- Researchers analyzed the structure of the group of bitcoin owners by observing transaction made from 2009 to 2013.
- The study reveals that bitcoin owners are oligarchs, and most of the wealth is concentrated in hands of small group of users.
Bitcoin was first introduced in 2009 as an open source document by an anonymous developer under the name of Satoshi Nakamoto. Now it has become a crucial source of direct financial exchange between private users.
The journey of bitcoin has been quite fluctuating, especially in the last couple of years. It has gained both criticism and praises. At present, it attracts a significant interest of computer scientists, economists, society and politicians.
Unlike bank transactions that are hidden from the public eye, bitcoin transactions are traceable. And since every transaction is open to public, it’s rather intriguing to investigate the statistical properties of bitcoin network.
Recently, researchers from the National Commission for Atomic Energy, Argentina and the University of Toulouse, France, analyzed the community-structure of bitcoin owners. They observed transactions (from the public block chain site) made between 11th January 2009 and 10th April 2013.
The study reveals that bitcoin owners are oligarchs with secret groups whose members are strongly interconnected, means a huge amount of wealth is distributed amount a few people.
Google Matrix Of Bitcoin Network
Researchers designed a blueprint of bitcoin crypto-network, what they call Google Matrix. It’s a weighted and directed network that takes all transactions (measured in bitcoin units) into account. The total number of transactions during the observed period is 28,140,756.
The matrix helps researchers measure global statistical characteristics of transactions –similar to PageRank algorithm used by Google search engine to rank pages — which focuses on ingoing transactions between users.
They also constructed CheiRank — an eigenvector with maximum real eigenvalue of the Google matrix built for a directed network with inverted link directions — which shows the impact of outgoing transactions between bitcoin owners.
The outcomes of Google Matrix highlight a strange circle-type structure within numerous transactions between users. According to the researchers, this kind of structure hasn’t been reported yet for real networks. It implies that there are secret groups of nodes connecting the cryptocurrency owners via a long sequence of transactions.
Reference: Springer | doi:10.1140/epjb/e2018-80674-y
The distribution of bitcoin owners in the PageRank-CheiRank plain is maximum along the diagonal, which highlights the fact that each owner tries to keep financial balance of his/her transaction. The same type of condition was also noticed for the world trade networks.
All bitcoin transactions are publicly accessible, which makes the network even more attractive for examination of statistical characteristics of financial flows. However, there is a hidden issue with this network.
Sometimes, a user carrying out a transaction to another user changes bitcoin code after the transaction, generating a new user even if the individual behind the code remains the same.
Therefore, the bitcoin network is characterized by a rather low ratio of links to nodes (about 2:3). Whereas, other networks like World Wide Web have nearly 10:20 ratio of links to nodes. So despite of transactions being accessible to public, it remains quite hard to establish transactions between real people.