Let’s Take a Closer Look at Bitcoin’s 'Wealth' Distribution

in #bitcoin3 years ago (edited)


btcwealthdistribution.jpg
Image source

Once in awhile I come across interesting statistics about Bitcoin or other cryptocurrencies and a little while ago I came across this image from September 12th 2017. It shows the Bitcoin 'wealth' distribution of that point in time, so it is a little bit outdated.


Screen Shot 2018-03-12 at 16.25.08.png

Skewed, isn’t it?

But what about today? How is the Bitcoin 'wealth' distributed today? Glad you asked. I looked it up and here is what I found.

Bitcoin wealth distribution as % of total (March 12th 2018)

(based on addresses, not individuals)

DateTop 10Top 100Top 1,000Top 10,000
12-03-20185.75%18.56%35.21%56.68%

Source of data

Respectively, how much do the top 100 and top 1000 richest addresses have together? 3,136,231 BTC and 5,950,577 BTC. So the richest 100 addresses hold a little bit more that the richest 101-1000 addresses!

But is it really that easy to say? No. There are exchanges that hold BTC for thousands of users on 1 single cold storage wallet address. Also, many addresses could be associated with one person (hardware wallets that use a different address every time). So actually, these statistics can be easily misinterpreted by anybody. It doesn't show how concentrated the BTC wealth is...

Bitcoin distribution details based on amount of BTC owned (March 12th 2018)


Screen Shot 2018-03-12 at 16.24.36.png
Source

I am planning on regularly checking Bitcoin’s 'wealth' distribution to monitor it because it interests me. For those who are interested too: I’ll do the research and will write a post about it :-)

What are the first thoughts that pop into your head when you see these statistics? What other statistics would you like to see?

Cheers


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Disclaimer: I am not a financial advisor, trader or developer. I am just a blockchain & cryptocurrencies enthusiast. Make sure you do your own research, draw your own conclusions and do not invest any money that you cannot afford to lose.

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Interesting! I saw that graphic too once and it is indeed something to make one frown.

But I do wonder: Does this include Satoshi's 1 million btc? Because that will indeed pull the average up.

Secondly, what about exchanges? I imagine they have a LOT of Bitcoin too, but they are not the sole owners of those Bitcoin.

After those two are deducted I think it will paint a more realistic picture. Whether that means there is a better distribution... I don't know, and I in fact doubt it. There will probably still be the uberrich 0.1%. But this is kind of the case in the 'real' world too. I am not sure how it is possible to distribute in such a way that there are no whales.

Secondly, even if it were distributed without whales, over time there would still develop a richlist. After all, some people suck at making money and others do not. Even if we all started with 1 token, given enough time there would develop a situation where 0.1% of the token holders own the majority of tokens.

I am not sure it matters either. Does the fact that someone else owns 100K BTC mean anything to me? As long as it's not all dumped at the same time, I'm not sure it would ever really affect me.

Some fair points about the Satoshi addresses and the exchanges, also pointed out by other commenters. I don't have a source that filters them out, also not sure whether that is really relevant. I am more interested in how this develops over time as a whole and will therefore look at the numbers from time to time and document them here on Steemit. I am planning another post on other coin distributions in the near future and might combine them in the end :-)

When more and more people are starting to use cold storage, the relative size of the bug exchanges will probably go down. I expect the distribution will appear to be changing in more fair, while in reality nothing might have changed though. We'll see what happens!

Cryptos seem to mimic the other financial profiles of our 1 percenter world.

That very much seems to be the case, but it cannot be interpreted like that so easily. Small note: the statistics are based on addresses and not individuals so some addresses belonging to some big exchanges are in there too. And don't forget the addresses of Satoshi Nakamoto, which are also amongst the top :-)

Like you mentioned, your view is based on the wealth distribution based on addresses. Keep in mind that quite a few of these richest addresses are most likely cold storage from exchanges, so those coins belong to a lot of people in reality. (Just saw that you replied this in the comments, but I'll leave it up)

I'll always recommend that people stay in control of their own private keys, no matter how secure the exchange might seem. Even though those people might be the legitimate owners of those coins, having them so centralized isn't a good idea in general.

Great point Daan! Indeed, it would be better to look at the distribution while filtering out known exchange addresses and maybe the Satoshi addresses as well. I haven't found a data source that does that yet, definitely let me know when you find one.

It will be interesting to see whether to top 1000 will hold a smaller and smaller percentage over time. I think that is quite likely. Especially if more people store their BTC in a more secure way (at least not on exchanges). Also, I can image some big players slowly selling off a bit of their stack, since accumulating even more does not raise that standard of living any longer. They might diversify into other crypto or real life assets (or their tokenized versions in the future of course).

Yes, the bitcoin distribution does appear to mimic the current wealth distribution in the world. However, I still believe that cryptocurrency is our opportunity to redistribute the wealth in the world. I'd appreciate it if you'd keep sharing your research. Thanks for the post.

I think and hope you are right! Note: these numbers cannot be interpreted as an indicator of wealth that easily though. See the notes in the other comments as well :-)

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