Abstract

https://ssrn.com/abstract=2808762
 


 



The Evolution of the Bitcoin Economy: Extracting and Analyzing the Network of Payment Relationships


Paolo Tasca


UCL Centre for Blockchain Technologies; London School of Economics & Political Science

Shaowen Liu


Deutsche Bundesbank

Adam Hayes


University of Wisconsin - Madison - Department of Sociology; The New School - Department of Economics

July 1, 2016


Abstract:     
In this paper, we gather together the minimum units of Bitcoin identity (the individual addresses), and group them into approximations of business entities, what we call “super clusters”. While these clusters can remain largely anonymous, we are able to ascribe many of them to particular business categories by analyzing some of their specific transaction patterns, as observed during the period from 2009-2015. We are then able to extract and create a map of the network of payment relationships among them, and analyze transaction behavior found in each business category. We conclude by identifying three marked regimes that have evolved as the Bitcoin economy has grown and matured: from an early prototype stage; to a second growth stage populated in large part with “sin” enterprise (i.e., gambling, black markets); to a third stage marked by a sharp progression away from “sin” and toward legitimate enterprises.

Number of Pages in PDF File: 46

Keywords: Blockchain, Bitcoin, Digital Currencies, Business Analysis, Network Theory

JEL Classification: E42, L14, O12, O35, P40


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Date posted: July 13, 2016 ; Last revised: August 29, 2016

Suggested Citation

Tasca, Paolo and Liu, Shaowen and Hayes, Adam, The Evolution of the Bitcoin Economy: Extracting and Analyzing the Network of Payment Relationships (July 1, 2016). Available at SSRN: https://ssrn.com/abstract=2808762 or http://dx.doi.org/10.2139/ssrn.2808762

Contact Information

Paolo Tasca (Contact Author)
UCL Centre for Blockchain Technologies ( email )
Gower Street
London, WC1E 6BT
United Kingdom
HOME PAGE: http://paolotasca.com
London School of Economics & Political Science ( email )
Houghton Street
London, WC2A 2AE
United Kingdom
+44 20 7852 3551 (Phone)
Shaowen Liu
Deutsche Bundesbank ( email )
Wilhelm-Epstein-Str. 14
D-60431 Frankfurt/Main
Germany
Adam Hayes
University of Wisconsin - Madison - Department of Sociology ( email )
8128 William H. Sewell Social Sciences Building
1180 Observatory Drive
Madison, WI 53706
United States
The New School - Department of Economics ( email )
Room 1116
6 East 16th Street
New York, NY 10003
United States
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