Cryptocurrencies are usually transmitted and created via distributed peer-to-peer networks with well-defined cryptographic protocols that record the system’s state via a public ledger (blockchain). Gronwald, “ Is bitcoin a commodity? On price jumps, demand shocks, and certainty of supply,” J. Siering, “Bitcoin-Asset or currency? Revealing users’ hidden intentions,” in ECIS 2014, Ap(SSRN, 2014) available at. Lee, “ Bitcoin: Medium of exchange or speculative assets?,” J. however, there is still no strong consensus as to whether it is a currency, a commodity, or an asset. Nakamoto, “ Bitcoin: A peer-to-peer electronic cash system,” Decentralized Bus.

In particular, we analyze minute-level market data that would capture price discrepancies among markets and allow us to detect any potentially anomalous information flows during a turbulent market event such as the Bitcoin price crash that occurred in 2017.īitcoin is a cryptocurrency that was originally designed as a medium of exchange 1 1. To understand the importance of different types of dynamics that come into play while determining the next price of a cryptocurrency, we analyze temporal patterns of information flow within and across markets. Therefore, the universal price of a cryptocurrency is also determined in a distributed fashion, depending on trading decisions within each individual market and trades that occur in between markets. Cryptocurrencies can be traded (sold and bought) at many independently operating venues (exchange markets) however, the price of a cryptocurrency eventually synchronizes as the traders take advantage of mismatches between prices, as observed by a single asset in several markets, or exploiting several assets within one market. They are also characterized by high price fluctuations, price bubbles, and sudden price crashes.

Cryptocurrencies are a novel financial instrument, whose uniqueness lies in a novel distributed ledger technology that serves as a public database of executed transactions.

Bitcoin price december 2017