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In this article, Vitalik argues that a high Gini coefficient is not a big problem in crypto because crypto does not measure life quality. Aka someone with only
by TekMol 5y ago
In this article, Vitalik argues that a high Gini coefficient is not a big problem in crypto because crypto does not measure life quality. Aka someone with only little crypto is not starving. They are just less invested.
I don't think most people care about the Gini in crypto because they are afraid of the crypto poor starving. I think they care because a high Gini means there are some super rich that could flood the market with their coins and make the price tank.
So the discussion in crypto about Gini is held from an investment perspective.
- vbuterin 5y agoThe whole point of my post was that instead of the Gini we should use a more targeted index that specifically measures the presence of super rich that can unilaterally flood the market with their coins, and does not concern itself with whether the long tail of users has 0.03 coins each or 0.003 coins each.
- TekMol 5y agoInteresting. While reading the post, I did not have the feeling this is the main point. But yes, the point is probably equivalent to the measurement of 'concentration' for which you propose the Herfindahl–Hirschman Index and other formulas. Is there good data out there to use as input for those formulas? Often when I read about distribution of crypto, the numbers used seem very foggy. Like account balances on the chain. Those could mean anything. One individual might own 1000 accounts (in a wallet). One account might belong to 1000 individuals (on an exchange). I would love to hear about some rough estimates for different crypto currencies. Like "How much ETH do the top 10 holders hold"?
- vbuterin 5y agoThere have been attempts at doing this, eg. https://cointelegraph.com/news/new-analysis-of-top-10k-ethereum-wallets-gives-highly-bullish-outlook https://cointelegraph.com/news/new-analysis-of-top-10k-ether... I imagine you would have to talk to the analytics firms to get the best-in-class attempts to figure out what the split between individual users is.
- TekMol 5y agoThanks for the link. In this linked tweet, it says the top 100 holders hold 26.4M ETH: https://twitter.com/adamscochran/status/1255332319180840960 https://twitter.com/adamscochran/status/1255332319180840960 That should be roughly 1/4th of all ETH.
- ashtonkem 5y agoAlso, crypto is trying to replace fiat currency. If they succeed, those with little crypto would indeed starve.
- sokoloff 5y agoIf that happened, many people who today hold exactly zero crypto would hold a non-zero amount. Looking at today’s ratio is not helpful for that hypothetical future.