Analyzing Bitcoin's Gini Coefficient: A Closer Look at on-chain Wealth Distribution

Alex Mologoko
Mar 19, 2024


Dr. Nouriel Roubini, the renowned economist and Professor of Economics and International Business at New York University Stern School of Business, earned his moniker “Dr. Doom” due to his prescient warnings about the 2008 subprime mortgage meltdown. His accurate predictions of the impending financial crisis garnered attention and solidified his reputation as a harbinger of economic doom. He’s also been an outspoken critic of Bitcoin, frequently making a claim that the Gini coefficient of Bitcoin surpasses even that of North Korea since 2018, at least. But is there more to this story than meets the eye?

At Elementus, we pride ourselves on rigorous data analysis. We’ve taken a deep dive into Bitcoin’s wealth distribution, examining it not at the individual wallet level, but rather at the entity and cluster level, which was made possible by our proprietary attribution data. Our findings may surprise you.

Understanding the Gini Coefficient

Before we delve into the specifics, let’s quickly recap what the Gini coefficient represents. It’s a measure of income or wealth inequality within a population. A Gini coefficient of 0% signifies perfect equality (where everyone has the same income), while an coefficient of 100% indicates maximal inequality (where one person holds all the wealth).

2019 Global Wealth Inequality: A Gini Coefficient Map1

Dr. Roubini’s Claim

Dr. Roubini’s assertion that Bitcoin’s Gini coefficient rivals North Korea’s is indeed attention-grabbing. However, we must consider the context. North Korea’s Gini coefficient is somewhere above 86%, placing it among the most unequal societies globally. But what about Bitcoin?

Elementus’ Analysis

Our team at Elementus took a different approach. Instead of focusing solely on individual wallets, we examined entities and clusters—groups of related addresses. This broader perspective provides a more accurate picture of wealth distribution.

After crunching the numbers, we arrived at a Gini value of 82.69% for Bitcoin. Not only is it lower than North Korea’s, it's even lower than the United States Gini coefficient, which stood at 85.0% as of 2021!2 Here are the assumptions we made for the purposes of this analysis:

  1. We have excluded certain entities, such as Satoshi Nakomoto whose wallets haven’t transacted ever since the mysterious Bitcoin creator disappeared, leaving roughly 1 million BTC out of 21 million maximum supply frozen.
  2. We have excluded all the entity types that commingle third-party holdings in their wallets, such as Centralized Exchanges, Custodians, ETFs etc. Otherwise those wallets would skew the wealth distribution picture because they represent collective rather than individual BTC holdings.
  3. We included only the entities and clusters that had a balance of 1 BTC or more to eliminate any dust left in Bitcoin wallets.

Distribution of entity/cluster holdings aggregated by BTC balance cohort

The Bigger Picture

While decentralization is a core tenet of cryptocurrencies, our findings suggest that wealth inequality persists. It appears the so-called “whales” are still in control of Bitcoin, although not to the same dramatic extent as the authoritarian North Korea’s economy, as claimed by Dr. “Doom”. That fact actually makes the all new Elementus platform Sonar even more of value to the cryptocurrency investors and researchers since Sonar provides unique insights into the whale activity in the depths of the Bitcoin ocean.

In conclusion, Dr. Roubini’s claim sparks debate, but our analysis sheds light on the nuances. Bitcoin’s wealth distribution is complex, and understanding it requires a holistic view—one that transcends individual wallets.

As the crypto landscape evolves, Elementus remains committed to data-driven insights. Stay tuned for more updates, and remember: behind every wallet lies a story waiting to be told.

If you are interested in learning more about Sonar please contact us here.

1. Credit Suisse. (2019). Global wealth databook 2019.
2. Credit Suisse. (2022). Global wealth databook 2022.