
Is the Bitcoin network an oligarchy? - rapnie
https://www.epj.org/epjb-news/1510-epjb-highlight-is-the-bitcoin-network-an-oligarchy
======
craigc
I am well aware that most people on Hacker News hate Bitcoin and
cryptocurrencies so a lot of these types of studies and articles that are
negative end up making their way to the top.

It is strange that this study was from 2017-2018 and yet they only considered
data from 2009-2013. Would be nice if there was an explanation as to why.

One thing I wanted to point out is this seems to be presented to shine a
negative light on Bitcoin, but I have a feeling that if you were to plot the
owners of _any_ equity you would find the exact same patterns. People who get
in early will own a majority of the supply.

For example take a look at Morgan Stanley stock. 86% of the shares are owned
by institutional investors and of that chunk, five institutions own 58% of
them:

[https://www.nasdaq.com/symbol/ms/ownership-
summary](https://www.nasdaq.com/symbol/ms/ownership-summary)

I also think these types of patterns with regards to transactions probably
exist with other currencies as well, but it is just that the data is not
available for the public to analyze.

~~~
0xcde4c3db
> I am well aware that most people on Hacker News hate Bitcoin and
> cryptocurrencies

It's not hatred of Bitcoin to think that it's more worthwhile as a white paper
than as an investment vehicle.

~~~
DonHopkins
It's not Bitcoin itself, it's just that most people on Hacker News hate
fraudsters and charlatans perpetrating get-rich-quick pyramid schemes.

~~~
robertAngst
You arent a programmer right?

Or did you not know there are only 21,000,000 BTC ever ever ever? Have you
heard of fractional reserve banking?

~~~
apoorvkumar
Fractional reserve banking is independent of the currency. You can implement a
bitcoin fractional banking system if you have trusted party available (the
bank) and as long as you consider bitcoins to be homogeneous. Although it'll
be funny (and borderline eco-terrorism) to use bitcoins if there exists a
trusted party (like CME for bitcoin futures, bitcoin wallets, bitcoin
exchanges, your ISP, your hardware manufacturer).

Limited bitcoins doesn't make it any less vulnerable to being marketed (yes,
there is a lot of marketing $ behind it) as a get rich quick scheme. In fact,
the growth of fiat value of bitcoin is the biggest reason people see it as an
investment vehicle. Bitcoin system might be helpful in countries with
oppressive governments and no trustworthy party, but I don't see largest
orders of bitcoins coming from North Korea.

------
hapnin
Of course only small communities have a majority of btc. Too many people -
geeks included - spent too many years believing the fud being broadcast about
Bitcoin while others were collecting btc. I've seen the blistering scorn from
some here on HN over the years.

When I first ran across Bitcoin in 2010, I thought it was a scam but was
intrigued by the tech. After studying it for about a month, I realised it
wasn't a scam (though scamsters abound in cryptocurrencies, as in all things
money) and went around to my friends in the tech community in my city to show
it to them. They know me to be literate in networks and cryptography but only
one person in the ten or twelve I approached was equally interested. The rest
poopooed Bitcoin, some outright laughing me out of their offices.

Institutional thinking is what kept a lot of smart people from even looking at
Bitcoin early on. The findings in this study shouldn't be surprising. In five
years, should the internet still be functioning, Bitcoin will be more spread
out than it is now.

~~~
eksemplar
What are you basing this on, your gut feeling? If I look at where I can
actually use bitcoins, or crypto currencies in general, the list is dwindling.
A few years ago I could buy coffee with crypto, I can’t today. A few years ago
I could buy certificates (if I could also pass them) and other Microsoft
products with crypto, I can’t today. A few years ago I could rent an vacation
home with crypto, I can’t today. Hell these days I can’t even conver crypto
into actual money in my country.

Maybe it’s not like that in the US, but the only useful thing I can spend
crypto on as a Scandinavian is paying for my domains.

~~~
hapnin
I'm basing it on eight years of experience in Bitcoin.

"Bitcoin for coffee" and the like is a waste of the tech, imo. Buying network
services such as you described is a better use as intercountry payments with
debit cards isn't always feasible.

Bitcoin's use is better as a transnational currency when traditional payment
channels are cumbersome. To be frank, Bitcoin still has some work to do in the
payment channel dept but Lightning Network is getting there.

In the US, there are more than a few places where you can trade out btc for
gold/silver and sell the metal for fiat. It's preferable to selling on an
exchange, imo.

If you can't spend now, hang onto your btc until you can. Saving is always a
good idea.

~~~
qplex
>Saving is always a good idea.

Not really.

Bitcoin has lost over -50% of its value in the last 6 months.

~~~
hapnin
Bitcoin has more than doubled in price in the past year.

On an even longer timeline, we're all dead.

------
strulovich
2009-2013 is a long time ago, so maybe the title should be “Was the Bitcoin
network an oligarchy?”

~~~
garmaine
Unfortunately the answer is still yes, just a different composition of
oligarchs.

~~~
darawk
That exact fact makes it not an oligarchy.

~~~
eksemplar
An oligarchy isn’t defined by a set of stable oligarchs. There can be a shift
in power in a oligarchy and there typically will be because the oligarchs
aren’t friends.

If you look to ancient Athens, it wasn’t uncommon for an oligarch to be
exiled. If you look to modern Russia, well, there is a reason a lot of former
Russian oligarchs chose to live in London and not a Russian prison.

An oligarchy is almost always a turbulent place, most of them making the BTC
powershifts look calm.

~~~
darawk
Churn at the top is the exact thing you want in a dynamic, robust economy. You
don't want equality. You want movement. Sure, Russia and Athens had _some_
churn. But it was incredibly low.

------
21
When bitcoin appeared, everybody was saying that "only retarded people would
`invest` in such an obvious scam. you would be better to blow your money in
Vegas, at least you'll get a free drink". Now the same people say "it's not
fair that some got to buy it at such cheap valuations".

~~~
jib
No we are still saying the same. Lots of people made money on pyramid schemes,
that doesn’t make them a good investment. The longer a pyramid scheme runs,
the dumber it is to invest in it.

If you truthfully believe bitcoin will develop into a stable alternative to
state run currencies, great, I wish you good luck.

I don’t. To me it is like religion - they can’t all be right and they are
mutually exclusive. I don’t trust myself to be able to pick the winner among
all the losers.

~~~
dane-pgp
The notes and coins for the euro were first issued in 2002, and the first
bitcoin was mined in 2009. What makes one a pyramid scheme and the other not?

The answer surely can't be "every currency issued by a government is stable
forever and every crypto-currency will collapse before 5 years".

What I'm saying is, there are a lot of currencies out there, and some are more
stable and have a better track record than others. You may not trust yourself
to pick a winner among the losers, but I suspect you do use at least one
currency from time to time, so you have picked one by default.

------
sanxchit
Pardon my ignorance, but how is it possible to track Bitcoin holders? I
thought that it was really easy to create multiple Bitcoin addresses, so if a
rich miner wanted to hide his holdings he could create a separate address for
each transaction and he would in effect be untraceable right?

~~~
dangero
There is lots of other metadata to collect: You can monitor which nodes
received the transaction first. Edge nodes can get IP address of sender. Who
are the transactions with? Amounts, quantity, and time of day/week/month could
all provide correlation.

------
siruncledrew
Honest question: Is there an etherscan.io for bitcoin to figure out what the
largest token holding addresses are?

If possible to figure out who the addresses belonged to, then the biggest coin
holders could be known.

~~~
firsttimeuser
[https://bitinfocharts.com/top-100-richest-bitcoin-
addresses....](https://bitinfocharts.com/top-100-richest-bitcoin-
addresses.html)

~~~
firsttimeuser
[https://btc.com/stats/rich-list](https://btc.com/stats/rich-list)

~~~
firsttimeuser
[https://99bitcoins.com/bitcoin-rich-list-
top100/](https://99bitcoins.com/bitcoin-rich-list-top100/)

------
atomical
How do these users have political control like an oligarch would have?

~~~
anoncoward111
Any entity that controls more than 51% of network capability (i.e. owns and
operates a lot of expensive hardware) can, in theory, begin making fradulent
transactions called "double spends".

Any common user of the network that is unfortunate enough to get caught up in
this scheme would lose their money. And the long term value of the network
would most likely plummet, but in 2013 it didn't for some odd reason :)

~~~
craigc
Unless I am missing something, this paper is referring to connections between
addresses when it mentions the “Bitcoin network”. Not actual mining nodes. It
does not have anything to do with a 51% attack.

~~~
anoncoward111
Oh, apologies! You are totally correct.

In that case, the select few owners of these coins could dump their holdings
to buyers who are otherwise unaware of these large numbers of "hidden" coins.
The owners make good money, the buyers overpay.

After that, it would be up to the core developers and the new holders of the
coins to make the Bitcoin ecosystem a valuable place to exchange money. If
they do that, then the coin will survive all that inflationary volume.

If the oligarchy never dumps, then they've just aided Bitcoin price support.

A coin does not equal a vote in Bitcoin version support, only hashing power
does.

But de facto, I suspect wallet size is correlated with hashing power.

------
jcfrei
Is this online "epdf" viewer by Springer running sluggish on purpose? Or is
that just because of my dated notebook? Whenever graphs are rendered my CPU
usage just spikes.

------
7373737373
With the emergence of electronic id cards in several countries (e.g. Estonia,
Germany), there is the real possibility of equally distributing currency to
card holders, even depending on properties such as current residence or birth
date (dystopian version: names or only people with specific biometrics: eye
color, heights or specific facial features). It is possible to create a
signature scheme that guarantees privacy while avoiding double spending. One
limitation to this is that organisations wanting to use signatures (at least
in my country) must register with the government as a service provider, which
might be a point of failure.

------
UncleEntity
I'm going to totally guess (having only read the article abstract) and say the
circles they are observing are in large part due to the exchanges.

So the exchanges are the oligarchs?

------
deepnotderp
HN 2015: Bitcoin is bullshit, don't waste your money on it.

HN 2018: people who got in early in bitcoin have more of it, thus it's bad.

~~~
jib
Those are not contradictions, you realise that right?

MLM schemes are bullshit, don’t waste your money.

If you buy into Herbalife now you are truly not making a good decision,
because there is already a huge pyramid of people above you.

MLM schemes are a bad idea at the start because they are unlikely to take off,
and they are a bad idea when they are running because they are unlikely to be
profitable for anyone at the lower levels due to the unsustainable structure
of profit distribution.

It’s just another hot potato game.

------
robertAngst
>Leonardo Ermann from the National Commission for Atomic Energy in Buenos
Aires, Argentina, and colleagues from the University of Toulouse, France, have
examined the structure of the Bitcoin-owner community by looking at the
transactions of this cryptocurrency between 2009 and 2013.

The study is 5 years old?

Guessing back then it was libertarians and drug dealers.

Also isnt this true of any early adoptor? The first smartphones were a small
group too.

The bigger question is- Why is this news?

This seems to be agenda driven rather than a discovery. Who benefits from
pushing anti-bitcoin ideas? These are not accidents, these studies are
expensive to run. Why was this study completed?

------
arisAlexis
you and me can change that. instead of writing articles fire up full nodes and
mine when you can

------
narrator
Oligarchy means controlled by the few. Anyone with a Raspberry PI, decent
network bandwidth, and a few terabytes hard drive can be a node and start
validating and relaying transactions. Besides, Bitcoin is not proof of stake,
so having a lot of bitcoin does not give someone more control of the network.
So no, Bitcoin is not an oligarchy. All of these big addresses likely belong
to exchanges like CoinBase, etc.

~~~
perfmode
control requires hashing power

