BitCoin Network Displaying Aspects of Legitimate Currencies

The network has the added advantage of every transaction that has ever been made being readily available

Since BitCoin’s inception in January 2009, there have been more than 17 million transactions. A unique aspect of the BitCoin is that every transaction that has ever taken place is publicly available. This characteristic gave Daniel Kondor and his colleagues at the Eotvos Lorand University in Hungary a one of a kind opportunity, as they saw it. After they downloaded the entire history of the transactions, they restructured the history of each account. Kondor and his colleagues then reconstructed the flow of cash over time and noted the patterns. “We believe that this is the first opportunity to investigate the movement of currency in such detail,” say the students.

As the network evolved over time, they noticed two separate phases of development. The first was before 2011, when the system was relatively new and there were very few participants. The BitCoin of this era had little real-world value, there were few transactions and the network itself had a structure that varied. The second phase developed in 2011, when media coverage attracted more users. An exchange was also set up in 2011 that traded dollars for bitcoins. Essentially, BitCoin began to trade more like a true currency. The structure of the network began to take on the preferential attachment of a standard network configuration. Nodes (or accounts) with a large number of links started attracting more links than nodes with fewer links.

In other words, a recognized effect in network science was taking place — the Matthew effect. This effect, also known as the rich get richer phenomenon, occurs in many networks. It gets its name from the biblical observation that the rich always get richer. Real economies also demonstrate this type of structure as well as websites on the internet. Popular websites are much more likely to grow faster than the ones that are less popular. This is just one more piece of evidence that the BitCoin might be on its way to being a true fiat currency in the near future.

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BitcoinWithPaypal (http://BitcoinWithPaypal.com) is a website dedicated to providing information on BitCoin. BitCoin are an electronic currency that is growing in popularity and the BitCoin itself is starting to become more accepted on the internet as a form of payment for goods and services.

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