Influencer Detection meets Network AutoRegression – Influential Regions in the Bitcoin Blockchain

75 Pages Posted: 11 Oct 2022

See all articles by Simon Trimborn

Simon Trimborn

University of Amsterdam - Amsterdam School of Economics (ASE); University of Amsterdam - CeNDEF

Hanqiu Peng

National University of Singapore

Ying Chen

National University of Singapore

Date Written: September 26, 2022

Abstract

Known as an active global virtual money network, Bitcoin blockchain with millions of accounts has played an ever-growing important role in fund transition, digital payment and hedging. We propose a method to Detect Influencers in Network AutoRegressive models (DINAR) via sparse-group regularization to detect regions influencing others cross-border. For a granular analysis we analyze if the transaction record size plays a role for the dynamics of the cross-border transactions in the network. With two-layer sparsity, DINAR enables discovering 1) the active regions with influential impact on the global digital money network and 2) if changes in the transaction record size impact the dynamic evolution of Bitcoin transactions. We illustrate the finite sample performance of DINAR along with intensive simulation studies and investigate its asymptotic properties. In the real data analysis on Bitcoin blockchain from Feb 2012 to December 2021, we found that in the earlier years (2012-2016) network effects came surprisingly from Africa and South America. In 2017 Asia and Europe dominate whereas from 2018 effects majorly originate from North America. The effects are robust in regard to different groupings, evaluation periods and choice of regularization parameters.

Keywords: Bitcoin Blockchain, Network Dynamics, Two-Layer sparsity

JEL Classification: C55, C58, C60, G17

Suggested Citation

Trimborn, Simon and Peng, Hanqiu and Chen, Ying, Influencer Detection meets Network AutoRegression – Influential Regions in the Bitcoin Blockchain (September 26, 2022). Available at SSRN: https://ssrn.com/abstract=4230241 or http://dx.doi.org/10.2139/ssrn.4230241

Simon Trimborn (Contact Author)

University of Amsterdam - Amsterdam School of Economics (ASE) ( email )

Roetersstraat 11
Amsterdam, North Holland 1018 WB
Netherlands

University of Amsterdam - CeNDEF ( email )

Roetersstraat 11
Amsterdam, NL-1018WB
Netherlands

Hanqiu Peng

National University of Singapore

Ying Chen

National University of Singapore ( email )

Department of Mathematics, Faculty of Science
Block S17, Level 4, 10 Lower Kent Ridge Road
Singapore, Singapore 119076
Singapore

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