Distribution of bitcoin wealth by owner

[BitChick]

Well, here is another big holder with about 15,000 BTC: http://techcrunch.com/2013/10/29/chamath-palihapitiya-owns-5-million-in-bitcoins-wants-to-own-10-15-million/

I kind of figured he was a big holder.  He is always bullish about Bitcoin in all the interviews and has enough capital to purchase a good amount.

[wachtwoord]

Well, here is another big holder with about 15,000 BTC: http://techcrunch.com/2013/10/29/chamath-palihapitiya-owns-5-million-in-bitcoins-wants-to-own-10-15-million/

I kind of figured he was a big holder.  He is always bullish about Bitcoin in all the interviews and has enough capital to purchase a good amount.

Not a bad ally to have and now he has the financial incentive too.

[calian]

Another data point is Max Keiser said on his show "it feels good to be a bitcoin millionaire" back when doing so would have taken about 15k BTC.

[gaston909]

I believe Max has about 20,000 or at least he did, he may have moved 1/2k into Bitcoin based investments.

[conspirosphere.tk]

check out this:
Rich-Get-Richer Effect Observed in BitCoin Digital Currency Network, August 22, 2013

Econophysicists studying the way people accumulate a new form of digital currency say they have observed the famous rich-get-richer effect for the first time.


http://www.technologyreview.com/view/518541/rich-get-richer-effect-observed-in-bitcoin-digital-currency-network/

[edit]: maybe if it gets too concentrated it may implode due to a shrinking users base

[wachtwoord]

What's the Y-axis?

[conspirosphere.tk]

What's the Y-axis?

"increase in one month in BTC", that is how much wallets grow in 1 month (Y) according to the wallet balance (X). That's what I get from it at least

[wachtwoord]

What's the Y-axis?

"increase in one month in BTC", that is how much wallets grow (Y) according the wallet size (X). That's what I get from it at least

Maybe it's because it's almost dinner time, but I have no idea what you meant by that. How do they know how much people's holdings grow over time and why is this relevant here?

[conspirosphere.tk]

Maybe it's because it's almost dinner time, but I have no idea what you meant by that. How do they know how much people's holdings grow over time and why is this relevant here?

they tracked just addresses' balances I guess. Seems feasible.
It's relevant as a trend of BTC wealth distribution, which seems even more important than a snap at any point in time.

[rpietila]

Maybe it's because it's almost dinner time, but I have no idea what you meant by that. How do they know how much people's holdings grow over time and why is this relevant here?

they tracked just addresses' balances I guess. Seems feasible.
It's relevant as a trend of BTC wealth distribution, which seems even more important than a snap at any point in time.

Where are all the addresses whose balance went down? Not in the chart above at least.. I haven't found the methodology yet.

[conspirosphere.tk]

Where are all the addresses whose balance went down? Not in the chart above at least.. I haven't found the methodology yet.

the paper can be downloaded here:
http://arxiv.org/abs/1308.3892v1

[Peter R]

Where are all the addresses whose balance went down?

OK, I tried to stop myself but i can't:

Answer:  On the other side of infinity.  

My apologies for the nerdy math joke.  Feel free to delete rpietila.  Loving the thread, BTW.

[rpietila]

New thread about the 500 bitcoin richest opened.

[Rassah]

check out this:
Rich-Get-Richer Effect Observed in BitCoin Digital Currency Network, August 22, 2013

Econophysicists studying the way people accumulate a new form of digital currency say they have observed the famous rich-get-richer effect for the first time.
https://www.technologyreview.com/sites/default/files/images/BitCoin%20network.png

http://www.technologyreview.com/view/518541/rich-get-richer-effect-observed-in-bitcoin-digital-currency-network/

This paper has been thoroughly discussed, and I think even debunked, due to authors making a few mistakes and wrong assumptions. I hope I remember this correctly (feel free to correct me if I'm wrong), but they assumed that large wallets belonging to exchanges and online wallet services were wallets of indiviidual wealthy owners, as opposed to belonging to many different owners, and even possibly lumped user's personal wallets together, if the users used the same address to trade on these exchanges. They also didn't take into account that wealthy bitcoin owners break up their wealth among many smaller accounts, and they linked a bunch of addresses together with the assumption that if one address sends money to another, both belong to the same person, despite the transaction possibly being between two people.

[rpietila]

This paper has been thoroughly discussed, and I think even debunked, due to authors making a few mistakes and wrong assumptions. I hope I remember this correctly (feel free to correct me if I'm wrong), but they assumed that large wallets belonging to exchanges and online wallet services were wallets of indiviidual wealthy owners, as opposed to belonging to many different owners, and even possibly lumped user's personal wallets together, if the users used the same address to trade on these exchanges. They also didn't take into account that wealthy bitcoin owners break up their wealth among many smaller accounts, and they linked a bunch of addresses together with the assumption that if one address sends money to another, both belong to the same person, despite the transaction possibly being between two people.

Is it so difficult to analyze it properly?? 

[User705]

check out this:
Rich-Get-Richer Effect Observed in BitCoin Digital Currency Network, August 22, 2013

Econophysicists studying the way people accumulate a new form of digital currency say they have observed the famous rich-get-richer effect for the first time.
https://www.technologyreview.com/sites/default/files/images/BitCoin%20network.png

http://www.technologyreview.com/view/518541/rich-get-richer-effect-observed-in-bitcoin-digital-currency-network/

This paper has been thoroughly discussed, and I think even debunked, due to authors making a few mistakes and wrong assumptions. I hope I remember this correctly (feel free to correct me if I'm wrong), but they assumed that large wallets belonging to exchanges and online wallet services were wallets of indiviidual wealthy owners, as opposed to belonging to many different owners, and even possibly lumped user's personal wallets together, if the users used the same address to trade on these exchanges. They also didn't take into account that wealthy bitcoin owners break up their wealth among many smaller accounts, and they linked a bunch of addresses together with the assumption that if one address sends money to another, both belong to the same person, despite the transaction possibly being between two people.

All wallets are in a sense personal wallets.  Wallets that exchanges use "belong" to the exchange and the exchange owes users BTC upon demand that they might pay or not.  So those wallets are more concentrated and large owners wallets are more distributed.  Perhaps it averages out.  I don't think bitcoin will somehow negate the laws of human interaction.  BTC will flow from incompetent users to competent ones so concentration much like with other wealth is unavoidable.

[Adrian-x]

BTC will flow from incompetent users to competent ones so concentration much like with other wealth is unavoidable.

Incompetent needs a bit more defining, to me incompetent owners of Bitcoin lose them to the benefit of the network.
My biggest fear is not selling but destroying my Bitcoins.

[User705]

BTC will flow from incompetent users to competent ones so concentration much like with other wealth is unavoidable.

Incompetent needs a bit more defining, to me incompetent owners of Bitcoin lose them to the benefit of the network.
My biggest fear is not selling but destroying my Bitcoins.

That is a concern but they aren't really destroyed.  And when I say incompetent an example would be someone buying an ASICMiner with BTC that won't ever earn that BTC back and those BTC flow to ASICMiner shareholders.

[Melbustus]

...I assume that anyone whose forum account is from 2011 or earlier, has BTC1,000-BTC10,000 unless proven otherwise...

Heh... That assumption needs revision, or at least further precision. There's a big difference in how many bitcoin new users likely obtained before and after May/June 2011. Keep in mind that bitcoin has a large learning curve, and there weren't many good resources for it at the time. It took time and diligence to understand the technology as well as the implications. Furthermore, obtaining bitcoin typically involved using services that one might not readily trust with all that much money (dwolla and gox were both pretty new without long reputations), so even people who studied enough to become uber-bulls probably scaled up purchases slowly starting in the $100 range, as they became comfortable with bitcoin services/processors. If you started that in Feb/March 2011, yeah, you could have 1000s of BTC. If you started that in July/Aug 2011, it would've taken a couple orders of magnitude more $ commitment to get into the 1000s of BTC territory; that's a very relevant distinction.

With regard to mining, my own miscalculation on mining in 2011 was probably fairly common. Despite being tech-savvy, I concluded during summer 2011 that mining wasn't worth it, since the GPU-mining ecosystem was already pretty developed and pushing returns toward zero if you didn't *already* have the GPUs sitting around. So I, probably like many, hardly mined.

[molecular]

...I assume that anyone whose forum account is from 2011 or earlier, has BTC1,000-BTC10,000 unless proven otherwise...

Heh... That assumption needs revision, or at least further precision. There's a big difference in how many bitcoin new users likely obtained before and after May/June 2011.

This is true. And even if you got in before May, you had to do it pretty decisively to acquire BTC 1000. It really was looking like an "online play money crypto experiment in some sort of bubble" and putting in $1000 took quite the insight and balls and/or stupidity really (unless you were wealthy and $1000 was irrelevant to you, which is unlikely for the kind of crowd bitcoin attracted at that time). I doubt a high percentage got in that "big". Most probably dropped 50 bucks or 200 on it. Only slowly scaling up when it was too late.

It was all about mining with GPU back then and difficulty blasted anyone pretty much out of the game in May/June when the gamer-kids joined, selling for fiat on the spot and feeding the new breed: people that decided that buying was the better option and who had a little more play money. (Bitcoin was looking good all of a sudden and reached a lot more people). But by then BTC 1000 cost > $10,000 which was a bit hefty again for what it was back then to most (hacker-drug-money).

So I'd go with something like BTC 100 to BTC 3,000 for people having joined in 2011, with heavy emphasis towards the former.