1

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

2

Bitcoin- A New Phenomenon

2009by an Anonymous Programmer named

Satoshi Nakamoto

Kyoto U Professor

(Suspicion)

An open source software published in

Shinichi Mochizuki

A virtual currency &a payment system like

Credit Card, Pasmo or Suica.

Bitcoin is bigger than some national

economy

3

Current Market Cap

About 8 billion USD

時価総額　約８０億ドル

Oct ‘13 Nov ‘13 Dec ‘13 Jan ‘14 Feb ‘14

Mark

et

Cap

[m

illi

on

US

D]

14 M

12 M

10 M

8 M

6 M

4 M

2 M

US

D /

BT

C

1200

1000

800

600

400

200

0

Exchange Rate

為替レート：　１ビットコインが何ドルか

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

5

Data Collection &

Creation of Bitcoin Graph Database

Part 1

Statistical Analysis

Part 2

Using Bitcoin Data ( > 10GB)From Jan 2009 ~ Jan 2014

User NetworkTransaction Network

Community Detection &

Network Visualization+New

6

Estimation of User Network

Estimation Algorithm

A2

A6

A7

A3

A4

A13

A9

A14

A12

A11 A10

A5

A1

A3

A8

A9

Jan 1, 2013

2 BTC

Transaction Network

U1 U2

U4

U3

U5

21.5

1

55.6

5

3

1.5

t2t1

t3

t4

t4

t4

t5

U1 U2

U3

U4

U5

Estimated User Network

Data#Addresses: 25,401,565#Transactions: 150,097,987

User Network#Users: 11,920,531#Edges: 74,894,291

Small UserNetwork

A2

A6

A7

A3

A4

A13

A9

A14

A12

A11 A10

A5

A1

A3

A8

A9

Jan 1, 2013

2 BTC

Visualizing Wikileaks NetworkPartial Transaction Network#Addresses: 25,

687#Transaction:

37,944

Estimation ofUser Network

Partial User Network #Users: 1708#Edge: 1719

Wikileaks Bitcoin Balance

Degree Distribution follows Power

Law

8

　 　 α 　

　2009-2012

2013 2009-2013

ind 2.005 2.003 1.895 outd 1.895 1.904 2.830

P(

ou

t d )

ind

P(

ind

)

outd

U4

Non-paremtric Estimation of PA

Function

9

R Package SNEPA

Preferent Attachment(PA) Function Ak

Nodes with High Degree

Nodes with High Probability of getting new edges

α = 1.005

No prior assumption ofpower law.

Few Rich Nodes Getting Richer

10

INJuly

inA

ug

ust

Rich nodes tend toreceive more bitcoins.

BDecember

P (

BD

ecem

ber )

1e 0

Community Detection & Network

Visualization

11

FBI

Case Study :Accumulation of huge

amount of Bitcoin by FBI

in October 2013.

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

References

End of Presentation

13

Additional Slides

14

15

• “Bitcoin” – An alternative payment network. • “bitcoin”- The currency of the “Bitcoin” network.

• Each user creates multiple addresses forbetter privacy.

What is Bitcoin?

How big is bitcoin?

16

Currency Symbol : BTC BTC Address :31uEbMgunupShBVTewXjtqbBv5MndwfXhb

E-mail: some@gmail.com

Current Market Cap(市場資本総額 )

About 8 billion USD Bigger than

other national currencies.(Exp- Jamaica,Laos,Georgia)

Oct ‘13 Nov ‘13 Dec ‘13 Jan ‘14 Feb ‘14

Mark

et

Cap

[m

illi

on

US

D]14 M

12 M

10 M

8 M

6 M

4 M

2 M

US

D /

BT

C

1200

1000

800

600

400

200

0

Limited amount: 21 million

Analogy

Rare & Valuable

17

tx 1

tx 3 tx 1

tx n

tx 2…

Transaction Pool

Bitcoin Mining

Public Ledger (Public transaction

Book)Registration

How Bitcoin Network works?

25 BTCReward

tx 1tx 3

…

2009

2014

tx 1

tx 3Bitcoin Mining 3741

232432349445533456

54

Bitcoin Blocktx 1

tx 3

Secret Number

tx 1tx 3

National currencies with low

market cap

18

Bitcoin Network Data• Transactions from Jan 03,2009 ~ Jan 01,2013

o # Bitcoin Blocks = 279,530o # Transaction = 30,717,483o # Addresses = 25,401,565

• Transaction Network

o # Vertices = # Addresses = 25,401,565o # Edges = About 150,000,000

• User Network

o # Vertices = 11,920,531o # Edges = 74,894,291