The cryptocurrency market has reached a record of $91 billion market capitalization in May 2017, after months of steady growth. Despite its increasing relevance in the financial world, however, a comprehensive analysis of the whole system is still lacking, as most studies have focused exclusively on the behavior of one (Bitcoin) or few cryptocurrencies. Here, we consider the history of the entire market and analyze the behavior of 1, 469 cryptocurrencies introduced since April 2013. We reveal that, while new cryptocurrencies appear and disappear continuously and their market capitalization is increasing exponentially, several statistical properties of the market have been stable for years. These include the number of active cryptocurrencies, the market share distribution and the turnover of cryptocurrencies. Adopting an ecological perspective, we show that the so-called neutral model of evolution is able to reproduce a number of key empirical observations, despite its simplicity and the assumption of no selective advantage of one cryptocurrency over another. Our results shed light on the properties of the cryptocurrency market and establish a first formal link between ecological modeling and the study of this growing system. We anticipate they will spark further research in this direction.
Bitcoin ecology: Quantifying and modelling the long-term dynamics of the cryptocurrency market
Abeer ElBahrawy, Laura Alessandretti, Anne Kandler, Romualdo Pastor-Satorras, Andrea Baronchelli