Post
Topic
Board Economics
Re: Distribution of bitcoin wealth by owner
by
rpietila
on 24/10/2013, 15:54:07 UTC
Here is a list of bitcoin-related activity. I would like to have better estimates available also, so please refer them here. Anyway, according to this one, bitcoin is overwhelmingly a first world thing (second world is now part of first FYI), and due to its highly technological nature, it is likely to appeal to the rich in medium and low-income countries.

A corollary would be that people who have bought bitcoins are wealthy, and therefore it is reasonable to conclude that they buy with rather large sums. My guesstimate of a typical first buy would be $100-$10000 with rather few buying either less or more. I run a precious metals shop, and also an automated silver depository. I have access to the statistical distribution of our customers' holdings, which has inspired this analysis.

Before this year, $100 would have fetched you an average of BTC10, and $10,000 would translate to BTC1,000. In 2013, $100 is about BTC1 and $10,000 would net you BTC100.

The important thing is that only a minority of people who have invested into bitcoins have less than BTC1. To fall into that category, one would have to be both poor and extremely conservative (yet willing to invest the time to learn..) and have bought in March or later, this year. All other scenarios lead to higher balance.

The history of mining can be divided into two periods: mining with existing equipment and mining with specialized equipment. When existing equipment was used, mining generated essentially free coins, and lots of them. Therefore all such miners have large balance (if any - we will later analyse the sold out phenomenon). After mining became an industry with investment calculations and GPU/FPGA/ASIC farms, the investments have generally been on par with the expected number of bitcoins generated. This kind of activity also produces rather large holders.

I have no knowledge if the bitcoin faucets and similar things have ever produced new bitcoin users/holders. I don't know what has generated the 1.5 million dust addresses (please help me!), but I doubt that it corresponds to many actual users.

On the other hand, services such as Easywallet or Instawallet (defunct) can host many users and mask their activity from the blockchain. Also exchanges can obscure the relationship between their cold wallets and the customers' balances that are stored there.

After delving into this matter in the last 1-2 days, I am tempted to drastically reduce the total number of bitcoin users, because I haven't found the mechanism that actually would have produced millions of sub-BTC1 holders so far. The number of investors will likely stay quite much the same after the update.