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Bitcoin Network Analysis

Bitcoin Network Analysis



Bitcoin Network.

Bitcoin Network.
Transaction & User Network.
Power Law distribution



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  • Bitcoin has become very popular and you will frequently see it in internet news and in various financial reports.
  • Here you can see a simple transaction network of 5 bitcoin users where different color represents different users. Bitcoin users use bitcoin addresses to send and receive bitcoin. Here each node is a bitcoin address. Ak means the k-th address of the bitcoin network. Each edge is a transaction which holds the information about the transaction time and the amount of transacted bitcoin. Transaction network tries to hide the user identity to maintain user privacy by allowing users to create multiple bitcoin addresses. The first part of my research was to create my own program to estimate bitcoin users and create the user network from the transaction network. The user estimation algorithms I have modified are suggested in two research papers, first by researcher Martin Harrigan(Graph Drawing research group, University of Limerick) and the second by researcher Sarah Meikeljohn from UC San Diego. While estimating the users, I have calculated the degree, balance and other network measures for users. If t represents time, I have defined dtk as the degree of of k-th user after time t. Degree means the number of edges connected to a node. Btk is the balance of k-th user after time t.

Bitcoin Network Analysis Bitcoin Network Analysis Presentation Transcript

  • Bitcoin landscape: A statistical analysis of the evolution of a fast-pacing decentralized payment network. Zehady Abdullah Khan B4 09B12702, Shimodaira Lab. Department of Information and Computer Sciences, School Of Engineering Science, Osaka University. 2014-02-17 1
  • Bitcoin- A New Phenomenon A virtual currency & a payment system like Credit Card, Pasmo or Suica. An open source software published in 2009 by an Anonymous Programmer named Satoshi Nakamoto (Suspicion) Kyoto U Professor Shinichi Mochizuki 2
  • USD / BTC Bitcoin is bigger than some national economy Current Market Cap About 8 billion USD 時価総額 約80億ドル Exchange Rate 為替レート: 1ビットコインが何ドルか 3
  • Past Research • Satoshi Nakamoto (2008) Bitcoin main paper. [1] • Reid & Harrigan (2011) An Analysis of Anonymity in the Bitcoin System.[2] • Sarah Meikeljohn (2013) User Detection Algorithms. [3] • Daniel Kondor, Marton Posfai, Istvan Csabai, and Gabor Vattay (2013) An Empirical Analysis of Bitcoin transaction network. [4] 4
  • Research Overview Part 1 Data Collection & Creation of Bitcoin Graph Database Using Bitcoin Data ( > 10GB) From Jan 2009 ~ Jan 2014 Part 2 Statistical Analysis New Transaction Network + Community Detection & Network Visualization User Network 5
  • Estimation of User Network Estimated User Network Transaction Network A A A 1 2 A 5 A 3 8 A 9 A 3 A 6 2 BTC A 7 Jan 1, 2013 A U1 U1 Estimation Algorithm t1 t2 1.5 2 U2 U2 4 t4 1.5 UU4 4 t3 1 A12 U3 3 U A14 t5 t4 55.6 3 A13 5 t4 A U5 U5 9 A11 A10 Uk : k- th user Ak : k- th address Data #Addresses: 25,401,565 #Transactions: 150,097,987 Small User Network User Network #Users: #Edges: 11,920,531 74,894,291 6
  • Visualizing Wikileaks Network Partial Transaction Network #Addresses: 25, 687 #Transaction: 37,944 Partial User Network #Users: 1708 #Edge: 1719 Estimation of User Network IN tk def := Bitcoins received by user Uk up to time t def OUTtk := Bitcoins sent by user Uk up to time t Bk t def := Bitcoin balance of Uk after time t =IN tk - OUTtk Wikileaks Bitcoin Balance Wikileaks Wikileaks BWikileaks = IN December - OUTDecember December = (7177 - 4139) BTC = 3038 BTC » 1.6 M USD
  • Degree Distribution follows Power Law t outd k P( ind ) t def := In Degree of user U up to time t k def := Out Degree of user U up to time t k ind c.c.d. f U4 =3 out 4 d December = 2 outd α Power Law Distribution p.d. f in 4 d December P( outd ) ind k p(x) µ x -a P(x) = ò ¥ x p(x)dx ind outd 2009-2012 2.005 1.895 2009-2013 2013 2.003 1.895 1.904 2.830 8
  • Non-paremtric Estimation of PA Function No prior assumption of power law. R Package SNEPA α = 1.005 Ak µ k1.005 Nodes with High Degree Nodes with High Probability of getting new edges Preferent Attachment(PA) Function Ak 9
  • Few Rich Nodes Getting Richer inAugust P (BDecember ) 1e 0 0.79 IN July µ inJuly BDecember INJuly Bitcoin Balance after time t, def B := IN t - OUTt t IN t int def := Bitcoins received up to month t def Rich nodes tend to receive more bitcoins. := Bitcoins received in month t only def OUTt := Bitcoins sent up to month t 10
  • Community Detection & Network Visualization Case Study : Accumulation of huge amount of Bitcoin by FBI in October 2013. FBI 11
  • References 1. Bitcoin: A Peer-to-Peer Electronic Cash System B.(2008)  Satoshi Nakamoto 2. An Analysis of Anonymity in the Bitcoin System. (2011)  Fergal Reid and Martin Harrigan 3. A Fistful of Bitcoins: Characterizing Payments Among Men with No Names.(2013)  Sarah Meiklejohn Marjori Pomarole Grant Jordan, Kirill Levchenko Damon McCoy† Geoffrey M. Voelker Stefan Savage 4. Do the rich get richer? An empirical analysis of the BitCoin transaction network. (2013)  Daniel Kondor, Marton Posfai, Istvan Csabai, and Gabor Vattay 5. http://bitcoin.org 12
  • End of Presentation 13
  • Additional Slides 14
  • What is Bitcoin? • “Bitcoin” – An alternative payment network. • “bitcoin”- The currency of the “Bitcoin” network. • Each user creates multiple addresses for better privacy. 15
  • USD / BTC How big is bitcoin? Limited amount: 21 million Current Market Cap(市場資本総額) About 8 billion USD Bigger than other national currencies. (Exp- Jamaica,Laos,Georgia) Rare & Valuable Currency Symbol : BTC BTC Address :31uEbMgunupShBVTewXjtqbBv5M ndwfXhb Analogy E-mail: some@gmail.com 16
  • How Bitcoin Network works? tx 1 Transaction Pool tx 3 tx 2 … Public Ledger (Public transaction Book) Registration 2009 tx 1 tx n Bitcoin Block tx 1 … Secret Number tx 3 Bitcoin Mining tx 1 25 BTC Reward tx 3 374123 243234 944553 345654 2014 17
  • National currencies with low market cap 18
  • Bitcoin Network Data • Transactions from Jan 03,2009 ~ Jan 01,2013 o # Bitcoin Blocks = 279,530 o # Transaction = 30,717,483 o # Addresses = 25,401,565 • Transaction Network o # Vertices = # Addresses = 25,401,565 o # Edges = About 150,000,000 • User Network o # Vertices = 11,920,531 o # Edges = 74,894,291