Distribution of bitcoin wealth by owner

[lyth0s]

I would also really like to see what the current distribution of coins looks like and I would really appreciate it if you could update the stats. Last update was in April and It'd be nice to see how the distribution changes with the next rise and before COIN hits the markets.

By the way is there anyway to automate your process? Maybe the community could donate some BTC your way for an open source software that can analyze the distribution (I know I would)

[1715120009]

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[1715120009]

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[practicaldreamer]

Mass manipulation by Banksters......

Given they can buy lots of Bitcoins off the chain (OTC) at a slight discount

Would need to be large quantities - where from ?

Edit; just looked into this - this article explains the process http://www.coindesk.com/bitcoin-brokers-trade-millions-without-exchange/.
Very interesting

[Vlad2Vlad]

Mass manipulation by Banksters......

Given they can buy lots of Bitcoins off the chain (OTC) at a slight discount

Would need to be large quantities - where from ?

Edit; just looked into this - this article explains the process http://www.coindesk.com/bitcoin-brokers-trade-millions-without-exchange/.
Very interesting

More Bitcoins trade off the chain than on exchanges.  The biggest deals are done off the books, not on exchanges, for obvious reasons.

If you're a mining pool and you need cash every month what would you rather do:  Dump thousands of Bitcoins on an exchange which can take days and significantly lower the price or get all the cash in one single trade and take only a small ~3% hit?

And like I said, the larger pools don't mind playing this game because the lower the price the less competition they'll have as smaller pools either shut down or quit and with a lower Bitcoin price less and less people buy mining gear so the difficulty remains lower for a longer period of time - rewarding the larger pools with more and more Bitcoins.

If you talk to guys in the know, like Charlie Shrem, you'll find out that there are massive cash buyers buying Bitcoins off the chain everyday.  Given Bitcoin is so illiquid, driving the price down (or up) is an easy task, especially for professional Wall Street traders.

[abracadabra]

More Bitcoins trade off the chain than on exchanges.  The biggest deals are done off the books, not on exchanges, for obvious reasons.

....

If you talk to guys in the know, like Charlie Shrem, you'll find out that there are massive cash buyers buying Bitcoins off the chain everyday.  Given Bitcoin is so illiquid, driving the price down (or up) is an easy task, especially for professional Wall Street traders.

Are you saying that bitcoins are being transfered by simply providing the private key to an address?  I'm not understanding your suggestion that btc is being traded/bought "off the chain".  I assume you mean the transaction is not seen on the blockchain?

[Vlad2Vlad]

More Bitcoins trade off the chain than on exchanges.  The biggest deals are done off the books, not on exchanges, for obvious reasons.

....

If you talk to guys in the know, like Charlie Shrem, you'll find out that there are massive cash buyers buying Bitcoins off the chain everyday.  Given Bitcoin is so illiquid, driving the price down (or up) is an easy task, especially for professional Wall Street traders.

Are you saying that bitcoins are being transfered by simply providing the private key to an address?  I'm not understanding your suggestion that btc is being traded/bought "off the chain".  I assume you mean the transaction is not seen on the blockchain?

Right.  You're a miner and you wanna sell 1,000 Bitcoins.  I send you the cash (or we use a middle man Broker like Shrem) cause we're both reputable people and you send me the BTC.  There's an obvious transaction for the simple transfer in the ledger [in the blockchain] but that's it.

The market price isn't affected at all by your huge sale to me unless I choose to dump it all at once to push the price down.

If you watch interviews with guys like Barry Silbert and other big buyers you'll see that they rarely buy any BTC on exchanges.  They buy from early adopters, miners and pools.  Off The Chain transactions and they get a bulk discount rate.

Given bicoin is so illiquid it wouldn't be difficult to use this mechanism to consistently drive the price down.

But don't fret, just as easily as Bitcoin can be manipulated down, it can even more easily be manipulated up.  The media will definitely get behind this next massive pump.


Edit:  Coinbase does mostly OTC transactions from what I've read.  It's a pretty common practice.

[cr1776]

...
Edit:  Coinbase does mostly OTC transactions from what I've read.  It's a pretty common practice.

Those were nice posts.

I'll just add that your scenarios also only account for the financial events that should hit in the next few months (ETFs etc).  Hopefully.  Sidechains (will be big) and other technical improvements will increase the usability scenarios on the non financial side.

If (when?) these confluence of events begin to hit, not to mention now that we are 18 months from the next halving, it should impact price significantly.  No guarantees of course, but the scenarios out there hav tremendous upside.

[Vlad2Vlad]

Those were nice posts.

I'll just add that your scenarios also only account for the financial events that should hit in the next few months (ETFs etc).  Hopefully.  Sidechains (will be big) and other technical improvements will increase the usability scenarios on the non financial side.

If (when?) these confluence of events begin to hit, not to mention now that we are 18 months from the next halving, it should impact price significantly.  No guarantees of course, but the scenarios out there hav tremendous upside.

Sidechains [at best] will only ever be half secure.

The only real purpose for sidechains is due to the fact that Bitcoin can not scale fast enough [next year].

Well, what if there is another identical coin like Bitcoin which can and will scale?  A fully matured Bitcoin clone? Bitcoin will still serve the purpose of attracting investments, as a savings account and the other coin will be the daily currency.

The only question then is, how long until Bitcoin has outlived its purpose?

But sidechains, they will not survive - better technology is already here.

But this is off topic so let's not take this issue any further on this thread.

Cheers!

[davidorentol]

But sidechains, they will not survive - better technology is already here.

What is this technology?

[cr1776]

But sidechains, they will not survive - better technology is already here.

What is this technology?

From Vlad's comment, I'm not sure if he is as familar with them as he could be.  2 way pegged sidechains can be as secure as the main chain and can implement just about any technology off the main chain.

You can read more here, this is somewhat technical:
http://www.blockstream.com/sidechains.pdf

They enable people to implement many features that might be risky on the main chain while leveraging bitcoin's infrastructure in ways an altcoin can't.

Check out the paper's authors.

There are other threads discussing this, so I don't want to derail this thread with a side topic, but my only point is that from the financial, usage, and tech sides there are many things that can impact fiat price and consequently long term distribution.

[Adrian-x]

But sidechains, they will not survive - better technology is already here.

What is this technology?

OT is one such technology, that dosn't need to change the Bitcoin protocol, so no risk of of Side Chains altering the incentives in mining Bitcoin over time.   

OT can be a  "decentralized exchanges" here is an intro as to how to do it without screwing with the bitcoin protocol.
http://youtu.be/teNzIFu5L70?t=1m

and some more info.
https://www.youtube.com/watch?v=vtJcUM5-TeA

[choeymethod]

Very interesting read, thanks for the insight gents.

[Rassah]

But sidechains, they will not survive - better technology is already here.

What is this technology?

OT is one such technology, that dosn't need to change the Bitcoin protocol, so no risk of of Side Chains altering the incentives in mining Bitcoin over time.   

I'm a huge supporter of OT, but I'm not sure it's a replacement for sidechains. The two technologies do different things and have different goals. I look at OT as the liability system to Bitcoins asset system, and sidechains are still assets pegged to the original bitcoin without needing any third party to do the peg. OT is best for pegging tokens to other things, like precious metals or shares of a company, with a third party doing the peg. Even if pegging to bitcoin using a distributed pool, you still need to trust the third party group of cosigners that control that pool.

[BootstrapCoinDev]

If more than one server could process a transaction, what stops two of them from doing it? I thought that OT solved the double spend problem by having one and only one entity that could validate a given token.

[Adrian-x]

If more than one server could process a transaction, what stops two of them from doing it? I thought that OT solved the double spend problem by having one and only one entity that could validate a given token.

Simplistically OT uses N of M multisig wallets distributed on many servers to secure your coins, when there is consensus say in a trade on an exchange the coins are released. The server could be as distributed as BitTorent or multiple servers on the net.

With regards to Tokens yes they would be controlled by a single entity,  they issue you tokens in exchange for your Bitcoin the cool part is they don't have access to your Bitcoin. 

[Adrian-x]

But sidechains, they will not survive - better technology is already here.

What is this technology?

OT is one such technology, that dosn't need to change the Bitcoin protocol, so no risk of of Side Chains altering the incentives in mining Bitcoin over time.  

I'm a huge supporter of OT, but I'm not sure it's a replacement for sidechains. The two technologies do different things and have different goals. I look at OT as the liability system to Bitcoins asset system, and sidechains are still assets pegged to the original bitcoin without needing any third party to do the peg. OT is best for pegging tokens to other things, like precious metals or shares of a company, with a third party doing the peg. Even if pegging to bitcoin using a distributed pool, you still need to trust the third party group of cosigners that control that pool.

Side Chains (SC) offer some of the same features, but with SC there is the possibility to do it all on the Bitcoin protocol, one can uses Merge Mining to secure and process transactions without an entity controlling it.

 The big difference is SC alow you to secure BTC, and mover the value onto another blockchain, this changes the dynamic that motivates miners to mine Bitcoin.

If a miner can mine a SC and earn, he could abandon Bitcoin mining or mine empty Bitcoin blocks worse 51% attack Bitcoin, without sacrificing her mining income. The scenario is far fetched but just the possibility puts me off.

A more likely scenario is SC-tokens backed by Bitcoin get exchanged for other SC-tokens, and a SC that stores Bitcoin but isn't as secure as Bitcoin is attacked or exploited, cutting of the return path for the BTC, thus permanently removing value from the Bitcoin blockchain.

If there were a failure or loss of some Bitcoin it would be a Bitcoin failure, unlike Gox there won't be anyone to blame.

None of this is a concern while Bitcoin's block reward is high, or SC are implemented in centralized entities, but just the fact that a for profit company is proposing a protocol change that makes possible the option to separate BTC the currently form the value stored on the blockchain is a red flag.

The biggest advantage I see is decentralized exchange and we don't need to change Bitcoin to alow SC for that.

[jehst]

So 14,000 people own roughly 72% of all bitcoin? If there are 1 million users, then the top 1.4% owns 72% of everything? That seems high.

[efreeti]

So 14,000 people own roughly 72% of all bitcoin? If there are 1 million users, then the top 1.4% owns 72% of everything? That seems high.

Yes, you get that right.

Don't believe the fairly tale that bitcoin is fair and liberated.

[jehst]

So 14,000 people own roughly 72% of all bitcoin? If there are 1 million users, then the top 1.4% owns 72% of everything? That seems high.

Yes, you get that right.

Don't believe the fairly tale that bitcoin is fair and liberated.

I don't think anyone ever said bitcoin is fair. Clearly early adopters are rewarded more than those come after, but I figured that bitcoin's wealth distribution would eventually mirror the real world's, where the top 1% of global wealth holders own approximately 40% of the total wealth (officially). Bitcoin's wealth distribution more closely resembles that of an African kleptocracy (e.g. Angola). Then again, much of the global elite's wealth is hidden. You don't see the Rockefeller family members at the top of the Forbes richlists. Global elite such as they may very well unofficially own close to 70% of everything through obfuscated ownership schemes.

[Adrian-x]

So 14,000 people own roughly 72% of all bitcoin? If there are 1 million users, then the top 1.4% owns 72% of everything? That seems high.

Yes, you get that right.

Don't believe the fairly tale that bitcoin is fair and liberated.

Bitcoin is at the beginning of its distribution cycle, nothing is fair, but unlike fiat having a lot of Bitcoin and not spending it doesn't alow you to accumulate more wealth. In the fiat world if you're part of the 0.01% you get paid to be the majority wealth holder. By contrast in Bitcoin if you are a majority holder you lose a lot more wealth than the wealth you cash out when you cash out.

What makes your Bitcoin grow in value is the size of the network of users, finding ways to distribute it to the people who will be responsible is not a trivial science. It would be prudent to only trust people to be responsible with there money when it comes at great hardship and expense.

So holding if you are a stake holder is hard, you need to spend it strategically to make the network grow, and manage it like you're the FED. Watching the velocity, because there are other stake holders with the same knowledge but they are in competition.

The fact is it's working extremely well, we've grown exponentially by an order of magnitude every year to date since inception.
Now that's what I find hard to believe.

[neurotypical]

So 14,000 people own roughly 72% of all bitcoin? If there are 1 million users, then the top 1.4% owns 72% of everything? That seems high.

Yes, you get that right.

Don't believe the fairly tale that bitcoin is fair and liberated.

Bitcoin is at the beginning of its distribution cycle, nothing is fair, but unlike fiat having a lot of Bitcoin and not spending it doesn't alow you to accumulate more wealth. In the fiat world if you're part of the 0.01% you get paid to be the majority wealth holder. By contrast in Bitcoin if you are a majority holder you lose a lot more wealth than the wealth you cash out when you cash out.

What makes your Bitcoin grow in value is the size of the network of users, finding ways to distribute it to the people who will be responsible is not a trivial science. It would be prudent to only trust people to be responsible with there money when it comes at great hardship and expense.

So holding if you are a stake holder is hard, you need to spend it strategically to make the network grow, and manage it like you're the FED. Watching the velocity, because there are other stake holders with the same knowledge but they are in competition.

The fact is it's working extremely well, we've grown exponentially by an order of magnitude every year to date since inception.
Now that's what I find hard to believe.

How in hell holding bitcoin doesn't make you more wealthy? If things go as they should, as bitcoin becomes more popular, the price of bitcoin should go up. So if you own a lot of bitcoin already, all you have to do is wait and you'll be getting ridiculously rich in 10 years. So yes, waiting and holding = more wealth, so there is a big incentive to hold and not to spend. What are you winning by spending bitcoin?