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An Econophysical Analysis of the Blockchain Ecosystem

In: Mathematical Research for Blockchain Economy

Author

Listed:
  • Philip Nadler

    (Imperial College London - Data Science Institute)

  • Rossella Arcucci

    (Imperial College London - Data Science Institute)

  • Yike Guo

    (Imperial College London - Data Science Institute)

Abstract

We propose a novel modelling approach for the cryptocurrency ecosystem. We model on-chain and off-chain interactions as econophysical systems and employ methods from physical sciences to conduct interpretation of latent parameters describing the cryptocurrency ecosystem as well as to generate predictions. We work with an extracted dataset from the Ethereum blockchain which we combine with off-chain data from exchanges. This allows us to study a large part of the transaction flows related to the cryptocurrency ecosystem. From this aggregate system view we deduct that movements on the blockchain and price and trading action on exchanges are interrelated. The relationship is one directional: On-chain token flows towards exchanges have little effect on prices and trading volume, but changes in price and volume affect the flow of tokens towards the exchange.

Suggested Citation

  • Philip Nadler & Rossella Arcucci & Yike Guo, 2020. "An Econophysical Analysis of the Blockchain Ecosystem," Springer Proceedings in Business and Economics, in: Panos Pardalos & Ilias Kotsireas & Yike Guo & William Knottenbelt (ed.), Mathematical Research for Blockchain Economy, pages 27-42, Springer.
    • Handle: RePEc:spr:prbchp:978-3-030-53356-4_3
    DOI: 10.1007/978-3-030-53356-4_3
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