The text on the bottom more or less explains why this kind of analysis is almost worthless:
Due to the nature of easy & anonymous address creation, and corporate account management inherent to Bitcoin & the companies in the ecosystem, estimating the actual number of unique bitcoin holders as opposed to addresses is unfortunately much more difficult — & not something we can glean from observing its blockchain alone.
Addresses can not only overstate user numbers when single people unknowingly control numerous addresses, but also understate user numbers when single addresses hold the funds of numerous unknown people, like an exchange who may control balances in a traditional database.
The thing I don't get with CS pop graphs (like this one) is if you want to show something is an obvious power law distribution, why don't you plot it on a log-log graph? Then it will be perfectly obvious.
Most people don't understand log-log graphs. Also, taking the log-log is so powerful that even distributions that don't strictly follow a power law can look as if they're approximately following a straight line.
pp. 24-29 have nice log-log plots of various data sets, along with whether they can plausibly described as power law distributions. 'Wealth', interestingly enough, looks like a pretty straight line, but fails the statistical test badly.
Btw, if you just take logs and run a regression to estimate the exponent, you get a highly biased estimate.
In general, it's much better to do a direct statistical test, although the method described in the paper is somewhat involved.
I like what you shared. I actually can't believe I haven't seen that paper before (it has >4k citations ffs), but I admit, I work in a less statistical side of physics.
What I'll say is that what something is is a fuzzy term, although I generally agree what you mean especially about a power law says about the behavior in the tails especially. That comes from thinking a small deviation on the tail is "small" due to optics and not realizing it is deviation on orders of magnitude. That might be what the replier to my comment was referring to. That's why "two graphs" is usually a good answer.
PS
Also, I would never fit a straight line on a loglog or semilog graph, nor should anyone ever. People who do that don't understand what least squares is at all.
When it comes to what I'd actually do with say a few million dollars, I have to admit the answer is very likely "well...nothing really."
I could run some benevolent organization but I have to admit that if it was truly benevolent and important, I could start it tomorrow and accrue a donation base to fund it. Lack of a windfall isn't a great excuse for inaction.
Greed and materialism is some kind of lust and addiction that can rob you of happiness just like any other addiction.
Pretend you buy a luxury car. You'll probably look carefully after it, take it for routine washes, get dents removed etc. If instead you buy the $4,000 craigslist special then who cares - let the rain wash it.
If you live in a mansion, you hire a maid and a gardener and have to look after rooms of furniture, be worried about your treasures ... for what? How many places can you sit at once?
You live once, this is all you get. Forget that silly stuff.
Yes, but you can actually use money to make yourself happier. Studies have shown that spending it on someone else will increase your own happiness.
Give $100 bills to homeless people. Buy nice things for all your friends and family. Hell, with that kind of money, you could look into houses that are about to foreclose and anonymously pay off the mortgages. The only reason I've ever wanted to be rich is to see how creative I can get about spreading that wealth around to do some good.
You could start such a debt relief fund right now. Write a mission statement, get some website together, some bylaws... File for not for profit status...
It's harder because people would want some demonstrable efficacy and results before hopping on board... That's not a bad thing
Handing out windfalls carries a lot less stress and commitment than starting a struggling nonprofit. If we're talking about ways to buy happiness with money, starting a nonprofit is not a substitute for money.
OK but we have to look at how much. If you're sitting on say $500,000, just through accumulation, with no intention of using it, then how will adding a zero or two change that?
Does some goal or ambition miraculously appear? It might... Perhaps this puts new things in reach.
The crux of the argument however is that unless those things are something intimately personal like starting a serious art collection or buying a private jet, you could arguably get the money.
And if they are personal itches then you likely won't get them fixed through materialism. There's decent $100 paintings and $20,000 airplanes you can split between 3 or so people (ie, $5,000 a person). This is actual money, yes. But it's not 1%er status.
When they were kids, my father and his friends did the same with baseball cards. They would chew the gum, and then put the 'worthless' baseball cards into their bicycle wheel spokes.
Who knows how many Mickey Mantle rookie cards they might have come across.
Point is, nobody can predict when a currently-worthless item might explode in value.
Ok so first directly to your point are some envelopes I found recently that my Grandma had with what would have been potentially valuable stamps from the 1960s when stamp collecting was in its heyday. What actually happened is that many people were excited by the unusual prices paid for stamps at the time and hoarded what they thought would be valuable stamps in the future. (it even hit pop culture: the 1963 movie Charade is about someone who smuggled millions of dollars on a sheet of paper of priceless stamps)
As a result, when I was pricing these recently, they were apparently collected by every other 1960s hobbyist and put in a shoebox. You combine that with the fad of stamp collecting waning and now the first-issue, day-1, limited-edition 55 year old stamp is put up for a few dollars (and usually doesn't sell even then), because every one of them were snatched up.
Second, here's two other of my near-million misses:
I was in an early talk in the bay with what eventually became YouTube.
It went like this "yeah that's fine but what about real player? They tried all this already. On demand video isn't a new idea. Just another flying car. I wish you luck."
Then there was the time I worked in Venice and there was this small company called snapchat and i was like "isn't this a busy and well established market already? Don't consumers have things like MMS, imo, and a myriad of other options?"
Who knows, maybe if I did join then my dismissive pessimism would have been instrumental in their failure on some alternative timeline.
I think the right analysis here is that both companies succeeded because the demographic of who could access the technology and for what purpose changed ... so the same idea in different hands did different things. It really opens up the analysis when considering these as essentially commodity startups.
Sorry if it's rubbing salt in the wounds but these stories are really tiresome. You thought about investing at 5 dollars is completely meaningless. The famous spike to 1200 lasted all of 6 hours, it's also meaningless. Too many comments talk about 1. missing an opportunity because of the lack of commitment or 2. talking about an opportunity which was far to opaque to understand without the benefit of hindsight. It's like talking about the fish that got away, no one wants to hear it.
Shaming has its purpose. I've been pulled into line on HN for some badly worded comments and for that i'm thankful because it maintains the quality here.
How do you figure? I can buy some bitcoin's, send them to btc-e and start trading immediately. There is no friction involved aside from acquiring your initial BTC.
I know, I was really replying to parent comment that it was "extremely difficult" to trade, and drawing comparison to other markets seemed the most apt. For those in the know, it gets easier.
Now I'm curious who holds the wallet with 100,000 BTC. Is it publicly known who owns it? My best guess would be either one of the early developers, or a major exchange or bank.
Awhile back I remember reading an article that found many addresses with 10,000 BTC (I might be mistaken on the exact number) deposited into them all around a similar time frame and the coins have never moved.
If you define wealth distribution strictly against individual people. You can report on distribution against anything really, in this case addresses. I agree with your point and most naive readers will assume distribution is per person.
So those 7.4+9.4 million bitcoin address with a balance of less than 0.0001 ($0.06) are basically unusable at this time (due to current fee and blockchain being constipated for most of 2016), the sum up to about 2600$ worth and result in millions of "spam" entries on the blockchain
You're mostly right, Fees are not paid per address but per transaction.
If I had a thousand addresses full of these amounts (0.0001) I could spend them all in one transaction into a single address.
The fee would end up being higher than the standard due to the recommendation that fees are per byte.
So I might end up with 0.099 in the final address.
So it's possible to move them if you can combine enough of them together to make the transaction worthwhile.
Of course the part where you're right is that it's unlikely a single person owns a large number of these spam transactions and thus the economics doesn't make sense for them to move at this time.
However, if Bitcoin were worth 100x and the fee remained in dollar terms roughly the same , it would now become much easier to move these spam amounts.
Transaction fees are really a function of transaction size in bytes not per transaction. Adding an additional input address increases transaction size by 180 bytes. The output address and other common overhead is around 44 bytes. The current minimum cost of block space is 0.0000001 BTC per byte if you are willing to wait several hours for your transaction to confirm. At that rate adding an additional input will cost you 0.0000180 so anything less than that is not worth moving under current conditions. To be confirmed in a timely fashion you need to pay a per byte fee of about 5x so in reality amounts under 0.00009 are currently not worth spending.
Due to the nature of easy & anonymous address creation, and corporate account management inherent to Bitcoin & the companies in the ecosystem, estimating the actual number of unique bitcoin holders as opposed to addresses is unfortunately much more difficult — & not something we can glean from observing its blockchain alone.
Addresses can not only overstate user numbers when single people unknowingly control numerous addresses, but also understate user numbers when single addresses hold the funds of numerous unknown people, like an exchange who may control balances in a traditional database.