Just 2% of people own 95% of bitcoin, it’s not equal and so unfair

What the FUD is this?

The idea that, while it’s OK for the majority of USD (and the right to print it) to be controlled by just a small group of people, that a potentially similar unequal distribution invalidates bitcoin as a means of exchange and store of value entirely.

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Experts reply…
  • A quick Google search would tell you that bitcoin addresses do not represent unique bitcoin holders. So either they are too lazy to do their research or they know it and decide to propagate this information anyway. So one, we don’t know how many addresses that I control on chain, so we can see all these addresses but how many unique owners are there? That’s very very difficult to figure out. Conversely,  one address could have multiple owners, for example at Kraken or Coinbase, the exchange holds all these coins on behalf of millions of customers. You can’t go and parse through bitcoin’s blockchain and pick out these couple of big addresses and say the 2% owns 95%… no, those are exchanges addresses. It’s kind of like going Bank of America, Citibank and these other large US banks own 99% of all the US dollar.

  • My view on wealth concentration

    • bitcoin is an emerging monetary system, it started with a GINI of 1 and decreases over time
    • fairdrops’ don’t work; see the voucher programs in the USSR
    • the best thing you can hope for is equality of opp. and no seignorage (bitcoin has both)
    • long term holders sell out as their wealth increases. this is empirically observable in Bitcoin (@unchainedcap‘s Hodl waves analysis makes this point) – this is a natural and organic force which disperses supply
    • wealth concentration is something to worry about if wealth can be transformed into political power, because you kick off a feedback loop of wealth -> power -> discretion over system features -> more wealth
    • luckily, bitcoin manifestly does NOT care if you are wealthy
    • in this context, the concentration of wealth in bitcoin is not something that worries me, even a little bit. Bitcoin ‘governance’ is nicely poised between nodes, devs, miners – if wealth meant power in Bitcoin, S2X would have prevailed. it didn’t. compare that with other chains
    • given that wealth does NOT equal power in Bitcoin, worrying about the concentration carries sinister undertones – it insinuates that the outcomes in Bitcoin are ‘wrong’ and may need to be remediated
    • if you believe in free market money, you believe in free market outcomes
    • thanks to a decade of PoW and an unrepeatable launch where coins where freely traded for years _without_ a $ value, Bitcoin has an enviable distribution – the chosen metric (% of addresses owning % of supply) is comically bad
    • every other coin is empirically more concentrated
    • this is a great case study in how data can be both trivially correct and very misleading
    • the default thing people do with data is misrepresent things
    • this is a difficult subject which requires nuance & a patterned analysis, not just a single metric
    • if you think that ‘bitcoin is unevenly distributed’ will inhibit adoption, you are in for a surprise
    • Bitcoin has long succeeded in spite of political unacceptability and bad optics. this probably won’t stop it

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