Cryptocurrencies Activity as a Complex Network: Analysis of Transactions Graphs

TL;DR

This paper applies complex network theory to analyze transaction graphs in four major cryptocurrencies, revealing small-world properties and offering insights into user interaction patterns on distributed ledgers.

Contribution

Introduces DiLeNA, a software tool for analyzing transaction networks in DLTs, and provides the first comparative network analysis across multiple cryptocurrencies.

Findings

All transaction graphs exhibit small-world properties.

Network analysis reveals distinct interaction patterns among cryptocurrencies.

Understanding network characteristics aids in comprehending user behavior in DLTs.

Abstract

The number of users approaching the world of cryptocurrencies exploded in the last years, and consequently the daily interactions on their underlying distributed ledgers have intensified. In this paper, we analyze the flow of these digital transactions in a certain period of time, trying to discover important insights on the typical use of these technologies by studying, through complex network theory, the patterns of interactions in four prominent and different Distributed Ledger Technologies (DLTs), namely Bitcoin, DogeCoin, Ethereum, Ripple. In particular, we describe the Distributed Ledger Network Analyzer (DiLeNA), a software tool for the investigation of the transactions network recorded in DLTs. We show that studying the network characteristics and peculiarities is of paramount importance, in order to understand how users interact in the DLT. For instance, our analyses reveal that all transaction graphs exhibit small world properties.