<story><title>.01% of Bitcoin holders hold 27% of all Bitcoin</title><url>https://twitter.com/MorePerfectUS/status/1527661935054962688</url></story><parent_chain><item><author>darawk</author><text>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.&lt;p&gt;I see no support for the headline number in this paper. What it appears that the people making this video did was take &amp;quot;1000 individuals&amp;quot; (which the paper defines as &lt;i&gt;clusters&lt;/i&gt; of wallets) and divide by 68 million &lt;i&gt;wallets&lt;/i&gt; 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.&lt;p&gt;It should be obvious how absurd this is.&lt;p&gt;EDIT: Hah, actually the exact calculation they did is 10k&amp;#x2F;68mm and 5mm&amp;#x2F;18mm. That gives you exactly 0.01% and 27%. Discrepancy resolved. This is the exact ludicrious calculation the people in this video did.</text></item><item><author>FabHK</author><text>&amp;gt; The only way you could possibly measure this ...&lt;p&gt;&amp;gt; This is obviously going to ...&lt;p&gt;&amp;gt; Analyses like these are a total joke.&lt;p&gt;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].&lt;p&gt;Do you think that the NBER, London School of Economics, and MIT harbour idiots that have not heard of exchanges?&lt;p&gt;On page 5 of the paper:&lt;p&gt;&amp;quot;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. [...]&lt;p&gt;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.&amp;quot;&lt;p&gt;[1] &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.nber.org&amp;#x2F;papers&amp;#x2F;w29396&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.nber.org&amp;#x2F;papers&amp;#x2F;w29396&lt;/a&gt;&lt;p&gt;[meta note: had to revise this post several times before posting to comply with HN guidelines.]</text></item><item><author>darawk</author><text>The only way you could possibly measure this is just to look at the distribution of coins among wallets. This is obviously going to count crypto exchanges as single entities, which is absurd.&lt;p&gt;It&amp;#x27;d be like counting JPMorgan as a single person when computing wealth inequality in the US. Analyses like these are a total joke.</text></item></parent_chain><comment><author>FabHK</author><text>You might well want to criticise the paper, but I think the video is a fair representation of the contents of the paper.&lt;p&gt;Regarding the number of holders, the paper says:
&amp;quot;While the original database has 896 million addresses, after we remove addresses in peeling chains we end up with 640 million addresses. Theses addresses belong to 189 million clusters, of which 116 million clusters are single-address clusters.&amp;quot;&lt;p&gt;Not sure where the number of 68 million wallets comes from. Taking 189m as the number of holders, we&amp;#x27;d have 0.005% of BTC holders holding 27% of all BTC. But even we take that 68m &amp;quot;wallet&amp;quot; number, and assume that each holder controlled multiple wallets, say 10 on average, we&amp;#x27;d have 6.8m holders, and then 0.15% of holders controlling about 27% of BTC. Still enormous concentration.&lt;p&gt;More from the paper: &amp;quot;It is also important to note that this measurement of concentration most likely is an understatement since we cannot rule out that some of the largest addresses are controlled by the same entity. In particular, in the above calculations, we do not assign the ownership of early bitcoins, which are held in about 20,000 addresses, to one person (Satoshi Nakamoto) but consider them as belonging to 20,000 different individuals.&amp;quot;&lt;p&gt;Another interesting part of the paper: &amp;quot;To the best of our knowledge, we have the most complete information about crypto entities that have been used in academic research up to this point. Our data cover 1,043 different entities. These include 393 exchanges, 86 gambling sites, 39 on-line wallets, 33 payment processors, 63 mining pools, 35 scammers, 227 ransomware attackers, 151 dark net market places and illegal services.&amp;quot;</text></comment>
<story><title>.01% of Bitcoin holders hold 27% of all Bitcoin</title><url>https://twitter.com/MorePerfectUS/status/1527661935054962688</url></story><parent_chain><item><author>darawk</author><text>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.&lt;p&gt;I see no support for the headline number in this paper. What it appears that the people making this video did was take &amp;quot;1000 individuals&amp;quot; (which the paper defines as &lt;i&gt;clusters&lt;/i&gt; of wallets) and divide by 68 million &lt;i&gt;wallets&lt;/i&gt; 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.&lt;p&gt;It should be obvious how absurd this is.&lt;p&gt;EDIT: Hah, actually the exact calculation they did is 10k&amp;#x2F;68mm and 5mm&amp;#x2F;18mm. That gives you exactly 0.01% and 27%. Discrepancy resolved. This is the exact ludicrious calculation the people in this video did.</text></item><item><author>FabHK</author><text>&amp;gt; The only way you could possibly measure this ...&lt;p&gt;&amp;gt; This is obviously going to ...&lt;p&gt;&amp;gt; Analyses like these are a total joke.&lt;p&gt;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].&lt;p&gt;Do you think that the NBER, London School of Economics, and MIT harbour idiots that have not heard of exchanges?&lt;p&gt;On page 5 of the paper:&lt;p&gt;&amp;quot;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. [...]&lt;p&gt;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.&amp;quot;&lt;p&gt;[1] &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.nber.org&amp;#x2F;papers&amp;#x2F;w29396&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.nber.org&amp;#x2F;papers&amp;#x2F;w29396&lt;/a&gt;&lt;p&gt;[meta note: had to revise this post several times before posting to comply with HN guidelines.]</text></item><item><author>darawk</author><text>The only way you could possibly measure this is just to look at the distribution of coins among wallets. This is obviously going to count crypto exchanges as single entities, which is absurd.&lt;p&gt;It&amp;#x27;d be like counting JPMorgan as a single person when computing wealth inequality in the US. Analyses like these are a total joke.</text></item></parent_chain><comment><author>v0idzer0</author><text>Yeah I mean the post is clickbait, but crypto (which can be bought with USD) unsurprisingly has similar inequality issues to USD. But the selling point of crypto was never curing inequality. It could have never done that. So the entire post is a bit of a straw man.</text></comment>