The surprise advent of the peer-to-peer payment system Bitcoin in 2009 has raised various concerns regarding its relationship to established economic market ideologies. That’s why Bitcoin risk analysis is so important. Unlike fiat currencies, Bitcoin is based on open-source software; it is a secure cryptocurrency, traded as an investment between two individuals over the internet, with no bank involvement.

Computationally, this is a very innovative solution, but Bitcoin’s popularity has raised a number of security and trust concerns among mainstream economists. With cities and countries, including San Francisco and Germany, using Bitcoin as a unit of account in their financial systems, there is still a lack of understanding and a paucity of models for studying its use, and the role Bitcoin might play in real physical economies.

This Bitcoin risk analysis identifies the ramifications of Bitcoin within economic models, by building a computational model of the currency to test its performance in financial market models. The project uses established agent-based modelling techniques to build a decentralised Bitcoin model, which can be ‘plugged into’ existing agent-based models of key economic and financial markets. This allows various metrics to be subjected to critical analysis, gauging the progress of digital economies equipped with Bitcoin usage.

Download this Bitcoin risk analysis to find out more.