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> The only way you could possibly measure this ... > This is obviously going to ... > Analyses like these are a total joke. Why is this obviously so? Watchin

by FabHK 4y ago

> The only way you could possibly measure this ... > This is obviously going to ... > Analyses like these are a total joke. Why is this obviously so? Watching the video, one realises that they refer to a WSJ article that is based on a 2021 NBER paper [1]. Do you think that the NBER, London School of Economics, and MIT harbour idiots that have not heard of exchanges? On page 5 of the paper: "Determining the concentration of ownership is more complicated than just tracking the holdings of the richest addresses, since many of the largest addresses belong to cold wallets of exchanges and online wallets, which hold Bitcoin on behalf of many investors. We develop a suite of algorithms based on graph analysis to classify addresses into those belonging to individual investors or those belonging to intermediaries. [...] We show that the balances held at intermediaries have been steadily increasing since 2014. By the end of 2020 it is equal to 5.5 million bitcoins, roughly one-third of Bitcoin in circulation. In contrast, individual investors collectively control 8.5 million bitcoins by the end of 2020. The individual holdings are still highly concentrated: the top 1000 investors control about 3 million BTC and the top 10,000 investors own around 5 million bitcoins." [1] https://www.nber.org/papers/w29396 https://www.nber.org/papers/w29396 [meta note: had to revise this post several times before posting to comply with HN guidelines.]

MrPatan 4y ago
> Do you think that the NBER, London School of Economics, and MIT harbour idiots that have not heard of exchanges? Not idiots, just people who want to publish something that will turn into a juicy headline, and don't care much about how closely it aligns with reality.
darawk 4y ago
This is theoretically a fair criticism. But note that the 27% vs 0.01% never appears in the NBER paper. Further note the extreme limitations of any clustering based analysis. And finally, note that they do not actually identify individuals, they identify clusters, and they also treat mining pools as individuals. I see no support for the headline number in this paper. What it appears that the people making this video did was take "1000 individuals" (which the paper defines as clusters of wallets) and divide by 68 million wallets in existence. What you actually get here when you do this is 0.001% vs 16%, which is reasonably close to the figured cited in the video, so is likely essentialy the calculation they did. It should be obvious how absurd this is. EDIT: Hah, actually the exact calculation they did is 10k/68mm and 5mm/18mm. That gives you exactly 0.01% and 27%. Discrepancy resolved. This is the exact ludicrious calculation the people in this video did.
- amelius 4y ago
  The fact remains that cryptocurrencies are Ponzi schemes. Even the original inventor of Bitcoin said so. https://www.thetimes.co.uk/article/craig-wright-i-invented-bitcoin-now-its-a-ponzi-scheme-hkrv75clr https://www.thetimes.co.uk/article/craig-wright-i-invented-b... Also, they are a way to fund criminal activity, of which ransomware is just one example. Cryptocurrencies are barely used for legitimate payments. They are mostly used for speculation (gambling). It's just bad news. Not the liberation we have been waiting for.
  - darawk 4y ago
    Whatever you think of them, it's extremely important to note that Craig Wright was absolutely not the inventor of Bitcoin.
  - chromatin 4y ago
    Craig Wright is so obviously not the pseudonymous creator of Bitcoin ("satoshi") that the only people who maintain this typically have a financial interest, viz. the failed "BSV" fork.
  - ch4s3 4y ago
    I am 100% a crypto skeptic and don't own any coins, but it is incorrect to call them a Ponzi scheme[1], which is an investment fraud that uses funds from new investors to pay existing investors. You can make a very credible case that many coins were designed for pump and dump scams, but that is not a Ponzi scheme. The crux of Bitcoins is that its value is derived from people's belief in its value. Lot's of assets and to an extent fiat moneys work this way. The "magic" of bitcoin et.al. is that they are finite, have clear chain of custody, and can be traded peer to peer. Those features can and do inspire confidence, but at the end of the day these coins have limited real world utility outside of money transfers and holding wealth. Those uses are directly tied to the faith of the market for those coins. If someone asked me if they should buy and hold these coins, I would say no. However, speculation is somewhat in the eye of the beholder and turns on the risk of losing the investment. It's nearly impossible to predict future changes in asset prices, especially when an asset has been steadily increasing in value for years, but has a limited history. TL;DR you're misusing the phrase "Ponzi scheme" which means something else. [1] https://en.wikipedia.org/wiki/Ponzi_scheme https://en.wikipedia.org/wiki/Ponzi_scheme
bigbillheck 4y ago
> Do you think that ... London School of Economics ... harbour[s] idiots I've seen a lot of dumb takes coming out of people from LSE, and as such will have to say "yes". (Haven't read the study but am not surprised by the conclusion)
anothernewdude 4y ago
Oh come on, you don't think the parent poster didn't think about this and read the article? You think they only spent a couple of seconds thinking about it before posting "what they reckon"?

by FabHK 4y ago

MrPatan 4y ago

> Do you think that the NBER, London School of Economics, and MIT harbour idiots that have not heard of exchanges? Not idiots, just people who want to publish something that will turn into a juicy headline, and don't care much about how closely it aligns with reality.

darawk 4y ago

This is theoretically a fair criticism. But note that the 27% vs 0.01% never appears in the NBER paper. Further note the extreme limitations of any clustering based analysis. And finally, note that they do not actually identify individuals, they identify clusters, and they also treat mining pools as individuals. I see no support for the headline number in this paper. What it appears that the people making this video did was take "1000 individuals" (which the paper defines as clusters of wallets) and divide by 68 million wallets in existence. What you actually get here when you do this is 0.001% vs 16%, which is reasonably close to the figured cited in the video, so is likely essentialy the calculation they did. It should be obvious how absurd this is. EDIT: Hah, actually the exact calculation they did is 10k/68mm and 5mm/18mm. That gives you exactly 0.01% and 27%. Discrepancy resolved. This is the exact ludicrious calculation the people in this video did.

amelius 4y ago
The fact remains that cryptocurrencies are Ponzi schemes. Even the original inventor of Bitcoin said so. https://www.thetimes.co.uk/article/craig-wright-i-invented-bitcoin-now-its-a-ponzi-scheme-hkrv75clr https://www.thetimes.co.uk/article/craig-wright-i-invented-b... Also, they are a way to fund criminal activity, of which ransomware is just one example. Cryptocurrencies are barely used for legitimate payments. They are mostly used for speculation (gambling). It's just bad news. Not the liberation we have been waiting for.
- darawk 4y ago
  Whatever you think of them, it's extremely important to note that Craig Wright was absolutely not the inventor of Bitcoin.
- chromatin 4y ago
  Craig Wright is so obviously not the pseudonymous creator of Bitcoin ("satoshi") that the only people who maintain this typically have a financial interest, viz. the failed "BSV" fork.
- ch4s3 4y ago
  I am 100% a crypto skeptic and don't own any coins, but it is incorrect to call them a Ponzi scheme[1], which is an investment fraud that uses funds from new investors to pay existing investors. You can make a very credible case that many coins were designed for pump and dump scams, but that is not a Ponzi scheme. The crux of Bitcoins is that its value is derived from people's belief in its value. Lot's of assets and to an extent fiat moneys work this way. The "magic" of bitcoin et.al. is that they are finite, have clear chain of custody, and can be traded peer to peer. Those features can and do inspire confidence, but at the end of the day these coins have limited real world utility outside of money transfers and holding wealth. Those uses are directly tied to the faith of the market for those coins. If someone asked me if they should buy and hold these coins, I would say no. However, speculation is somewhat in the eye of the beholder and turns on the risk of losing the investment. It's nearly impossible to predict future changes in asset prices, especially when an asset has been steadily increasing in value for years, but has a limited history. TL;DR you're misusing the phrase "Ponzi scheme" which means something else. [1] https://en.wikipedia.org/wiki/Ponzi_scheme https://en.wikipedia.org/wiki/Ponzi_scheme

bigbillheck 4y ago

> Do you think that ... London School of Economics ... harbour[s] idiots I've seen a lot of dumb takes coming out of people from LSE, and as such will have to say "yes". (Haven't read the study but am not surprised by the conclusion)

anothernewdude 4y ago

Oh come on, you don't think the parent poster didn't think about this and read the article? You think they only spent a couple of seconds thinking about it before posting "what they reckon"?