Does Metcalfe's Law Explain Bitcoin Prices? A Time Series Analysis

Civitarese, Jamil

doi:10.2139/ssrn.3107895

Cited by 6 publications

(5 citation statements)

References 6 publications

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“…22 Civitarese rejects the applicability of Metcalfe's law to the value of the Bitcoin network by running a cointegration test between price and an adjusted number of wallets' connections. 37 Gandal and Halaburda use a different approach to examine the existence of network effects in networks. They define network effects as the reinforcement effects the price of a cryptocurrency has on the price of another cryptocurrency.…”

Section: Prior Literature and Contributionmentioning

confidence: 99%

Cryptocurrency Competition and Market Concentration in the Presence of Network Effects

Stylianou

Spiegelberg

Herlihy

et al. 2021

ledger

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When network products and services become more valuable as their userbase grows (network effects), this tendency can become a major determinant of how they compete with each other in the market and how the market is structured. Network effects are traditionally linked to high market concentration, early-mover advantages, and entry barriers, and in the market they have also been used as a valuation tool. The recent resurgence of Bitcoin has been partly attributed to network effects, too. We study the existence of network effects in six cryptocurrencies from their inception to obtain a high-level overview of the application of network effects in the cryptocurrency market. We show that, contrary to the usual implications of network effects, they do not serve to concentrate the cryptocurrency market, nor do they accord any one cryptocurrency a definitive competitive advantage, nor are they consistent enough to be reliable valuation tools. Therefore, while network effects do occur in cryptocurrency networks, they are not (yet) a defining feature of the cryptocurrency marketas a whole.

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Section: Prior Literature and Contributionmentioning

confidence: 99%

Cryptocurrency Competition and Market Concentration in the Presence of Network Effects

Stylianou

Spiegelberg

Herlihy

et al. 2021

ledger

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“…They still use Metcalfe's law but only as only as one of the building blocks of their model. Civitarese [9] rejects the applicability of Metcalfe's law to the value of the Bitcoin network by running a cointegration test between price and an adjusted number of wallets' connections.…”

Section: Prior Literature and Contributionmentioning

confidence: 99%

Cryptoasset Competition and Market Concentration in the Presence of Network Effects

Stylianou,

Spiegelberg,

Herlihy

et al. 2021

Preprint

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When network products and services become more valuable as their userbase grows (network effects), this tendency can become a major determinant of how they compete with each other in the market and how the market is structured. Network effects are traditionally linked to high market concentration, early-mover advantages, and entry barriers, and in the cryptoasset market they have been used as a valuation tool too. The recent resurgence of Bitcoin has been partly attributed to network effects too. We study the existence of network effects in six cryptoassets from their inception to obtain a high-level overview of the application of network effects in the cryptoasset market. We show that contrary to the usual implications of network effects, they do not serve to concentrate the cryptoasset market, nor do they accord any one cryptoasset a definitive competitive advantage, nor are they consistent enough to be reliable valuation tools. Therefore, while network effects do occur in cryptoasset networks, they are not a defining feature of the cryptoasset market as a whole.

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“…Este problema ha sido objeto de varias líneas de investigación, que han abordado el análisis de diferentes tipos de variables. En primer lugar, los modelos basados en variables sobre la dinámica entre la demanda y oferta (Civitarese, 2018;Poyser, 2017;Balcilar et al, 2017). En segundo lugar, los estudios que relacionan el valor con el atractivo que la misma ofrece en redes sociales a los inversores (Nasir et al, 2019;Hayes, 2017).…”

Section: Revisión De La Literaturaunclassified

“…En este sentido, el número de criptomonedas disponibles se asocia con efecto negativo en el valor de las monedas (Ciaian, 2016a). Igualmente, el número de direcciones (carteras virtuales) se asocia con un efecto directo y positivo en el precio (Civitarese, 2018;Ciaian, 2016a). Y del mismo modo, las variables de volumen de transacciones diarias y transferencias por los usuarios de la red también han demostrado tener un impacto directo en los precios (Sovbetov, 2018;Buchholz et al, 2012).…”

Section: Revisión De La Literaturaunclassified

“…En este contexto, las criptomonedas están marcando una tendencia cada vez más fuerte en todos los mercados financieros, y la literatura financiera está dedicando más atención a su estudio (Liu et al, 2020;Nasir et al, 2019;Grinberg, 2012). Investigaciones recientes han identificado diferentes factores que afectan al precio de las criptomonedas, especialmente al bitcoin y al ethereum (Sovbetov, 2018;Al-Khazali et al, 2018;Civitarese, 2018). Estos factores están relacionados principalmente con la demanda y la oferta, con el atractivo en redes sociales, y con variables macroeconómicas y financieras.…”

Section: Introductionunclassified

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Identificación de factores de influencia en el precio de las criptomonedas: evidencia para bitcoin y ethereum

Fernández

López²,

Gámez

et al. 2020

CICE

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El presente estudio tiene como objetivo el desarrollo de nuevos modelos para determinar con alta precisión los factores que explican el precio de las principales criptomonedas. Para ello, se ha utilizado una amplia base de datos de variables relacionadas con el bitcoin y el ethereum, y se han aplicado técnicas de redes neuronales artificiales. Los resultados obtenidos han permitido identificar que los aspectos relacionados con el número de publicaciones en foros, el volumen de transacciones en blockchain y la tasa de hash proporcionan una excelente estrategia para predecir el precio del bitcoin. También, que el volumen de transacciones, el tamaño de los bloques, las comisiones de mineros y los precios del petróleo son los mejores predictores del valor de mercado del ethereum

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Does Metcalfe's Law Explain Bitcoin Prices? A Time Series Analysis

Cited by 6 publications

References 6 publications

Cryptocurrency Competition and Market Concentration in the Presence of Network Effects

Cryptocurrency Competition and Market Concentration in the Presence of Network Effects

Cryptoasset Competition and Market Concentration in the Presence of Network Effects

Identificación de factores de influencia en el precio de las criptomonedas: evidencia para bitcoin y ethereum

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