So, what's wrong with it? Well, there are lots of things wrong with it, and people have written lots of articles about various problems with the Gini coefficient. In this article, I will focus on one specific problem that I think is under-discussed about the Gini as a whole, but that has particular relevance to analyzing inequality in internet communities such as blockchains. The Gini coefficient combines together into a single inequality index two problems that actually look quite different: suffering due to lack of resources and concentration of power.

To understand the difference between the two problems more clearly, let's look at two dystopias:

• Dystopia A: half the population equally shares all the resources, everyone else has none

• Dystopia B: one person has half of all the resources, everyone else equally shares the remaining half

However, as one might expect from any scheme that tried to reduce inequality to a single number, the Gini coefficient also has its limits. This is true even in its original context of measuring income and wealth inequality in countries, but it becomes even more true when the Gini coefficient is transplanted into other contexts (particularly: cryptocurrency). In this post I will talk about some of the limits of the Gini coefficient, and propose some alternat