[iownzerobtc]

Several issues with using this metric to measure wealth inequality for crypto currencies, especially those with smart contracts like Ethereum.

- A single address might be a contract like WETH, which can hold tens of billions of dollars worth of tokens despite all users in the network having access to it. Similar with centralized exchanges holding many tokens. Addresses are not users.

- This metric often confuses “inequality of interest” with “inequality of wealth.” A user holding $10,000 of ETH and another user holding $100 of ETH may be in similar fiat-wealth brackets, but one is more interested & invested in crypto than the other.

- It is very easy to spin up a new wallet as it’s effectively just a random unique number. A single user might have 10-20 wallets with almost-zero tokens leftover, and all of their assets concentrated on one or two accounts, which further skews this stat.

- A number of tokens in the network are inaccessible due to being locked in a contract or sent to a burn address. The standard ETH burn address has $250M worth of tokens.

There is a lot of crypto disparity and inequality but this stat at face value is fairly meaningless.

[Synaesthesia]

The fact is still that the crypto sphere is even more unequally owned than the economy or the stock market, which is already extraordinarily unequal.

When I was first excited for bitcoin, it was because of its revolutionary capacity for people to transact without governments and banks, and to own and control that means themselves. Well that really hasn't panned out at all.

[aqme28]

I'm sure this is true, but it's still not a good reason to put out bogus statistics. There are other ways to argue this point without hurting your credibility by lying about it.

[v0idzer0]

> When I was first excited for bitcoin, it was because of its revolutionary capacity for people to transact without governments and banks, and to own and control that means themselves. Well that really hasn't panned out at all.

This has panned out. This is the exact reality of crypto right now. It has nothing to do with inequality whatsoever. Solving inequality has not panned out, but it was never expected to, nor possible.

[emteycz]

Huh? I'm sending Bitcoin without involving any government. You're doing something wrong if you feel like you need to involve them.

[me_me_mu_mu]

Except come tax time you need to declare your crypto..

[emteycz]

Fortunately I live in a country where such thing is a big tabu. I only need to declare my gains (and only in case I'm holding less than a year) - and there are none if I am simply using BTC to send cash.

[colecut]

So btc has only gone down since you bought it?

If you buy btc, and value goes up, and you use it to "send cash" that is a gain.

[emteycz]

BTC has stayed the same price for the duration of my transfers. It's just a few hours most of the time. There is also allowance in the law for this case - I don't need to declare anything unless I profit over $1k/year.

[X6S1x6Okd1st]

> The fact is still that the crypto sphere is even more unequally owned than the economy or the stock market, which is already extraordinarily unequal.

What are the specific figures & sources you derived this claim from? Last time I looked into this it was somewhat surpising, but there are huge problems with the methodology (e.g. assuming that 1 address = 1 person is a really broken assumption)

https://www.frontiersin.org/articles/10.3389/fbloc.2021.7301... is a good attempt, but still flawed methodology. It's latest estimate for bitcoin is gini index on wealth per account at ~0.45

Which if it was a country would make it one of the least high in terms of wealth inequality which is hard to believe.

https://en.wikipedia.org/wiki/List_of_countries_by_wealth_in...

[FabHK]

> Several issues with using this metric

Which metric are you referring to?

The authors of the paper on which the statement is based are fully aware and address most of issues you enumerate.

See my other comment.

https://news.ycombinator.com/item?id=31460346

[jeremyjh]

They are referring to the metric they imagined was in use based upon reading the title.

[iownzerobtc]

Thanks for the link. The paper mostly only addresses one issue I that mentioned: attempting to distinguish intermediaries from individuals. It does not make any conclusions about how adoption of crypto as a whole will result in 100x more unequal wealth distribution than the regular economy which is what the OP tweets seem to be implying based on this 0.01% statistic.

The paper does point to the fact that holdings are skewed; 400,000 individuals control almost half of the circulating supply, so—like with the stock market—a very small handful of players stand to benefit if the price continues to appreciate significantly. This is particularly a problem for crypto currencies like Bitcoin that have a fixed supply capacity and are primarily used as a store of value. (Disclaimer: I own no BTC and feel it has inherent problems.)

Another study comparing Bitcoin, Ethereum and other coins to real world Gini coefficients finds similar results: that a small number of addresses hold a significant sum of tokens, but that overall wealth distribution in crypto currencies is often in-line with that of real economies.[1] The idea that crypto holdings mirror the wealth inequality of real economies is hardly surprising considering this is where the investors are coming from.

Two more interesting points raised by [1] worth noting:

> Results from both Bitcoin-like and Ethereum-like cryptocurrencies suggest that the wealth distribution is initially poor likely due to only a select few participants controlling the majority of the wealth. But this concentration often dissipates as more participants join the system, as observed in Bitcoin and Ethereum.

> Bitcoin-like coins often have capped supply, i.e., the number of these coins are algorithmically limited to a predefined quantity to provide intrinsic value to the asset. Ethereum, on the other hand, does not impose a strict limit on the supply of Ethers. ... Thus the figures reported in this subsection will likely change significantly over time, unlike Bitcoin-like currencies in which a large proportion of wealth is already distributed.

[1] https://ulir.ul.ie/bitstream/handle/10344/11073/Sai_2021_Cha...

[hammock]

What is the equivalent of this metric for physical gold, or even dollars?

[iownzerobtc]

Gini coefficient is often used in traditional markets:

https://vitalik.ca/general/2021/07/29/gini.html

[hammock]

That’s not what I meant. What portion of all mined physical gold is held by the top 0.01% of gold holders?

[MrMan]

In all markets there is no traditional vs non traditional market

[jwilber]

None of these make this stay meaningless at face value.

Almost all of your points apply to non-crypto as well, but nobody is denying wealth inequality there.

[plsbenice34]

An invalid statistical argument that appears to support the truth is still invalid. Just like a proof for a mathematical theorem can be invalid even if the statement turns out to be provably true by other means.

[hihihihi1234]

Nobody is "denying wealth inequality" here either, the point is just that the headline statistic may be a bad way to measure wealth inequality in crypto.

[iownzerobtc]

There is no doubt crypto includes wealth inequality as the network exists within our capitalist society. If 10% of the world population were to purchase crypto today, it would mirror the same wealth inequality we see in our fiat economy.

But claims that crypto networks display 100x more wealth inequality is not supported by this statistic, and articles should not be basing their arguments on this stat without understanding the implications.

[salawat]

>Addresses are not users.

Mmmmhmmmm. Welcome to the User-Agent problem. Unfortunately, Society will take your idea and massage it until the rest of society "safely" (to their thinking) can make that assumption.

[forgotmypw17]

The crypto economy does not automagically solve all the old problems, but it does allow them to be more transparent and visible.

[MomoXenosaga]

Get in your car and drive to the bad part of town. Pretty visible no?