated. The Mt.Gox data gave us the confidence to use a steeper j parameter, which means a more "equitable" distribution with more coins in the middle brackets.

- 1+ category remained intact, and the fractional categories were significantly sized down. The lower threshold of "owner" was also raised to BTC0.002 because of the decline in price.

- Number of Bitcoin millionaires at this price ($500) is about 400. This means that only 400 people worldwide can raise a $million by selling bitcoins, but about 30,000,000 people can invest a $million to buy bitcoins (without going into debt).

- The Bitcoin millionaires command about 4.9 million bitcoins, which is 40% of all bitcoins. The control of world's gold and fiat currency is more centralized with a smaller number of individuals controlling higher percentage.

[Vlad2Vlad]

Banks and Hedge Funds are currently buying up massive amounts of Bitcoins [I predicted last year this would happen in 2014].

That said, I expect [by Christmas] that at least 25%+ of the total Bitcoin supply will be in the hands of a very few select elite banks and hedge funds.

And this will bring about a whole new issue of Centralization [which I again brought up last year] regarding Bitcoin.

Eventually this trend will become self-evident as most banks and funds have to file quarterly statements of their investments.

[bucktotal]

Hey Nikke,

the number is truthful to the extent that you believe the multibit guys. they are reporting the number of unique pings the software hits their server with to check for software updates. so while they have 1.5 million downloads, i guess it means about 250k wallets are running per week.

[rpietila]

- Number of Bitcoin millionaires at this price ($500) is about 400. This means that only 400 people worldwide can raise a $million by selling bitcoins, but about 30,000,000 people can invest a $million to buy bitcoins (without going into debt).

Remember my friend 30 mil people are fiat Millionaires but most are not liquid, and a $1mil dollar investment into bitcoins without having a $10 mil dollar estate (10%) is quite risky even now.

Similarly none of my friends in the BTC2,000-BTC20,000 range intends to sell bitcoins worth $1M at these prices, so that puts both numbers in the same ballpark

[boumalo]

- Number of Bitcoin millionaires at this price ($500) is about 400. This means that only 400 people worldwide can raise a $million by selling bitcoins, but about 30,000,000 people can invest a $million to buy bitcoins (without going into debt).

Remember my friend 30 mil people are fiat Millionaires but most are not liquid, and a $1mil dollar investment into bitcoins without having a $10 mil dollar estate (10%) is quite risky even now.

Similarly none of my friends in the BTC2,000-BTC20,000 range intends to sell bitcoins worth $1M at these prices, so that puts both numbers in the same ballpark

Of course not because if they wanted to sell they would have sell by now 

[wachtwoord]

- Number of Bitcoin millionaires at this price ($500) is about 400. This means that only 400 people worldwide can raise a $million by selling bitcoins, but about 30,000,000 people can invest a $million to buy bitcoins (without going into debt).

Can you rpovide me with similar numbers for other fiat amounts?

Say:

$750k
$500k
$250k
$100k
$50k
$25k
$10k

I'm just curious (and your slots are rather large)

[rpietila]

- Number of Bitcoin millionaires at this price ($500) is about 400. This means that only 400 people worldwide can raise a $million by selling bitcoins, but about 30,000,000 people can invest a $million to buy bitcoins (without going into debt).

Can you rpovide me with similar numbers for other fiat amounts?

Say:

$750k
$500k
$250k
$100k
$50k
$25k
$10k

I'm just curious (and your slots are rather large)

The way I make the bitcoin slots, does not have interpolation so you have to do it manually. I am currently working on a model that would allow random precision (as long as the law of large numbers holds, naturally).

Also the 2012 world wealth distribution data is given in orders of magnitude precision only.

Ergo, sorry, no. 

[JorgeStolfi]

It would be interesting to know

(1) how many BTC the BTC users in each bracket have moved.  E.g., "a user who now has 0.1--1.0 BTC has sent 3.14 BTC on average since Genesis."

(2) when have those users used their BTC.  E.g., "50% of the users who now have 0.1--1.0 BTC have sent or received bitcoins in the last 3.14 months."

[rpietila]

It would be interesting to know

(1) how many BTC the BTC users in each bracket have moved.  E.g., "a user who now has 0.1--1.0 BTC has sent 3.14 BTC on average since Genesis."

(2) when have those users used their BTC.  E.g., "50% of the users who now have 0.1--1.0 BTC have sent or received bitcoins in the last 3.14 months."

That kind of data is impossible to compose, because the Blockchain only contains the information on how many BTC are on each address, but not whether they belong to a person owning a lot of other coins. Also it is not easy to discern the transfer and change.

The distribution of holdings methodology used here, is a statistical formula that does not use the blockchain very much, except as one of the sources for information on the total number of holders. The theory is that the address balances and holders are so convoluted that actual distribution metrics (from the Mt.Gox leak dump, for instance) provide more useful results, which can be used as parameters here.

They are very good questions though, and I would really much appreciate if someone would take the time to try to address them.

[Lauda]

When was this updated the last time?
Never mind I am blind. There was a jump of people who own more than 10k Bitcoins.
Who bought so many, I wonder.

[wachtwoord]

When was this updated the last time?
Never mind I am blind. There was a jump of people who own more than 10k Bitcoins.
Who bought so many, I wonder.

probably the change of methodology had more effect than people actually moving between brackets.

[rpietila]

When was this updated the last time?
Never mind I am blind. There was a jump of people who own more than 10k Bitcoins.
Who bought so many, I wonder.

probably the change of methodology had more effect than people actually moving between brackets.

Yes:

- Number of 10k+ holders recalculated because we now know better the average number of coins in each bracket (thanks to Mt.Gox data). So the large holders still have the same number of coins in total, but there appears to be more of the holders.

[molecular]

i think Multibit states that there are 250k active weekly wallet users.

That number seems rather high to me. How do they even measure it? Do you have a link to the source?

[wachtwoord]

i think Multibit states that there are 250k active weekly wallet users.

That number seems rather high to me. How do they even measure it? Do you have a link to the source?

They count the number of distinct weekly pings of the running software checking for updates.