Publication Type
Working Paper
Version
publishedVersion
Publication Date
5-2021
Abstract
Since its advent in 2009, Bitcoin, a cryptography-enabled peer-to-peer digital payment system, has been gaining increasing attention from both academia and industry. An effort designed to overcome a cluster of bottlenecks inherent in existing centralized financial systems, Bitcoin has always been championed by the crypto community as an example of the spirit of decentralization. While the decentralized nature of Bitcoin's Proof-of-Work consensus algorithm has often been discussed in great detail, no systematic study has so far been conducted to quantitatively measure the degree of decentralization of Bitcoin from an asset perspective -- How decentralized is Bitcoin as a financial asset? We present in this paper the first systematic investigation of the degree of decentralization for Bitcoin based on its entire transaction history. We proposed both static and dynamic analysis of Bitcoin transaction network with quantifiable decentralization measures developed based on network analysis and market efficiency study. Case studies are also conducted to demonstrate the effectiveness of our proposed metrics.
Keywords
Blockchain, Bitcoin, on-chain data analysis
Discipline
Databases and Information Systems | Information Security
Research Areas
Data Science and Engineering
First Page
1
Last Page
10
Identifier
10.48550/arXiv.2105.07646
Publisher
arXiv
Citation
CHENG, Ling; ZHU, Feida; LIU, Huiwen; and MIAO, Chunyan.
On decentralization of bitcoin: An asset perspective. (2021). 1-10.
Available at: https://ink.library.smu.edu.sg/sis_research/7811
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.48550/arXiv.2105.07646