The growing popularity of Bitcoin has led to unprecedented opportunities for researchers to study complex phenomena in society. In this research paper, the  authors take a look at the history of Bitcoin and its complete lists of transactions, taking the dataset to reconstruct the transaction network and analyse any changes in the structure of the subgraph. Ultimately, the aim is to show how changes in structure will directly impact the exchange price of bitcoins.

The authors offer a clear comparison between traditional financial systems and cryptocurrency. They also outline the different methods they use to reach their conclusions, such as extracting the core network and how they detect structural changes. By reconstructing daily network snapshots of the most active users across a two-year period, it became apparent that the structure of the underlying network of a financial system  can provide important new insights complementing analysis of the external features.

The most streaking feature that was found during the study was the time-varying substitution of some of the base networks. They show clear correspondence with the market price of bitcoins. The main focus in economics research is also understanding the time series of prices of goods and assets. While statistical models using only the properties of the time series itself have been successful in many aspects, the authors of this paper expected to gain a better understanding of the phenomena involved if they modelled the underlying system of interacting agents within Bitcoin.

Download this research paper to discover some interesting new patterns within Bitcoin and how they are impacting the price of Bitcoin. It’s time to challenge to challenge traditional financial institutions.