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by flashdance 3123 days ago
Your source uses poor methodology to calculate inequality, and is really outdated.

The 2014 article you're citing uses this 2013 article [1] as a source. This uses data from bitcoinrichlist.com, which contains balances for all active bitcoin addresses at the time.

This sort of blockchain analysis isn't super useful, especially in 2017, because some extremely-rich people have funds in multiple addresses and some extremely-rich addresses contain funds for multiple people.

The richest bitcoin address in 2017 has 1.8B worth of bitcoin, but it's the cold storage address for hundreds of thousands of bitfinex users [2]. It's possible that many of the other addresses on the richlist are coinbase vault addresses or cold storage addresses for other custodial wallets. The important part is that, with some publicly disclosed exceptions, we don't know if a rich address belongs to a single person or an organization.

Meanwhile, the poorest addresses contain UTXOs worth pennies that cost more in fees to send than they're worth. These addresses have been completely abandoned by their users and have no practical owner.

Even addresses with a spendable balance don't correspond to one user ever since Hierarchical Deterministic address generation has become the standard. HD wallets generate a new address for every incoming transaction for greater privacy [3]. A typical user may have their funds spread over dozens of addresses.

That being said, I'm sure wealth is highly concentrated in the bitcoin ecosystem: it's just very hard to quantify to what degree it is.

Disclaimer: I hold bitcoin and some other cryptocurrencies.

[1] http://www.businessinsider.com/927-people-own-half-of-the-bi...

[2] https://bitinfocharts.com/bitcoin/address/3D2oetdNuZUqQHPJmc...

[3] https://support.mycelium.com/hc/en-us/articles/207045475-Wha...

1 comments

forgive my shock but are you saying there is one single private key out there that unlocks 1.8B USD?

edit: nvm you linked it second. that seems insanely risky to put it all in one address, right?

One public key contains 1.8B USD, but take a look at the address again:

3D2oetdNuZUqQHPJmcMDDHYoqkyNVsFk9r

See how it starts with a 3? Most normal bitcoin addresses start with a 1. The 3 means that it's a pay to script hash address, which means that its likely a multisignature address.

Multisig addresses require multiple signatures to send funds. This could be two out of three possible signatures, seven out of seven possible signatures, fifty out of one hundred possible signatures, it all depends how it is configured.

In short though it kind of works like nuclear weapons where you need multiple keys help by different people to authenticate a transaction.