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Comment by zanny | Hacker News Reader

This is why I got out of bitcoin trading. It used to correlate to the general attitude about it. Now the coins and miners are so centralized the real driving force of bitcoins price is the thousand wallets holding 95% of all BTC. Its like trying to predict market movements for a stock where 95% of the shares in a company are owned by one person. It isn't up to anyone else but that person where the price trends, because the behavior of the 5% crumbs mean nothing against the behavior of that one holder.

The price will simply go up when the whales want it to, and go down when said whales want to cash out. Fees could go up or down, China could do X or Y, the Fed could regulate it or not, and the general opinions of the ecosystem don't matter whatsoever - price is fairly solely dictated by the whims of a few dozen elites nowadays.

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Reposting this as pertinent:

  In economics, the Gini coefficient is the standard measure 
  of how inequitable a society is. This is tricky to 
  determine for Bitcoin, as it's not quiet a "society" in 
  the Gini sense, one person may have multiple addresses and 
  many addresses have been used only once or a few times. 
  (The commonly-cited figure of 0.88 is based on one small 
  exchange in 2011.) However, a Citigroup analysis from 
  early 2014 notes: "47 individuals hold about 30 percent, 
  another 900 a further 20 percent, the next 10,000 about 
  25% and another million about 20%"; and distribution 
  "looks much like the distribution of wealth in North Korea 
  and makes China's and even the US' wealth distribution 
  look like that of a workers' paradise

  Dorit Ron and Adi Shamir found in a 2012 study that only 
  22% of then-existing Bitcoins were in circulation at all, 
  there were a total of 75 active users or businesses with 
  any kind of volume, one (unidentified) user owned a 
  quarter of all Bitcoins in existence, and one large owner 
  was trying to hide their pile by moving it around in 
  thousands of smaller transactions. (Shamir is one of the 
  most renowned cryptographers in the world and the "S" in 
  "RSA encryption")"

[1] via https://news.ycombinator.com/user?id=davidgerard

For context, those numbers came from 2014. http://www.businessinsider.com/bitcoin-inequality-2014-1

I can't find any more recent study specific to the Gini coefficient, however these[1] charts show an improvement over this snapshot[2] from May 2015.

[1]: https://bitinfocharts.com/top-100-richest-bitcoin-addresses.... [2]: https://www.cryptocoinsnews.com/1-bitcoin-community-controls...

The original studies suggests early mining rewards were distributed mostly to a small group of users. It also shows attempts by large stakeholders to hide their large holdings by distributing funds across several wallet accounts.

If someone were to have monitored IP addresses in the swarm it may be possible to correlate attempts from single users hiding their funds across many wallets. Simply looking at the blockchain balances of single addresses will not necessarily indicate a single person controlling many addresses.

How can they possibly identify 47 individuals and what does that even mean in bitcoin context? Would an exchange fund holding millions of people’s coins be considered a single individual?

IP addresses in the swarm, among other unique indicators of identity.

Please don’t quote large blocks of text like that, it’s impossible to read on mobile because of HN’s crappy web layout

But on desktop it looks rather nice

It seems like yes the day-to-day fluctuations may be at the whim of the large wallets, but how can they actually be in control of the price over longer periods?

Or if they can, then given that it's in their interest for the price to keep rising long-term, why not hold and go along for the ride?

They want to slowly sell off their stock so as not to affect the price too much. If they sold nothing, they'd make no money off bitcoin and eventually when they did want to sell, the effect would be so huge as to crash the entire currency. So to maximize their return from their bitcoins, they need to constantly sell off bitcoins. Not too much to affect the price too badly, but not so little that they aren't cashing in appropriately on their investment.

Most whales don't want to sell off their stock. Simplified spoken, they want to sell one coin for 7100, then buy one coin back for 7000 and cash out those 100 bugs (or cash out 50 and reinvest the other 50). They use their huge volume to try to influence the market their way.

But I guess most whales are in competition against each other, rather than cooperating. And that would be a good thing.

where are you getting those false numbers from, this is the distribution

https://bitinfocharts.com/top-100-richest-bitcoin-addresses....

Trading on attitude is not the best trading analysis strategy, I'm glad you sold before losing more money

1 person =/= 1 address, and the gini coefficient is a measure of wealth distribution among people. bitinfocharts doesn't know which addresses are actually owned by a single person. an exchange, however, has the data and resources to suss it out, or at least estimate.

Looking at that kind of statistics can be interesting as long as you understand that any individual is likely to hold their funds over a number of Bitcoin addresses. That is how wallets work. Single addresses with large holdings are mainly cold storage systems, the largest ones are identifiable as exchanges. So those are coins owned by customers.

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