6 ms·

Bitcoin Wealth Distribution

105 points by jackgavigan 10y ago

throwaway1974 10y ago
So those 7.4+9.4 million bitcoin address with a balance of less than 0.0001 ($0.06) are basically unusable at this time (due to current fee and blockchain being constipated for most of 2016), the sum up to about 2600$ worth and result in millions of "spam" entries on the blockchain
- deleted 10y ago
  [deleted]
- bitcoinspammer 10y ago
  When we were spamming Bitcoin and Litecoin with dust it didn't occur to us that we would (effectively) be throwing away thousands in fees down the drain. Still have the rest of coins from those tx change in thousands of wallets in some encrypted vm. Hopefully I still remember the password, heh.
- josephagoss 10y ago
  You're mostly right, Fees are not paid per address but per transaction. If I had a thousand addresses full of these amounts (0.0001) I could spend them all in one transaction into a single address. The fee would end up being higher than the standard due to the recommendation that fees are per byte. So I might end up with 0.099 in the final address. So it's possible to move them if you can combine enough of them together to make the transaction worthwhile. Of course the part where you're right is that it's unlikely a single person owns a large number of these spam transactions and thus the economics doesn't make sense for them to move at this time. However, if Bitcoin were worth 100x and the fee remained in dollar terms roughly the same , it would now become much easier to move these spam amounts.
  - pmorici 10y ago
    Transaction fees are really a function of transaction size in bytes not per transaction. Adding an additional input address increases transaction size by 180 bytes. The output address and other common overhead is around 44 bytes. The current minimum cost of block space is 0.0000001 BTC per byte if you are willing to wait several hours for your transaction to confirm. At that rate adding an additional input will cost you 0.0000180 so anything less than that is not worth moving under current conditions. To be confirmed in a timely fashion you need to pay a per byte fee of about 5x so in reality amounts under 0.00009 are currently not worth spending. http://bitcoin.stackexchange.com/questions/1195/how-to-calculate-transaction-size-before-sending http://bitcoin.stackexchange.com/questions/1195/how-to-calcu... https://bitcoinfees.21.co/#delay https://bitcoinfees.21.co/#delay
Retr0spectrum 10y ago
Interesting, although I think graphs like this one give a better idea of the distribution: https://medium.com/@jony_levin/the-lorenz-curve-of-bitcoin-is-crooked-how-to-make-it-straight-f9179041b984#.43vun7u0s https://medium.com/@jony_levin/the-lorenz-curve-of-bitcoin-i...
kristopolous 10y ago
"Many bitcoin are stuck in addresses with lost private keys". Lol yep. Had a few thousand when they were worthless and don't remember what happened to them.
- corv 10y ago
  Ouch
  - kristopolous 10y ago
    I think many people in tech missed a few million dollar opportunities. It's fine... we're not paid poorly.
    - jeffwass 10y ago
      If it makes you feel better : When they were kids, my father and his friends did the same with baseball cards. They would chew the gum, and then put the 'worthless' baseball cards into their bicycle wheel spokes. Who knows how many Mickey Mantle rookie cards they might have come across. Point is, nobody can predict when a currently-worthless item might explode in value.
      - kristopolous 10y ago
        Ok so first directly to your point are some envelopes I found recently that my Grandma had with what would have been potentially valuable stamps from the 1960s when stamp collecting was in its heyday. What actually happened is that many people were excited by the unusual prices paid for stamps at the time and hoarded what they thought would be valuable stamps in the future. (it even hit pop culture: the 1963 movie Charade is about someone who smuggled millions of dollars on a sheet of paper of priceless stamps) As a result, when I was pricing these recently, they were apparently collected by every other 1960s hobbyist and put in a shoebox. You combine that with the fad of stamp collecting waning and now the first-issue, day-1, limited-edition 55 year old stamp is put up for a few dollars (and usually doesn't sell even then), because every one of them were snatched up. Second, here's two other of my near-million misses: I was in an early talk in the bay with what eventually became YouTube. It went like this "yeah that's fine but what about real player? They tried all this already. On demand video isn't a new idea. Just another flying car. I wish you luck." Then there was the time I worked in Venice and there was this small company called snapchat and i was like "isn't this a busy and well established market already? Don't consumers have things like MMS, imo, and a myriad of other options?" Who knows, maybe if I did join then my dismissive pessimism would have been instrumental in their failure on some alternative timeline. I think the right analysis here is that both companies succeeded because the demographic of who could access the technology and for what purpose changed ... so the same idea in different hands did different things. It really opens up the analysis when considering these as essentially commodity startups.
noobermin 10y ago
The thing I don't get with CS pop graphs (like this one) is if you want to show something is an obvious power law distribution, why don't you plot it on a log-log graph? Then it will be perfectly obvious.
- loeber 10y ago
  Most people don't understand log-log graphs. Also, taking the log-log is so powerful that even distributions that don't strictly follow a power law can look as if they're approximately following a straight line.
  - noobermin 10y ago
    Plot two graphs, one loglog, one not. Also, "nearly linear" on a log-log graph does mean almost power law.
    - smallnamespace 10y ago
      being roughly straight on a log-log plot is a necessary but not sufficient condition for power-law behavior Source: https://arxiv.org/abs/0706.1062 https://arxiv.org/abs/0706.1062, p.15 pp. 24-29 have nice log-log plots of various data sets, along with whether they can plausibly described as power law distributions. 'Wealth', interestingly enough, looks like a pretty straight line, but fails the statistical test badly. Btw, if you just take logs and run a regression to estimate the exponent, you get a highly biased estimate. In general, it's much better to do a direct statistical test, although the method described in the paper is somewhat involved.
      - noobermin 10y ago
        I like what you shared. I actually can't believe I haven't seen that paper before (it has >4k citations ffs), but I admit, I work in a less statistical side of physics. What I'll say is that what something is is a fuzzy term, although I generally agree what you mean especially about a power law says about the behavior in the tails especially. That comes from thinking a small deviation on the tail is "small" due to optics and not realizing it is deviation on orders of magnitude. That might be what the replier to my comment was referring to. That's why "two graphs" is usually a good answer. PS Also, I would never fit a straight line on a loglog or semilog graph, nor should anyone ever. People who do that don't understand what least squares is at all.
wtracy 10y ago
Now I'm curious who holds the wallet with 100,000 BTC. Is it publicly known who owns it? My best guess would be either one of the early developers, or a major exchange or bank.
- lossolo 10y ago
  Someone estimated that Satoshi Nakamoto (founder of bitcoin) has around 1 million bitcoins spread around multiple addresses.
  - notyourwork 10y ago
    Awhile back I remember reading an article that found many addresses with 10,000 BTC (I might be mistaken on the exact number) deposited into them all around a similar time frame and the coins have never moved.
- drcross 10y ago
  Just do a search, most big bitcoin addresses are reported on.
VertexRed 10y ago
Isn't it inaccurate to base this on addresses, since nearly everyone uses more than one?
- notyourwork 10y ago
  If you define wealth distribution strictly against individual people. You can report on distribution against anything really, in this case addresses. I agree with your point and most naive readers will assume distribution is per person.
- kobeya 10y ago
  Also coins held in a single address can have multiple owners -- e.g. custodial funds.
nullc 10y ago
The text on the bottom more or less explains why this kind of analysis is almost worthless: Due to the nature of easy & anonymous address creation, and corporate account management inherent to Bitcoin & the companies in the ecosystem, estimating the actual number of unique bitcoin holders as opposed to addresses is unfortunately much more difficult — & not something we can glean from observing its blockchain alone. Addresses can not only overstate user numbers when single people unknowingly control numerous addresses, but also understate user numbers when single addresses hold the funds of numerous unknown people, like an exchange who may control balances in a traditional database.

105 points by jackgavigan 10y ago

throwaway1974 10y ago

So those 7.4+9.4 million bitcoin address with a balance of less than 0.0001 ($0.06) are basically unusable at this time (due to current fee and blockchain being constipated for most of 2016), the sum up to about 2600$ worth and result in millions of "spam" entries on the blockchain

deleted 10y ago
[deleted]
bitcoinspammer 10y ago
When we were spamming Bitcoin and Litecoin with dust it didn't occur to us that we would (effectively) be throwing away thousands in fees down the drain. Still have the rest of coins from those tx change in thousands of wallets in some encrypted vm. Hopefully I still remember the password, heh.
josephagoss 10y ago
You're mostly right, Fees are not paid per address but per transaction. If I had a thousand addresses full of these amounts (0.0001) I could spend them all in one transaction into a single address. The fee would end up being higher than the standard due to the recommendation that fees are per byte. So I might end up with 0.099 in the final address. So it's possible to move them if you can combine enough of them together to make the transaction worthwhile. Of course the part where you're right is that it's unlikely a single person owns a large number of these spam transactions and thus the economics doesn't make sense for them to move at this time. However, if Bitcoin were worth 100x and the fee remained in dollar terms roughly the same , it would now become much easier to move these spam amounts.
- pmorici 10y ago
  Transaction fees are really a function of transaction size in bytes not per transaction. Adding an additional input address increases transaction size by 180 bytes. The output address and other common overhead is around 44 bytes. The current minimum cost of block space is 0.0000001 BTC per byte if you are willing to wait several hours for your transaction to confirm. At that rate adding an additional input will cost you 0.0000180 so anything less than that is not worth moving under current conditions. To be confirmed in a timely fashion you need to pay a per byte fee of about 5x so in reality amounts under 0.00009 are currently not worth spending. http://bitcoin.stackexchange.com/questions/1195/how-to-calculate-transaction-size-before-sending http://bitcoin.stackexchange.com/questions/1195/how-to-calcu... https://bitcoinfees.21.co/#delay https://bitcoinfees.21.co/#delay

Retr0spectrum 10y ago

Interesting, although I think graphs like this one give a better idea of the distribution: https://medium.com/@jony_levin/the-lorenz-curve-of-bitcoin-is-crooked-how-to-make-it-straight-f9179041b984#.43vun7u0s https://medium.com/@jony_levin/the-lorenz-curve-of-bitcoin-i...

kristopolous 10y ago

"Many bitcoin are stuck in addresses with lost private keys". Lol yep. Had a few thousand when they were worthless and don't remember what happened to them.

corv 10y ago
Ouch
- kristopolous 10y ago
  I think many people in tech missed a few million dollar opportunities. It's fine... we're not paid poorly.
  - jeffwass 10y ago
    If it makes you feel better : When they were kids, my father and his friends did the same with baseball cards. They would chew the gum, and then put the 'worthless' baseball cards into their bicycle wheel spokes. Who knows how many Mickey Mantle rookie cards they might have come across. Point is, nobody can predict when a currently-worthless item might explode in value.
    - kristopolous 10y ago
      Ok so first directly to your point are some envelopes I found recently that my Grandma had with what would have been potentially valuable stamps from the 1960s when stamp collecting was in its heyday. What actually happened is that many people were excited by the unusual prices paid for stamps at the time and hoarded what they thought would be valuable stamps in the future. (it even hit pop culture: the 1963 movie Charade is about someone who smuggled millions of dollars on a sheet of paper of priceless stamps) As a result, when I was pricing these recently, they were apparently collected by every other 1960s hobbyist and put in a shoebox. You combine that with the fad of stamp collecting waning and now the first-issue, day-1, limited-edition 55 year old stamp is put up for a few dollars (and usually doesn't sell even then), because every one of them were snatched up. Second, here's two other of my near-million misses: I was in an early talk in the bay with what eventually became YouTube. It went like this "yeah that's fine but what about real player? They tried all this already. On demand video isn't a new idea. Just another flying car. I wish you luck." Then there was the time I worked in Venice and there was this small company called snapchat and i was like "isn't this a busy and well established market already? Don't consumers have things like MMS, imo, and a myriad of other options?" Who knows, maybe if I did join then my dismissive pessimism would have been instrumental in their failure on some alternative timeline. I think the right analysis here is that both companies succeeded because the demographic of who could access the technology and for what purpose changed ... so the same idea in different hands did different things. It really opens up the analysis when considering these as essentially commodity startups.

noobermin 10y ago

The thing I don't get with CS pop graphs (like this one) is if you want to show something is an obvious power law distribution, why don't you plot it on a log-log graph? Then it will be perfectly obvious.

loeber 10y ago
Most people don't understand log-log graphs. Also, taking the log-log is so powerful that even distributions that don't strictly follow a power law can look as if they're approximately following a straight line.
- noobermin 10y ago
  Plot two graphs, one loglog, one not. Also, "nearly linear" on a log-log graph does mean almost power law.
  - smallnamespace 10y ago
    being roughly straight on a log-log plot is a necessary but not sufficient condition for power-law behavior Source: https://arxiv.org/abs/0706.1062 https://arxiv.org/abs/0706.1062, p.15 pp. 24-29 have nice log-log plots of various data sets, along with whether they can plausibly described as power law distributions. 'Wealth', interestingly enough, looks like a pretty straight line, but fails the statistical test badly. Btw, if you just take logs and run a regression to estimate the exponent, you get a highly biased estimate. In general, it's much better to do a direct statistical test, although the method described in the paper is somewhat involved.
    - noobermin 10y ago
      I like what you shared. I actually can't believe I haven't seen that paper before (it has >4k citations ffs), but I admit, I work in a less statistical side of physics. What I'll say is that what something is is a fuzzy term, although I generally agree what you mean especially about a power law says about the behavior in the tails especially. That comes from thinking a small deviation on the tail is "small" due to optics and not realizing it is deviation on orders of magnitude. That might be what the replier to my comment was referring to. That's why "two graphs" is usually a good answer. PS Also, I would never fit a straight line on a loglog or semilog graph, nor should anyone ever. People who do that don't understand what least squares is at all.

wtracy 10y ago

Now I'm curious who holds the wallet with 100,000 BTC. Is it publicly known who owns it? My best guess would be either one of the early developers, or a major exchange or bank.

lossolo 10y ago
Someone estimated that Satoshi Nakamoto (founder of bitcoin) has around 1 million bitcoins spread around multiple addresses.
- notyourwork 10y ago
  Awhile back I remember reading an article that found many addresses with 10,000 BTC (I might be mistaken on the exact number) deposited into them all around a similar time frame and the coins have never moved.
drcross 10y ago
Just do a search, most big bitcoin addresses are reported on.

VertexRed 10y ago

Isn't it inaccurate to base this on addresses, since nearly everyone uses more than one?

notyourwork 10y ago
If you define wealth distribution strictly against individual people. You can report on distribution against anything really, in this case addresses. I agree with your point and most naive readers will assume distribution is per person.
kobeya 10y ago
Also coins held in a single address can have multiple owners -- e.g. custodial funds.

nullc 10y ago

The text on the bottom more or less explains why this kind of analysis is almost worthless: Due to the nature of easy & anonymous address creation, and corporate account management inherent to Bitcoin & the companies in the ecosystem, estimating the actual number of unique bitcoin holders as opposed to addresses is unfortunately much more difficult — & not something we can glean from observing its blockchain alone. Addresses can not only overstate user numbers when single people unknowingly control numerous addresses, but also understate user numbers when single addresses hold the funds of numerous unknown people, like an exchange who may control balances in a traditional database.