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Gini Coefficient Based Wealth Distribution in the Bitcoin Network: A Case Study

  • Manas Gupta
  • Parth Gupta
Conference paper
Part of the Communications in Computer and Information Science book series (CCIS, volume 805)

Abstract

Bitcoin has gained widespread attention globally in 2013 and is the first online currency based on a peer to peer network without any central authority or third parties. Its market capitalization reached US$ 8.5 billion in December 2013. However, despite its popularity some issues like network security (thefts), anonymity (privacy) and wealth distribution (inequality) have plagued it. Of considerable importance is the last issue of unequal wealth distribution as it may create a huge socio-economic burden for the society. A group of researchers estimated that the GINI coefficient for the network was at an all time high of 0.985 in Jan 2013 and that the rich were getting richer as the network grew. In the present work it has been strived to determine how the GINI actually increases or decreased depending upon the wealth distribution. For doing this a raw transaction of data of more than 36 million transactions has been sourced and a list of all users and their wealth in the network has been computed. The final results are very alarming as GINI has increased to 0.997 by the end of 2013 and the market share of top 10 holders alone has reached 6.6% of the entire market. Therefore, the rich have actually got richer and steps should be taken to curb such a wealth accumulation model in the network.

Keywords

Bitcoin protocol Gini coefficient Wealth distribution Bitcoin wallet 

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Copyright information

© Springer Nature Singapore Pte Ltd. 2018

Authors and Affiliations

  1. 1.Department of ComputingNational UniversitySingaporeSingapore
  2. 2.Department of Computer Science EngineeringChitkara UniversityRajpuraIndia

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