Demythifying the belief in cryptocurrencies decentralized aspects. A study of cryptocurrencies time cross-correlations with common currencies, commodities and financial indices

Manavi, Seyed Alireza; Jafari, G. R.; Rouhani, S.; Ausloos, Marcel

doi:10.1016/j.physa.2020.124759

Cited by 41 publications

(24 citation statements)

References 61 publications

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“…This shows that research into the currency was met with a higher rate of users choosing to use this currency, indicating that the feature of greater anonymity holds some niche value to a minority of users. The findings corroborate those of Manavi et al (2020) concerning regional importance.…”

Section: Resultssupporting

confidence: 88%

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Challenging practical features of Bitcoin by the main altcoins

Spurr

Ausloos

2020

Qual Quant

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We study the fundamental differences that separate: Litecoin; Bitcoin Gold; Bitcoin Cash; Ethereum; and Zcash from Bitcoin, and draw some analysis to how these features are appreciated by the market, to ultimately make an inference as to how future successful cryptocurrencies may be invented and behave. We use Google Trend data, as well as price, volume and market capitalization data sourced from coinmarketcap.com to support this analysis. We find that Litecoin’s shorter block times offer benefits in commerce, but drawbacks in the mining process through orphaned blocks. Zcash holds a niche use for anonymous transactions, benefitting areas of the world lacking in economic freedom. Bitcoin Cash suffers from centralization in the mining process, while the greater decentralization of Bitcoin Gold has generally left it to stagnate. Ether’s greater functionality offers the greatest threat to Bitcoin’s dominance in the market. A coin that incorporates several of these features can be technically better than Bitcoin, but the first-to-market advantage of Bitcoin should keep its dominant position in the market.

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Section: Resultssupporting

confidence: 88%

“…A question still raised by Chohan (2019). Recently, Manavi et al (2020) proved that the"myth", for the Bitcoin-based networks, i.e. decentralization is only true in specific regions, i.e., it is not distributed homogeneously.…”

Section: Literature Reviewmentioning

confidence: 99%

Challenging practical features of Bitcoin by the main altcoins

Spurr

Ausloos

2020

Qual Quant

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“…Since their inception, cryptocurrencies have been of great interest to researchers in dynamical systems and econophysics. There has been substantial research on individual cryptocurrencies such as Bitcoin [33] , [34] , [35] , [36] , [37] and the disorder and fractal behaviour within cryptocurrencies in general [38] , [39] , [40] , [41] . Notably, Drozdz and coauthors have analysed several quantitative aspects of the cryptocurrency market closely, including cross-correlations, auto-correlations and scaling effects.…”

Section: Introductionmentioning

confidence: 99%

Changes to the extreme and erratic behaviour of cryptocurrencies during COVID-19

James

Menzies

Chan

2021

Physica A: Statistical Mechanics and its Applications

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“…Initially, only bitcoin was of significant interest [ 24 , 25 , 26 ], but soon also other cryptocurrencies went under investigation [ 27 , 28 , 29 ]. Then there appeared studies reporting on correlations within the market [ 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 ], and its relationship with regular markets [ 39 , 40 , 41 , 42 , 43 ]. Recently, some researchers focused their attention on possible use of BTC as a hedging instrument for Forex [ 44 ], for gold and other commodities [ 45 ], as well as for the stock markets [ 46 , 47 ].…”

Section: Introductionmentioning

confidence: 99%

Complexity in Economic and Social Systems: Cryptocurrency Market at around COVID-19

Dróżdż

Kwapień

Oświęcimka

et al. 2020

Entropy

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Social systems are characterized by an enormous network of connections and factors that can influence the structure and dynamics of these systems. Among them the whole economical sphere of human activity seems to be the most interrelated and complex. All financial markets, including the youngest one, the cryptocurrency market, belong to this sphere. The complexity of the cryptocurrency market can be studied from different perspectives. First, the dynamics of the cryptocurrency exchange rates to other cryptocurrencies and fiat currencies can be studied and quantified by means of multifractal formalism. Second, coupling and decoupling of the cryptocurrencies and the conventional assets can be investigated with the advanced cross-correlation analyses based on fractal analysis. Third, an internal structure of the cryptocurrency market can also be a subject of analysis that exploits, for example, a network representation of the market. In this work, we approach the subject from all three perspectives based on data from a recent time interval between January 2019 and June 2020. This period includes the peculiar time of the Covid-19 pandemic; therefore, we pay particular attention to this event and investigate how strong its impact on the structure and dynamics of the market was. Besides, the studied data covers a few other significant events like double bull and bear phases in 2019. We show that, throughout the considered interval, the exchange rate returns were multifractal with intermittent signatures of bifractality that can be associated with the most volatile periods of the market dynamics like a bull market onset in April 2019 and the Covid-19 outburst in March 2020. The topology of a minimal spanning tree representation of the market also used to alter during these events from a distributed type without any dominant node to a highly centralized type with a dominating hub of USDT. However, the MST topology during the pandemic differs in some details from other volatile periods.

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Demythifying the belief in cryptocurrencies decentralized aspects. A study of cryptocurrencies time cross-correlations with common currencies, commodities and financial indices

Cited by 41 publications

References 61 publications

Challenging practical features of Bitcoin by the main altcoins

Challenging practical features of Bitcoin by the main altcoins

Changes to the extreme and erratic behaviour of cryptocurrencies during COVID-19

Complexity in Economic and Social Systems: Cryptocurrency Market at around COVID-19

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