From the
European Physical Journal - B:
New study of Bitcoin transactions reveals hidden owner
communities and a high-concentration of wealth distributed between a
few people
Cryptocurrencies like Bitcoin can be analysed because every
transaction is traceable. This means that they are an attractive system
for physicists to study. In a paper published in EPJ B,
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 team’s findings reveal that Bitcoin owners are close to an
oligarchy with hidden communities whose members are highly
interconnected. This research has implications for our understanding of
these emerging cryptocurrency communities in our society - as usual bank
transactions are typically deeply hidden from the public eye. They
could also be helpful to computer scientists, economists and politicians
who could better understand handle them.
As part of their study, the authors construct a blueprint of this
network - the so-called Google matrix. It helps them calculate key
characteristics of the network, such as PageRank - known for underlining
the Google search engine - which highlights the influence of ingoing
transactions between individual Bitcoin owners. The author also rely on
CheiRank, which highlights the influence of outgoing transactions
between owners.
Based on such data, they identify an unusual circle-type structure
within the range of transactions between Bitcoins owners. Until now,
such a structure has never been reported for real networks. This means
that there are hidden communities of nodes linking the currency owners
through a long series of transactions.
Based on another characteristic of the network of transactions, the
authors have also found that the main portion of the network's wealth is
distributed between a small fraction of users.
