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Is btc's distribution a threat to adoption?
255 sats \ 17 comments \ @elvismercury 30 Jul 2023 bitcoin
It's widely known that, even though btc is more widely distributed than other crypto projects, by the standards of any fiat money, or even of gold, the distribution of btc is astoundingly centralized.
Thought experiment: imagine that 90% of the gold in the world was owned by Russia, in Putin's private vault; the other ten percent was spread proportionately as it currently is, e.g., if Peter Schiff currently has .0000001 of it, then in the thought experiment he'd have .0000001 of 10%. In this scenario, how appealing would gold be as a store of value?
My sense is that people would be a lot less excited about the prospect of gold-as-sound-money if one entity controlled so much of it. In different language, Putin would be a one-man Cantillon effect: the desires / tastes of Putin would disproportionately alter the value of things in the world, as encoded in the price of gold. Even if Putin never spent any of his horde, the looming threat that the representation of value could be so skewed by a single actor would be off-putting.
No single agent owns 90% of btc, of course, but the broad idea still holds. Bitcoiners often use this same distribution argument as one line of evidence for how Ethereum is a scam; and as a reason for why no new technologically-superior successor to btc could ever emerge: the new coin would never be able to get anywhere close to as fair a distribution as btc did. Nobody's gonna get behind a new coin where some VC fund pre-mined a third of them. Not in the long-term, anyway.
All that said -- is btc's distribution a concern for you? If not, why not? If so, is there anything to be done?
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110 sats \ 1 reply \ @OriginalSize 30 Jul 2023
You can always fork it and redistribute the coins as you see fit.
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0 sats \ 0 replies \ @ryu 30 Jul 2023
That's been done with Cash, and the dozen other spinoffs of Bitcoin that are nowhere near as good.
BTC and BCH are the only coins that aren't privacy-oriented ones I care enough about to use.
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344 sats \ 1 reply \ @mallardshead 30 Jul 2023
Cantillionaires have the ability to change the rules of the game itself in the fiat system. With bitcoin, it doesn't matter how much bitcoin a person owns, they can't vote, can't provide network security by staking, can't collude. They have within the protocol, as much power as someone with 0 bitcoin. The protocol (set of rules) are not different for a person with 10000 BTC than they are for someone with 0. Bitcoin is not something you can simply print more of, or invade a country and take. You have to work for it, even if you mine, it requires capex and a continuous expenditure of resources. And even here, it may or may not be profitable at times. The monetary policy of bitcoin is fixed, it isn't fixed in the cantillionaire fiat world. It isn't fixed with ETH. Distribution of ETH is absolutely a threat to adoption, because their block 0 was a premine block. And now with PoS, ETH gives token holders powers within the protocol itself. Without doing any work, or expending any resources, a staker simply acquires more and more power within the system, and the prospects of collusion get better. This is exacerbated by the ability to use derivatives within the system (LSTs et al), which can be derivative stacked to control more of the consensus.
Bitcoin is different, block 0 is inaccessible, as it violates consensus rules not pointing to a previous block, and the price of bitcoin when it began in Jan 2009 was zero. It remained zero until a rando decided to pay a guy in BTC to order him pizza a year later. This isn't the case for any other project, which has never overcome this bootstrapping problem. The distribution of bitcoin is incredibly fair, and directionally, will continue to distribute. At some point a person holding a bunch of bitcoin will swap it to capture some economic expansion (goods or services) outside the system, and because of its disinflationary nature, this will benefit whomever holds it next, who over time will be able to capture even more economic expansion than the previous person. If a person holding a bunch of bitcoin doesn't distribute their bitcoin, they simply benefit everyone else holding bitcoin, without any ability to alter the game's rules by leveraging time.
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0 sats \ 0 replies \ @elvismercury OP 30 Jul 2023
I'm not talking about the ability of a holder's ability to perturb the literal results of bitcoin, I'm talking about the ability to perturb the actual value that the token encodes -- the price signal, as determined by distributed transactors across the world.
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4 sats \ 0 replies \ @asdasd123sadasd2 30 Jul 2023
you have to provide value to humanity to keep a positive BTC flow to you, if not within generations you will redistribute all yourself by buying land, goods, or by having spoiled offsprings that spend it all without working
also coins can always be lost
you need to be consistent for decades and decades, and its very hard, no government will come to rescue you if you do the wrong investments
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0 sats \ 0 replies \ @premitive1 30 Jul 2023
life isn't fair. Those with bitcoin will inevitably use some of it to buy things. those without bitcoin will inevitably do things of value to acquire some.
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0 sats \ 3 replies \ @mudbloodvonfrei 30 Jul 2023
It's true that the demand for bitcoin is dependent on network effects, but I'm not sure that it has to do with the actual distribution function so much as the number of people who have it. I'd even argue that an empty wallet, if the owner is unique, is important. If Putin holds most of the gold that doesn't change the fitness of gold as a store of value in the long term, although of course he could dump it and crash the market short-term.
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0 sats \ 2 replies \ @elvismercury OP 30 Jul 2023
The number of people who have it is the aspect of distribution I'm referring to. The question of how short the 'short term' effects would be of one person's ability to perturb the value of all the world's goods is the question at hand.
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0 sats \ 1 reply \ @mudbloodvonfrei 30 Jul 2023
Well, okay let's say I'm Putin and I own 90% of the total bitcoin supply. If I dump the entire supply now, for dollars let's say, then nothing really happens. The price of bitcoin in dollars will crash and reach some new equilibrium until it starts to climb again at whatever rate bitcoiners can orange pill people, but this won't have any systemic effects. If all of the world's goods are denominated in bitcoin then I can dump my supply, but only out of spite. What would I dump it for? Dollars? By this point they're either a token for paying taxes, denominated in bitcoin, or defunct. Buy out all of the consumer goods in the world? At this point, it's in my interest to keep holding since I have a lot of bitcoin in a bitcoin-denominated world.
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0 sats \ 0 replies \ @elvismercury OP 30 Jul 2023
I think that's basically right, except I think you're emphasizing the wrong point: Putin isn't dumping as an attack, he's spending because he wants stuff, the same as people do who are hugely privileged in the current fiat system, with the same effects: the distribution is such that he spends egregiously and keeps fucking up the prices of goods (Cantillon) and de-valuing the larger currency (bc he's such a whale).
Eventually the system equilibriates. In the meantime, the other users get incessant devaluation and price instability.
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0 sats \ 0 replies \ @sudonaka 30 Jul 2023
no
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80 sats \ 5 replies \ @hueso 30 Jul 2023
Check out the GRIN project. It tackes the distribution along with the privacy problem.
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0 sats \ 2 replies \ @elvismercury OP 30 Jul 2023
I knew about Grin. The lack of pre-mine helps, of course, but pre-mining is only one of the ways that distribution gets skewed -- the fact that, post-btc, whenever new projects are announced a million people pounce on it and mine the shit out of it skews things massively -- not technically a pre-mine, but definitely a thumb on the scales of distribution. Is Grin different in this regard?
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20 sats \ 1 reply \ @hueso 30 Jul 2023
It's not just the pre-mine, it's about the emission schedule. Take Monero or Dogecoin for example, both have a very steep emission curves, with the vast mayority of the coins mined on the first months/years after launch, disproportionately favouring early adopters. It's not technically a premine but has the same results in practice, that can be considered scammy. Grin has a linear emission schedule, which disincentives speculation and promotes a fairer distribution, with inflation tending towards zero. Bitcoin sits at a middle ground: its halving schedule favors early adopters but not as much as Monero/Doge.
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10 sats \ 0 replies \ @elvismercury OP 31 Jul 2023
It's a good point -- all of these things (pre-mine, emission, the resultant distribution, the identity of who the coins have been distributed to) are all elements in how monetization and price discovery unfold.
That said, I'm less certain than you seem to be that the 'right' answer is known. The exponentially decaying distribution of btc may have been the key to its success, creating stakeholders who had a giant vested interest in building it out and getting it accepted. (I'm not sure if this is true, but it's not an idea you can dismiss out of hand, imo.)
The success of Grin -- or lack of it, from a price standpoint, vs Monero for instance -- might be evidence of that, too, although there's a lot more in play, obviously. I also think Monero's tail emission strategy is sound. I expect that btc will wind up doing the same thing in a decade, though it is heresy to suggest it. We'll probably know the answer in less time than that.
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0 sats \ 1 reply \ @mudbloodvonfrei 30 Jul 2023
Isn't that the shitcoin where some anonymous developer dropped a white paper on some forum? I was still into shitcoins when that came out and that cheap marketing ploy was one of many small steps to maximalism.
Anyway, Darth isn't here so I'll fill in... But shit.. I'm in somewhat of a good mood.. Okay, okay. "Don't do shitcoins kids, they turn this egg-standin-for-a-brain into this omelette-standin-for-brain-on-drugs..."
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0 sats \ 0 replies \ @hueso 30 Jul 2023
What's wrong about it? I agree with "don't do shitcoins" (99.9% of altcoins are) and it's good to be skeptical but attacking some project just because it's not Bitcoin makes no sense.
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