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Cited by 56Blockchain Technology Applications and SecurityIncome, Poverty, and InequalityComplex Systems and Time Series Analysis

The DOI matches its Crossref record; 63 of the 64 references it cites were found in a registry or an index.

Characterizing Wealth Inequality in Cryptocurrencies

Open access
Sai, Ashish Rajendra, Buckley, Jim, Le Gear, Andrew·2021·Frontiers in Blockchain
DOI 10.3389/fbloc.2021.730122
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Abstract

Cryptocurrencies often tend to maintain a publically accessible ledger of all transactions. This open nature of the transactional ledger allows us to gain macroeconomic insight into the USD 1 Trillion crypto economy. In this paper, we explore the free market-based economy of eight major cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, Dash, Litecoin, ZCash, Dogecoin, and Ethereum Classic. We specifically focus on the aspect of wealth distribution within these cryptocurrencies as understanding wealth concentration allows us to highlight potential information security implications associated with wealth concentration. We also draw a parallel between the crypto economies and real-world economies. To adequately address these two points, we devise a generic econometric analysis schema for cryptocurrencies. Through this schema, we report on two primary econometric measures: Gini value and Nakamoto Index which report on wealth inequality and 51% wealth concentration respectively. Our analysis reports that, despite the heavy emphasis on decentralization in cryptocurrencies, the wealth distribution remains in-line with the real-world economies, with the exception of Dash. We also report that 3 of the observed cryptocurrencies (Dogecoin, ZCash, and Ethereum Classic) violate the honest majority assumption with less than 100 participants controlling over 51% wealth in the ecosystem, potentially indicating a security threat. This suggests that the free-market fundamentalism doctrine may be inadequate in countering wealth inequality within a crypto-economic context: Algorithmically driven free-market implementation of these cryptocurrencies may eventually lead to wealth inequality similar to those observed in real-world economies.

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Crossref · 10.3389/fbloc.2021.730122

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Citations

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1 retracted

Show all 64 references

Research works printed but not linked: 16

  1. 2019, Bitcoin/Bips
  2. Boghosian, 2021, Is Inequality Inevitable
  3. Buterin, 2013, Ethereum white Paper, GitHub repository, 22
  4. 2021, Market Capitalization
  5. 2018, Ethereum Network under Assault: Gas price Manipulation May Indicate covert Eos Attack [interview]
  6. 2021, Household Finance and Consumption Survey 2018 - Cso - central Statistics Office
  7. Duffield, 2015, Dash: A Privacycentric Cryptocurrency
  8. Hopwood, 2016, Zcash Protocol Specification
  9. Irwin, 2020, Free Trade under Fire
  10. May, 1992, The Crypto Anarchist Manifesto. High Noon on the Electronic Frontier: Conceptual Issues in Cyberspace
  11. O’Kane, 2018, Detecting Patterns in the Ethereum Transactional Data Using Unsupervised Learning
  12. Roubini, 2018, Blockchain Isn’t about Democracy and Decentralisation – It’s about Greed by Nouriel Roubini [Dataset]
  13. Russom, 2011, Big Data Analytics., 1
  14. Srinivasan, 2017, Quantifying Decentralization [Dataset]
  15. Stock, 2015, Introduction to Econometrics
  16. Suisse, 2018, Global Wealth Databook.

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Metadata

Authors
Sai, A. R., Buckley, J., & Le Gear, A.
Affiliations
University of Limerick (IE)
Corresponding author
Sai, Ashish Rajendra
ORCID
Venue
Frontiers in Blockchain
Publisher
Frontiers Media SA
Published
2021-12-20
Volume
4
ISSN
2624-7852 (ISSN-L)
DOI
10.3389/fbloc.2021.730122
OpenAlex
W4200500220
Cited by
45
References
64
Citations by year
2026: 9 · 2025: 17 · 2024: 7 · 2023: 9 · 2022: 3
FWCI
4.29
Type
journal article
Language
en
Open access
Licence
Locations
  • Frontiers in Blockchain (publishedVersion, cc-by)
  • University of Limerick Institutional Repository (University of Limerick) (acceptedVersion, cc-by-nc-sa)
  • DOAJ (DOAJ: Directory of Open Access Journals) (submittedVersion, cc-by-sa)
  • Figshare (submittedVersion, cc-by-nc-sa)
  • University of Limerick Institutional Repository (University of Limerick) (submittedVersion, cc-by-nc-sa)
  • University of Limerick Institutional Repository (University of Limerick)
Funders
Science Foundation Ireland
Topics
  • Physical Sciences › Computer Science › Information Systems › Blockchain Technology Applications and Security
  • Social Sciences › Sociology and Political Science › Income, Poverty, and Inequality
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Complex Systems and Time Series Analysis
Keywords
wealth distribution, Gini coefficient, 51% attack, decentralization (distributed systems), Bitcoin, Ethereum, Dogecoin, Zcash, DASH, Litecoin, Bitcoin Cash, information security

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