Projects - User contributions [en]

Projects:2018s1-142 Modelling the Dynamics of Cryptocurrency Market

2018-10-16T02:14:53Z

A1668483:

== Supervisors ==

*Prof Derek Abbott
*Dr Azhar Iqbal
*Dr Matthew Sorell

== Honours Students ==

*Jeremy Abbot
*Nikolaos Flabouris

== Project Description ==

Cryptocurrencies, such as Bitcoin, have become increasingly popular with over 600 different cryptocurrencies being actively traded. There has been much research into individual currencies (in particular Bitcoin), but very few have looked into the effect that they have on each other. This project aims to analyse the dynamics of the cryptocurrency market, including the market share distribution, behaviour of the prices, stability parameters, and the effect of the birth and deaths of new cryptocurrencies.

== Background Information ==

Most cryptocurrencies work through the use of a blockchain - a decentralised online public ledger - where all transactions are recorded. Cryptocurrency "miners" record the transactions between traders and add them to the next block in the blockchain. To trade in cryptocurrencies a trader must first acquire a cryptocurrency wallet. This can be stored on a local machine or in the cloud. To trade a trader must move their coin to an exchange. From here the trader can make market and limit orders for other currencies that the exchange supports. Market orders are orders usually around the current trading price and can be matched immediately. Limit orders are transactions that only become available when the trade price hits a certain limit. Cryptocurrency exchanges usually support trade between fiat currencies (paper currencies like USD) and the major currencies like Bitcoin. The major currencies can then be used to trade with the less popular cryptocurrencies usually referred to as alt-coins. Fees apply to traders at various stages along this process.

Due to the potential for profit and growth as a hosting grounds for new online technologies research has begun in analysing trends and relationships between cryptocurrencies. Researchers have found connections between online traffic about a currency and its price. Others have compared cryptocurrencies considering if one can be said to be better then the rest. There are many quantitative factors to compare and measure other then just price such as market share, number of active traders/transactions and fee costs as well as any potential qualitative factors.

== Methodology ==

To perform an analysis on some of the quantitative factors of this market an agent based model will be constructed. The model will create traders as agents that react to the start of the market environment. Traders will make decisions based on the state of the market. The market will record these decisions and update its state. Traders will then reassess the state of the market. At each time step information about the traders and the state of the market will be recorded. This data will then be analysed to find trends as well as compare to the real world market. The model will be initiated with real world data so that the results of the model can be compared to real world results.

[[File:Volatility.jpg | https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/ ]]

https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/

== Results & Discussion==

In general, more traders ended up running at a loss, with very few traders making a net gain. The average calculated trader ranked 505th, while the average random trader ranked 499th. When comparing the percentage gain of the traders, the average calculated trader performed better, ranking at 480th, and the average random trader performing at 508th.
[[File:Percenttraders01.png]]
[[File:Percent trader 462 01.png]]

Throughout the runs, both the Ethereum and Ripple seemed to perform the best, though Ripple managed to perform positively more often that the other currencies.
{| class="wikitable" style="text-align: center; margin: auto;"
|Currency|| Number of Best Performance|| Number of Positive Performance
|-
|Bitcoin|| 3|| 2
|-
|Ethereum|| 9|| 1
|-
|Ripple|| 9|| 6
|}

An interesting discovery was that on all runs that a currency resulted in a positive gain for its market value, a trader for each respected currency performed the best.
When comparing the results with that of reality, it shows that the model is underperforming when it comes to the prices of cryptocurrencies.
[[File:Bitcoinreality1.png|center]]

==Conclusion==

== Supplementary Information ==
*Blockchain
Blockchain is a new technology that was first used to create Bitcoin. Blockchain removes the need for a central authority to manage transactions between two traders. Miners around the world all maintain a local copy of the blockchain for a given cryptocurrency. A concensus is used to determine what the correct version is, the version that the majority of traders have is the correct version. Updates are propagated throughout the network and fail safes are in place to correct errors due to the delays in the network.

Each trader has a public and private cryptographic key. These keys are used to verify the identities of traders. When two traders agree to perform a transaction their cryptographic keys are used to verify their consent and the transaction is sent out into the public network. Miners collect these verified transactions and complete a proof of work task to form a block of verified transactions which is then added to the blockchain. Each block contains a reference to the previous block to form a chain. The proof of work task is used to ensure all traders have a chance to have their transaction processed. For most implementations of a blockchain the proof of work task involves guessing a random number. While having more computing power increases the chances of finding the correct number there is always a chance for any miner to find this number. This avoids the case where a large mining group could choose to completely stop including certain transactions as miners decided which transactions to include the block that they mine.

Miners end up using a considerable amount of electricity to power computers mining these blocks. As payment for their efforts in facilitating the processing of transactions miners are often rewarded with new coin of the cryptocurrency and/or the fees placed on the transactions included in the block they mine. In the case of Bitcoin both new coin and fees are allocated to the miners. Once all 21 million bitcoins are added to the market miners will only receive the fees. As miners receive the fees for the transactions they include it is more profitable for them to include transactions paying a larger fee. Traders can decide how much of a fee they are willing to pay, a large fee would encourage for the transactions to be included as soon as possible while low fees may fall down on the priority list.

==Links==
*[https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html Bitcoin Rich List]
*[https://etherscan.io/accounts Ethereum data]
*[https://metrics.torproject.org/bandwidth.csv?start=2018-02-10&end=2018-05-07 Tor Metrics]
*[https://coinmetrics.io/data-downloads/ Coin Metrics]
*[https://trends.google.com/trends/?geo=US Google Trends]

Projects:2018s1-142 Modelling the Dynamics of Cryptocurrency Market

2018-10-16T01:55:19Z

A1668483:

== Supervisors ==

*Prof Derek Abbott
*Dr Azhar Iqbal
*Dr Matthew Sorell

== Honours Students ==

*Jeremy Abbot
*Nikolaos Flabouris

== Project Description ==

Cryptocurrencies, such as Bitcoin, have become increasingly popular with over 600 different cryptocurrencies being actively traded. There has been much research into individual currencies (in particular Bitcoin), but very few have looked into the effect that they have on each other. This project aims to analyse the dynamics of the cryptocurrency market, including the market share distribution, behaviour of the prices, stability parameters, and the effect of the birth and deaths of new cryptocurrencies.

== Background Information ==

Most cryptocurrencies work through the use of a blockchain - a decentralised online public ledger - where all transactions are recorded. Cryptocurrency "miners" record the transactions between traders and add them to the next block in the blockchain. To trade in cryptocurrencies a trader must first acquire a cryptocurrency wallet. This can be stored on a local machine or in the cloud. To trade a trader must move their coin to an exchange. From here the trader can make market and limit orders for other currencies that the exchange supports. Market orders are orders usually around the current trading price and can be matched immediately. Limit orders are transactions that only become available when the trade price hits a certain limit. Cryptocurrency exchanges usually support trade between fiat currencies (paper currencies like USD) and the major currencies like Bitcoin. The major currencies can then be used to trade with the less popular cryptocurrencies usually referred to as alt-coins. Fees apply to traders at various stages along this process.

Due to the potential for profit and growth as a hosting grounds for new online technologies research has begun in analysing trends and relationships between cryptocurrencies. Researchers have found connections between online traffic about a currency and its price. Others have compared cryptocurrencies considering if one can be said to be better then the rest. There are many quantitative factors to compare and measure other then just price such as market share, number of active traders/transactions and fee costs as well as any potential qualitative factors.

== Methodology ==

To perform an analysis on some of the quantitative factors of this market an agent based model will be constructed. The model will create traders as agents that react to the start of the market environment. Traders will make decisions based on the state of the market. The market will record these decisions and update its state. Traders will then reassess the state of the market. At each time step information about the traders and the state of the market will be recorded. This data will then be analysed to find trends as well as compare to the real world market. The model will be initiated with real world data so that the results of the model can be compared to real world results.

[[File:Volatility.jpg | https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/ ]]

https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/

== Results & Discussion==

In general, more traders ended up running at a loss, with very few traders making a net gain. The average calculated trader ranked 505th, while the average random trader ranked 499th. When comparing the percentage gain of the traders, the average calculated trader performed better, ranking at 480th, and the average random trader performing at 508th.
[[File:Percenttraders01.png]]
[[File:Percent trader 462 01.png]]

Throughout the runs, both the Ethereum and Ripple seemed to perform the best, though Ripple managed to perform positively more often that the other currencies.
{| class="wikitable" style="text-align: center; margin: auto;"
|Currency|| Number of Best Performance|| Number of Positive Performance
|-
|Bitcoin|| 3|| 2
|-
|Ethereum|| 9|| 1
|-
|Ripple|| 9|| 6
|}

An interesting discovery was that on all runs that a currency resulted in a positive gain for its market value, a trader for each respected currency performed the best.
When comparing the results with that of reality, it shows that the model is underperforming when it comes to the prices of cryptocurrencies.
[[File:Bitcoinreality1.png|center]]

== Supplementary Information ==
*Blockchain
Blockchain is a new technology that was first used to create Bitcoin. Blockchain removes the need for a central authority to manage transactions between two traders. Miners around the world all maintain a local copy of the blockchain for a given cryptocurrency. A concensus is used to determine what the correct version is, the version that the majority of traders have is the correct version. Updates are propagated throughout the network and fail safes are in place to correct errors due to the delays in the network.

Each trader has a public and private cryptographic key. These keys are used to verify the identities of traders. When two traders agree to perform a transaction their cryptographic keys are used to verify their consent and the transaction is sent out into the public network. Miners collect these verified transactions and complete a proof of work task to form a block of verified transactions which is then added to the blockchain. Each block contains a reference to the previous block to form a chain. The proof of work task is used to ensure all traders have a chance to have their transaction processed. For most implementations of a blockchain the proof of work task involves guessing a random number. While having more computing power increases the chances of finding the correct number there is always a chance for any miner to find this number. This avoids the case where a large mining group could choose to completely stop including certain transactions as miners decided which transactions to include the block that they mine.

Miners end up using a considerable amount of electricity to power computers mining these blocks. As payment for their efforts in facilitating the processing of transactions miners are often rewarded with new coin of the cryptocurrency and/or the fees placed on the transactions included in the block they mine. In the case of Bitcoin both new coin and fees are allocated to the miners. Once all 21 million bitcoins are added to the market miners will only receive the fees. As miners receive the fees for the transactions they include it is more profitable for them to include transactions paying a larger fee. Traders can decide how much of a fee they are willing to pay, a large fee would encourage for the transactions to be included as soon as possible while low fees may fall down on the priority list.

==Conclusion==

==Links==
*[https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html Bitcoin Rich List]
*[https://etherscan.io/accounts Ethereum data]
*[https://metrics.torproject.org/bandwidth.csv?start=2018-02-10&end=2018-05-07 Tor Metrics]
*[https://coinmetrics.io/data-downloads/ Coin Metrics]
*[https://trends.google.com/trends/?geo=US Google Trends]

Projects:2018s1-142 Modelling the Dynamics of Cryptocurrency Market

2018-10-16T01:34:09Z

A1668483: /* Results & Discussion */

== Supervisors ==

*Prof Derek Abbott
*Dr Azhar Iqbal
*Dr Matthew Sorell

== Honours Students ==

*Jeremy Abbot
*Nikolaos Flabouris

== Project Description ==

Cryptocurrencies, such as Bitcoin, have become increasingly popular with over 600 different cryptocurrencies being actively traded. There has been much research into individual currencies (in particular Bitcoin), but very few have looked into the effect that they have on each other. This project aims to analyse the dynamics of the cryptocurrency market, including the market share distribution, behaviour of the prices, stability parameters, and the effect of the birth and deaths of new cryptocurrencies.

== Background Information ==

Most cryptocurrencies work through the use of a blockchain - a decentralised online public ledger - where all transactions are recorded. Cryptocurrency "miners" record the transactions between traders and add them to the next block in the blockchain. To trade in cryptocurrencies a trader must first acquire a cryptocurrency wallet. This can be stored on a local machine or in the cloud. To trade a trader must move their coin to an exchange. From here the trader can make market and limit orders for other currencies that the exchange supports. Market orders are orders usually around the current trading price and can be matched immediately. Limit orders are transactions that only become available when the trade price hits a certain limit. Cryptocurrency exchanges usually support trade between fiat currencies (paper currencies like USD) and the major currencies like Bitcoin. The major currencies can then be used to trade with the less popular cryptocurrencies usually referred to as alt-coins. Fees apply to traders at various stages along this process.

Due to the potential for profit and growth as a hosting grounds for new online technologies research has begun in analysing trends and relationships between cryptocurrencies. Researchers have found connections between online traffic about a currency and its price. Others have compared cryptocurrencies considering if one can be said to be better then the rest. There are many quantitative factors to compare and measure other then just price such as market share, number of active traders/transactions and fee costs as well as any potential qualitative factors.

== Methodology ==

To perform an analysis on some of the quantitative factors of this market an agent based model will be constructed. The model will create traders as agents that react to the start of the market environment. Traders will make decisions based on the state of the market. The market will record these decisions and update its state. Traders will then reassess the state of the market. At each time step information about the traders and the state of the market will be recorded. This data will then be analysed to find trends as well as compare to the real world market. The model will be initiated with real world data so that the results of the model can be compared to real world results.

[[File:Volatility.jpg | https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/ ]]

https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/

== Results & Discussion==

In general, more traders ended up running at a loss, with very few traders making a net gain. The average calculated trader ranked 505th, while the average random trader ranked 499th. When comparing the percentage gain of the traders, the average calculated trader performed better, ranking at 480th, and the average random trader performing at 508th.
[[File:Percenttraders01.png]]
[[File:Percent trader 462 01.png]]

Throughout the runs, both the Ethereum and Ripple seemed to perform the best, though Ripple managed to perform positively more often that the other currencies.
{| class="wikitable" style="text-align: center; margin: auto;"
|Currency|| Number of Best Performance|| Number of Positive Performance
|-
|Bitcoin|| 3|| 2
|-
|Ethereum|| 9|| 1
|-
|Ripple|| 9|| 6
|}

An interesting discovery was that on all runs that a currency resulted in a positive gain for its market value, a trader for each respected currency performed the best.
When comparing the results with that of reality, it shows that the model is underperforming when it comes to the prices of cryptocurrencies.
[[File:Bitcoinreality1.png|center]]

== Supplementary Information ==
*Blockchain
Blockchain is a new technology that was first used to create Bitcoin. Blockchain removes the need for a central authority to manage transactions between two traders. Miners around the world all maintain a local copy of the blockchain for a given cryptocurrency. A concensus is used to determine what the correct version is, the version that the majority of traders have is the correct version. Updates are propagated throughout the network and fail safes are in place to correct errors due to the delays in the network.

Each trader has a public and private cryptographic key. These keys are used to verify the identities of traders. When two traders agree to perform a transaction their cryptographic keys are used to verify their consent and the transaction is sent out into the public network. Miners collect these verified transactions and complete a proof of work task to form a block of verified transactions which is then added to the blockchain. Each block contains a reference to the previous block to form a chain. The proof of work task is used to ensure all traders have a chance to have their transaction processed. For most implementations of a blockchain the proof of work task involves guessing a random number. While having more computing power increases the chances of finding the correct number there is always a chance for any miner to find this number. This avoids the case where a large mining group could choose to completely stop including certain transactions as miners decided which transactions to include the block that they mine.

Miners end up using a considerable amount of electricity to power computers mining these blocks. As payment for their efforts in facilitating the processing of transactions miners are often rewarded with new coin of the cryptocurrency and/or the fees placed on the transactions included in the block they mine. In the case of Bitcoin both new coin and fees are allocated to the miners. Once all 21 million bitcoins are added to the market miners will only receive the fees. As miners receive the fees for the transactions they include it is more profitable for them to include transactions paying a larger fee. Traders can decide how much of a fee they are willing to pay, a large fee would encourage for the transactions to be included as soon as possible while low fees may fall down on the priority list.

==Links==
*[https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html Bitcoin Rich List]
*[https://etherscan.io/accounts Ethereum data]
*[https://metrics.torproject.org/bandwidth.csv?start=2018-02-10&end=2018-05-07 Tor Metrics]
*[https://coinmetrics.io/data-downloads/ Coin Metrics]
*[https://trends.google.com/trends/?geo=US Google Trends]

Projects:2018s1-142 Modelling the Dynamics of Cryptocurrency Market

2018-10-16T01:21:42Z

A1668483:

== Supervisors ==

*Prof Derek Abbott
*Dr Azhar Iqbal
*Dr Matthew Sorell

== Honours Students ==

*Jeremy Abbot
*Nikolaos Flabouris

== Project Description ==

Cryptocurrencies, such as Bitcoin, have become increasingly popular with over 600 different cryptocurrencies being actively traded. There has been much research into individual currencies (in particular Bitcoin), but very few have looked into the effect that they have on each other. This project aims to analyse the dynamics of the cryptocurrency market, including the market share distribution, behaviour of the prices, stability parameters, and the effect of the birth and deaths of new cryptocurrencies.

== Background Information ==

Most cryptocurrencies work through the use of a blockchain - a decentralised online public ledger - where all transactions are recorded. Cryptocurrency "miners" record the transactions between traders and add them to the next block in the blockchain. To trade in cryptocurrencies a trader must first acquire a cryptocurrency wallet. This can be stored on a local machine or in the cloud. To trade a trader must move their coin to an exchange. From here the trader can make market and limit orders for other currencies that the exchange supports. Market orders are orders usually around the current trading price and can be matched immediately. Limit orders are transactions that only become available when the trade price hits a certain limit. Cryptocurrency exchanges usually support trade between fiat currencies (paper currencies like USD) and the major currencies like Bitcoin. The major currencies can then be used to trade with the less popular cryptocurrencies usually referred to as alt-coins. Fees apply to traders at various stages along this process.

Due to the potential for profit and growth as a hosting grounds for new online technologies research has begun in analysing trends and relationships between cryptocurrencies. Researchers have found connections between online traffic about a currency and its price. Others have compared cryptocurrencies considering if one can be said to be better then the rest. There are many quantitative factors to compare and measure other then just price such as market share, number of active traders/transactions and fee costs as well as any potential qualitative factors.

== Methodology ==

To perform an analysis on some of the quantitative factors of this market an agent based model will be constructed. The model will create traders as agents that react to the start of the market environment. Traders will make decisions based on the state of the market. The market will record these decisions and update its state. Traders will then reassess the state of the market. At each time step information about the traders and the state of the market will be recorded. This data will then be analysed to find trends as well as compare to the real world market. The model will be initiated with real world data so that the results of the model can be compared to real world results.

[[File:Volatility.jpg | https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/ ]]

https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/

== Results & Discussion==

In general, more traders ended up running at a loss, with very few traders making a net gain. The average calculated trader ranked 505th, while the average random trader ranked 499th. When comparing the percentage gain of the traders, the average calculated trader performed better, ranking at 480th, and the average random trader performing at 508th.
[[File:Percenttraders01.png]]
[[File:Percent trader 462 01.png]]

Throughout the runs, both the Ethereum and Ripple seemed to perform the best, though Ripple managed to perform positively more often that the other currencies.
{| class="wikitable" style="text-align: center; margin: auto;"
|Currency|| Number of Best Performance|| Number of Positive Performance
|-
|Bitcoin|| 3|| 2
|-
|Ethereum|| 9|| 1
|-
|Ripple|| 9|| 6
|}

An interesting discovery was that on all runs that a currency resulted in a positive gain for its market value, a trader for each respected currency performed the best.
When comparing the results with that of reality, it shows that the model is underperforming when it comes to the prices of cryptocurrencies.
[[File:Bitcoinreality1.png|center]]

== Supplementary Information ==
*Blockchain
Blockchain is a new technology that was first used to create Bitcoin. Blockchain removes the need for a central authority to manage transactions between two traders. Miners around the world all maintain a local copy of the blockchain for a given cryptocurrency. A concensus is used to determine what the correct version is, the version that the majority of traders have is the correct version. Updates are propagated throughout the network and fail safes are in place to correct errors due to the delays in the network.

Each trader has a public and private cryptographic key. These keys are used to verify the identities of traders. When two traders agree to perform a transaction their cryptographic keys are used to verify their consent and the transaction is sent out into the public network. Miners collect these verified transactions and complete a proof of work task to form a block of verified transactions which is then added to the blockchain. Each block contains a reference to the previous block to form a chain. The proof of work task is used to ensure all traders have a chance to have their transaction processed. For most implementations of a blockchain the proof of work task involves guessing a random number. While having more computing power increases the chances of finding the correct number there is always a chance for any miner to find this number. This avoids the case where a large mining group could choose to completely stop including certain transactions as miners decided which transactions to include the block that they mine.

Miners end up using a considerable amount of electricity to power computers mining these blocks. As payment for their efforts in facilitating the processing of transactions miners are often rewarded with new coin of the cryptocurrency and/or the fees placed on the transactions included in the block they mine. In the case of Bitcoin both new coin and fees are allocated to the miners. Once all 21 million bitcoins are added to the market miners will only receive the fees. As miners receive the fees for the transactions they include it is more profitable for them to include transactions paying a larger fee. Traders can decide how much of a fee they are willing to pay, a large fee would encourage for the transactions to be included as soon as possible while low fees may fall down on the priority list.

==Links==
*[https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html Bitcoin Rich List]
*[https://etherscan.io/accounts Ethereum data]
*[https://metrics.torproject.org/bandwidth.csv?start=2018-02-10&end=2018-05-07 Tor Metrics]
*[https://coinmetrics.io/data-downloads/ Coin Metrics]
*[https://trends.google.com/trends/?geo=US Google Trends]

Projects:2018s1-142 Modelling the Dynamics of Cryptocurrency Market

2018-10-16T01:15:31Z

A1668483: /* Results */

== Supervisors ==

*Prof Derek Abbott
*Dr Azhar Iqbal
*Dr Matthew Sorell

== Honours Students ==

*Jeremy Abbot
*Nikolaos Flabouris

== Project Description ==

Cryptocurrencies, such as Bitcoin, have become increasingly popular with over 600 different cryptocurrencies being actively traded. There has been much research into individual currencies (in particular Bitcoin), but very few have looked into the effect that they have on each other. This project aims to analyse the dynamics of the cryptocurrency market, including the market share distribution, behaviour of the prices, stability parameters, and the effect of the birth and deaths of new cryptocurrencies.

== Background Information ==

Most cryptocurrencies work through the use of a blockchain - a decentralised online public ledger - where all transactions are recorded. Cryptocurrency "miners" record the transactions between traders and add them to the next block in the blockchain. To trade in cryptocurrencies a trader must first acquire a cryptocurrency wallet. This can be stored on a local machine or in the cloud. To trade a trader must move their coin to an exchange. From here the trader can make market and limit orders for other currencies that the exchange supports. Market orders are orders usually around the current trading price and can be matched immediately. Limit orders are transactions that only become available when the trade price hits a certain limit. Cryptocurrency exchanges usually support trade between fiat currencies (paper currencies like USD) and the major currencies like Bitcoin. The major currencies can then be used to trade with the less popular cryptocurrencies usually referred to as alt-coins. Fees apply to traders at various stages along this process.

Due to the potential for profit and growth as a hosting grounds for new online technologies research has begun in analysing trends and relationships between cryptocurrencies. Researchers have found connections between online traffic about a currency and its price. Others have compared cryptocurrencies considering if one can be said to be better then the rest. There are many quantitative factors to compare and measure other then just price such as market share, number of active traders/transactions and fee costs as well as any potential qualitative factors.

== Methodology ==

To perform an analysis on some of the quantitative factors of this market an agent based model will be constructed. The model will create traders as agents that react to the start of the market environment. Traders will make decisions based on the state of the market. The market will record these decisions and update its state. Traders will then reassess the state of the market. At each time step information about the traders and the state of the market will be recorded. This data will then be analysed to find trends as well as compare to the real world market. The model will be initiated with real world data so that the results of the model can be compared to real world results.

[[File:Volatility.jpg | https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/ ]]

https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/

== Results ==

In general, more traders ended up running at a loss, with very few traders making a net gain. The average calculated trader ranked 505th, while the average random trader ranked 499th. When comparing the percentage gain of the traders, the average calculated trader performed better, ranking at 480th, and the average random trader performing at 508th.
[[File:Percenttraders01.png]]
[[File:Percent trader 462 01.png]]

Throughout the runs, both the Ethereum and Ripple seemed to perform the best, though Ripple managed to perform positively more often that the other currencies.
{| class="wikitable" style="text-align: center; margin: auto;"
|Currency|| Number of Best Performance|| Number of Positive Performance
|-
|Bitcoin|| 3|| 2
|-
|Ethereum|| 9|| 1
|-
|Ripple|| 9|| 6
|}

An interesting discovery was that on all runs that a currency resulted in a positive gain for its market value, a trader for each respected currency performed the best.
When comparing the results with that of reality, it shows that the model is underperforming when it comes to the prices of cryptocurrencies.
[[File:Bitcoinreality1.png|center]]

== Discussion ==

== Supplementary Information ==
*Blockchain
Blockchain is a new technology that was first used to create Bitcoin. Blockchain removes the need for a central authority to manage transactions between two traders. Miners around the world all maintain a local copy of the blockchain for a given cryptocurrency. A concensus is used to determine what the correct version is, the version that the majority of traders have is the correct version. Updates are propagated throughout the network and fail safes are in place to correct errors due to the delays in the network.

Each trader has a public and private cryptographic key. These keys are used to verify the identities of traders. When two traders agree to perform a transaction their cryptographic keys are used to verify their consent and the transaction is sent out into the public network. Miners collect these verified transactions and complete a proof of work task to form a block of verified transactions which is then added to the blockchain. Each block contains a reference to the previous block to form a chain. The proof of work task is used to ensure all traders have a chance to have their transaction processed. For most implementations of a blockchain the proof of work task involves guessing a random number. While having more computing power increases the chances of finding the correct number there is always a chance for any miner to find this number. This avoids the case where a large mining group could choose to completely stop including certain transactions as miners decided which transactions to include the block that they mine.

Miners end up using a considerable amount of electricity to power computers mining these blocks. As payment for their efforts in facilitating the processing of transactions miners are often rewarded with new coin of the cryptocurrency and/or the fees placed on the transactions included in the block they mine. In the case of Bitcoin both new coin and fees are allocated to the miners. Once all 21 million bitcoins are added to the market miners will only receive the fees. As miners receive the fees for the transactions they include it is more profitable for them to include transactions paying a larger fee. Traders can decide how much of a fee they are willing to pay, a large fee would encourage for the transactions to be included as soon as possible while low fees may fall down on the priority list.

==Links==
*[https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html Bitcoin Rich List]
*[https://etherscan.io/accounts Ethereum data]
*[https://metrics.torproject.org/bandwidth.csv?start=2018-02-10&end=2018-05-07 Tor Metrics]
*[https://coinmetrics.io/data-downloads/ Coin Metrics]
*[https://trends.google.com/trends/?geo=US Google Trends]

Projects:2018s1-142 Modelling the Dynamics of Cryptocurrency Market

2018-10-16T01:12:43Z

A1668483: /* Results */

== Supervisors ==

*Prof Derek Abbott
*Dr Azhar Iqbal
*Dr Matthew Sorell

== Honours Students ==

*Jeremy Abbot
*Nikolaos Flabouris

== Project Description ==

Cryptocurrencies, such as Bitcoin, have become increasingly popular with over 600 different cryptocurrencies being actively traded. There has been much research into individual currencies (in particular Bitcoin), but very few have looked into the effect that they have on each other. This project aims to analyse the dynamics of the cryptocurrency market, including the market share distribution, behaviour of the prices, stability parameters, and the effect of the birth and deaths of new cryptocurrencies.

== Background Information ==

Most cryptocurrencies work through the use of a blockchain - a decentralised online public ledger - where all transactions are recorded. Cryptocurrency "miners" record the transactions between traders and add them to the next block in the blockchain. To trade in cryptocurrencies a trader must first acquire a cryptocurrency wallet. This can be stored on a local machine or in the cloud. To trade a trader must move their coin to an exchange. From here the trader can make market and limit orders for other currencies that the exchange supports. Market orders are orders usually around the current trading price and can be matched immediately. Limit orders are transactions that only become available when the trade price hits a certain limit. Cryptocurrency exchanges usually support trade between fiat currencies (paper currencies like USD) and the major currencies like Bitcoin. The major currencies can then be used to trade with the less popular cryptocurrencies usually referred to as alt-coins. Fees apply to traders at various stages along this process.

Due to the potential for profit and growth as a hosting grounds for new online technologies research has begun in analysing trends and relationships between cryptocurrencies. Researchers have found connections between online traffic about a currency and its price. Others have compared cryptocurrencies considering if one can be said to be better then the rest. There are many quantitative factors to compare and measure other then just price such as market share, number of active traders/transactions and fee costs as well as any potential qualitative factors.

== Methodology ==

To perform an analysis on some of the quantitative factors of this market an agent based model will be constructed. The model will create traders as agents that react to the start of the market environment. Traders will make decisions based on the state of the market. The market will record these decisions and update its state. Traders will then reassess the state of the market. At each time step information about the traders and the state of the market will be recorded. This data will then be analysed to find trends as well as compare to the real world market. The model will be initiated with real world data so that the results of the model can be compared to real world results.

[[File:Volatility.jpg | https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/ ]]

https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/

== Results ==

In general, more traders ended up running at a loss, with very few traders making a net gain. The average calculated trader ranked 505th, while the average random trader ranked 499th. When comparing the percentage gain of the traders, the average calculated trader performed better, ranking at 480th, and the average random trader performing at 508th.
[[File:Percenttraders01.png]]
[[File:Percent trader 462 01.png]]

Throughout the runs, both the Ethereum and Ripple seemed to perform the best, though Ripple managed to perform positively more often that the other currencies.
{| class="wikitable"
|Currency|| Number of Best Performance|| Number of Positive Performance
|-
|Bitcoin|| 3|| 2
|-
|Ethereum|| 9|| 1
|-
|Ripple|| 9|| 6
|}

An interesting discovery was that on all runs that a currency resulted in a positive gain for its market value, a trader for each respected currency performed the best.
When comparing the results with that of reality, it shows that the model is underperforming when it comes to the prices of cryptocurrencies.
[[File:Bitcoinreality1.png|center]]

== Discussion ==

== Supplementary Information ==
*Blockchain
Blockchain is a new technology that was first used to create Bitcoin. Blockchain removes the need for a central authority to manage transactions between two traders. Miners around the world all maintain a local copy of the blockchain for a given cryptocurrency. A concensus is used to determine what the correct version is, the version that the majority of traders have is the correct version. Updates are propagated throughout the network and fail safes are in place to correct errors due to the delays in the network.

Each trader has a public and private cryptographic key. These keys are used to verify the identities of traders. When two traders agree to perform a transaction their cryptographic keys are used to verify their consent and the transaction is sent out into the public network. Miners collect these verified transactions and complete a proof of work task to form a block of verified transactions which is then added to the blockchain. Each block contains a reference to the previous block to form a chain. The proof of work task is used to ensure all traders have a chance to have their transaction processed. For most implementations of a blockchain the proof of work task involves guessing a random number. While having more computing power increases the chances of finding the correct number there is always a chance for any miner to find this number. This avoids the case where a large mining group could choose to completely stop including certain transactions as miners decided which transactions to include the block that they mine.

Miners end up using a considerable amount of electricity to power computers mining these blocks. As payment for their efforts in facilitating the processing of transactions miners are often rewarded with new coin of the cryptocurrency and/or the fees placed on the transactions included in the block they mine. In the case of Bitcoin both new coin and fees are allocated to the miners. Once all 21 million bitcoins are added to the market miners will only receive the fees. As miners receive the fees for the transactions they include it is more profitable for them to include transactions paying a larger fee. Traders can decide how much of a fee they are willing to pay, a large fee would encourage for the transactions to be included as soon as possible while low fees may fall down on the priority list.

==Links==
*[https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html Bitcoin Rich List]
*[https://etherscan.io/accounts Ethereum data]
*[https://metrics.torproject.org/bandwidth.csv?start=2018-02-10&end=2018-05-07 Tor Metrics]
*[https://coinmetrics.io/data-downloads/ Coin Metrics]
*[https://trends.google.com/trends/?geo=US Google Trends]

Projects:2018s1-142 Modelling the Dynamics of Cryptocurrency Market

2018-10-16T01:11:41Z

A1668483: /* Methodology */

== Supervisors ==

*Prof Derek Abbott
*Dr Azhar Iqbal
*Dr Matthew Sorell

== Honours Students ==

*Jeremy Abbot
*Nikolaos Flabouris

== Project Description ==

Cryptocurrencies, such as Bitcoin, have become increasingly popular with over 600 different cryptocurrencies being actively traded. There has been much research into individual currencies (in particular Bitcoin), but very few have looked into the effect that they have on each other. This project aims to analyse the dynamics of the cryptocurrency market, including the market share distribution, behaviour of the prices, stability parameters, and the effect of the birth and deaths of new cryptocurrencies.

== Background Information ==

Most cryptocurrencies work through the use of a blockchain - a decentralised online public ledger - where all transactions are recorded. Cryptocurrency "miners" record the transactions between traders and add them to the next block in the blockchain. To trade in cryptocurrencies a trader must first acquire a cryptocurrency wallet. This can be stored on a local machine or in the cloud. To trade a trader must move their coin to an exchange. From here the trader can make market and limit orders for other currencies that the exchange supports. Market orders are orders usually around the current trading price and can be matched immediately. Limit orders are transactions that only become available when the trade price hits a certain limit. Cryptocurrency exchanges usually support trade between fiat currencies (paper currencies like USD) and the major currencies like Bitcoin. The major currencies can then be used to trade with the less popular cryptocurrencies usually referred to as alt-coins. Fees apply to traders at various stages along this process.

Due to the potential for profit and growth as a hosting grounds for new online technologies research has begun in analysing trends and relationships between cryptocurrencies. Researchers have found connections between online traffic about a currency and its price. Others have compared cryptocurrencies considering if one can be said to be better then the rest. There are many quantitative factors to compare and measure other then just price such as market share, number of active traders/transactions and fee costs as well as any potential qualitative factors.

== Methodology ==

To perform an analysis on some of the quantitative factors of this market an agent based model will be constructed. The model will create traders as agents that react to the start of the market environment. Traders will make decisions based on the state of the market. The market will record these decisions and update its state. Traders will then reassess the state of the market. At each time step information about the traders and the state of the market will be recorded. This data will then be analysed to find trends as well as compare to the real world market. The model will be initiated with real world data so that the results of the model can be compared to real world results.

[[File:Volatility.jpg | https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/ ]]

https://qz.com/1216880/ripples-xrp-crypto-is-more-volatile-than-ethereum-bitcoin-stocks-and-gold/

== Results ==

In general, more traders ended up running at a loss, with very few traders making a net gain. The average calculated trader ranked 505th, while the average random trader ranked 499th. When comparing the percentage gain of the traders, the average calculated trader performed better, ranking at 480th, and the average random trader performing at 508th.
[[File:Percenttraders01.png]]
[[File:Percent trader 462 01.png]]

Throughout the runs, both the Ethereum and Ripple seemed to perform the best, though Ripple managed to perform positively more often that the other currencies.
{| class="wikitable"
|Currency|| Number of Best Performance|| Number of Positive Performance
|-
|Bitcoin|| 3|| 2
|-
|Ethereum|| 9|| 1
|-
|Ripple|| 9|| 6
|}

An interesting discovery was that on all runs that a currency resulted in a positive gain for its market value, a trader for each respected currency performed the best.
When comparing the results with that of reality, it shows that the model is underperforming when it comes to the prices of cryptocurrencies.
[[File:Bitcoinreality1.png]]

== Discussion ==

== Supplementary Information ==
*Blockchain
Blockchain is a new technology that was first used to create Bitcoin. Blockchain removes the need for a central authority to manage transactions between two traders. Miners around the world all maintain a local copy of the blockchain for a given cryptocurrency. A concensus is used to determine what the correct version is, the version that the majority of traders have is the correct version. Updates are propagated throughout the network and fail safes are in place to correct errors due to the delays in the network.

Each trader has a public and private cryptographic key. These keys are used to verify the identities of traders. When two traders agree to perform a transaction their cryptographic keys are used to verify their consent and the transaction is sent out into the public network. Miners collect these verified transactions and complete a proof of work task to form a block of verified transactions which is then added to the blockchain. Each block contains a reference to the previous block to form a chain. The proof of work task is used to ensure all traders have a chance to have their transaction processed. For most implementations of a blockchain the proof of work task involves guessing a random number. While having more computing power increases the chances of finding the correct number there is always a chance for any miner to find this number. This avoids the case where a large mining group could choose to completely stop including certain transactions as miners decided which transactions to include the block that they mine.

Miners end up using a considerable amount of electricity to power computers mining these blocks. As payment for their efforts in facilitating the processing of transactions miners are often rewarded with new coin of the cryptocurrency and/or the fees placed on the transactions included in the block they mine. In the case of Bitcoin both new coin and fees are allocated to the miners. Once all 21 million bitcoins are added to the market miners will only receive the fees. As miners receive the fees for the transactions they include it is more profitable for them to include transactions paying a larger fee. Traders can decide how much of a fee they are willing to pay, a large fee would encourage for the transactions to be included as soon as possible while low fees may fall down on the priority list.

==Links==
*[https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html Bitcoin Rich List]
*[https://etherscan.io/accounts Ethereum data]
*[https://metrics.torproject.org/bandwidth.csv?start=2018-02-10&end=2018-05-07 Tor Metrics]
*[https://coinmetrics.io/data-downloads/ Coin Metrics]
*[https://trends.google.com/trends/?geo=US Google Trends]

File:Volatility.jpg

2018-10-16T01:09:19Z

A1668483:

Projects:2018s1-142 Modelling the Dynamics of Cryptocurrency Market

2018-10-16T01:07:14Z

A1668483: /* Results */

== Supervisors ==

*Prof Derek Abbott
*Dr Azhar Iqbal
*Dr Matthew Sorell

== Honours Students ==

*Jeremy Abbot
*Nikolaos Flabouris

== Project Description ==

Cryptocurrencies, such as Bitcoin, have become increasingly popular with over 600 different cryptocurrencies being actively traded. There has been much research into individual currencies (in particular Bitcoin), but very few have looked into the effect that they have on each other. This project aims to analyse the dynamics of the cryptocurrency market, including the market share distribution, behaviour of the prices, stability parameters, and the effect of the birth and deaths of new cryptocurrencies.

== Background Information ==

Most cryptocurrencies work through the use of a blockchain - a decentralised online public ledger - where all transactions are recorded. Cryptocurrency "miners" record the transactions between traders and add them to the next block in the blockchain. To trade in cryptocurrencies a trader must first acquire a cryptocurrency wallet. This can be stored on a local machine or in the cloud. To trade a trader must move their coin to an exchange. From here the trader can make market and limit orders for other currencies that the exchange supports. Market orders are orders usually around the current trading price and can be matched immediately. Limit orders are transactions that only become available when the trade price hits a certain limit. Cryptocurrency exchanges usually support trade between fiat currencies (paper currencies like USD) and the major currencies like Bitcoin. The major currencies can then be used to trade with the less popular cryptocurrencies usually referred to as alt-coins. Fees apply to traders at various stages along this process.

Due to the potential for profit and growth as a hosting grounds for new online technologies research has begun in analysing trends and relationships between cryptocurrencies. Researchers have found connections between online traffic about a currency and its price. Others have compared cryptocurrencies considering if one can be said to be better then the rest. There are many quantitative factors to compare and measure other then just price such as market share, number of active traders/transactions and fee costs as well as any potential qualitative factors.

== Methodology ==

To perform an analysis on some of the quantitative factors of this market an agent based model will be constructed. The model will create traders as agents that react to the start of the market environment. Traders will make decisions based on the state of the market. The market will record these decisions and update its state. Traders will then reassess the state of the market. At each time step information about the traders and the state of the market will be recorded. This data will then be analysed to find trends as well as compare to the real world market. The model will be initiated with real world data so that the results of the model can be compared to real world results.

== Results ==

In general, more traders ended up running at a loss, with very few traders making a net gain. The average calculated trader ranked 505th, while the average random trader ranked 499th. When comparing the percentage gain of the traders, the average calculated trader performed better, ranking at 480th, and the average random trader performing at 508th.
[[File:Percenttraders01.png]]
[[File:Percent trader 462 01.png]]

Throughout the runs, both the Ethereum and Ripple seemed to perform the best, though Ripple managed to perform positively more often that the other currencies.
{| class="wikitable"
|Currency|| Number of Best Performance|| Number of Positive Performance
|-
|Bitcoin|| 3|| 2
|-
|Ethereum|| 9|| 1
|-
|Ripple|| 9|| 6
|}

An interesting discovery was that on all runs that a currency resulted in a positive gain for its market value, a trader for each respected currency performed the best.
When comparing the results with that of reality, it shows that the model is underperforming when it comes to the prices of cryptocurrencies.
[[File:Bitcoinreality1.png]]

== Discussion ==

== Supplementary Information ==
*Blockchain
Blockchain is a new technology that was first used to create Bitcoin. Blockchain removes the need for a central authority to manage transactions between two traders. Miners around the world all maintain a local copy of the blockchain for a given cryptocurrency. A concensus is used to determine what the correct version is, the version that the majority of traders have is the correct version. Updates are propagated throughout the network and fail safes are in place to correct errors due to the delays in the network.

Each trader has a public and private cryptographic key. These keys are used to verify the identities of traders. When two traders agree to perform a transaction their cryptographic keys are used to verify their consent and the transaction is sent out into the public network. Miners collect these verified transactions and complete a proof of work task to form a block of verified transactions which is then added to the blockchain. Each block contains a reference to the previous block to form a chain. The proof of work task is used to ensure all traders have a chance to have their transaction processed. For most implementations of a blockchain the proof of work task involves guessing a random number. While having more computing power increases the chances of finding the correct number there is always a chance for any miner to find this number. This avoids the case where a large mining group could choose to completely stop including certain transactions as miners decided which transactions to include the block that they mine.

Miners end up using a considerable amount of electricity to power computers mining these blocks. As payment for their efforts in facilitating the processing of transactions miners are often rewarded with new coin of the cryptocurrency and/or the fees placed on the transactions included in the block they mine. In the case of Bitcoin both new coin and fees are allocated to the miners. Once all 21 million bitcoins are added to the market miners will only receive the fees. As miners receive the fees for the transactions they include it is more profitable for them to include transactions paying a larger fee. Traders can decide how much of a fee they are willing to pay, a large fee would encourage for the transactions to be included as soon as possible while low fees may fall down on the priority list.

==Links==
*[https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html Bitcoin Rich List]
*[https://etherscan.io/accounts Ethereum data]
*[https://metrics.torproject.org/bandwidth.csv?start=2018-02-10&end=2018-05-07 Tor Metrics]
*[https://coinmetrics.io/data-downloads/ Coin Metrics]
*[https://trends.google.com/trends/?geo=US Google Trends]

File:Bitcoinreality1.png

2018-10-16T01:06:47Z

A1668483:

File:Percent trader 462 01.png

2018-10-16T01:04:34Z

A1668483:

File:Percenttraders01.png

2018-10-16T01:02:22Z

A1668483:

Projects:2018s1-142 Modelling the Dynamics of Cryptocurrency Market

2018-10-16T01:01:10Z

A1668483: /* Results */

== Supervisors ==

*Prof Derek Abbott
*Dr Azhar Iqbal
*Dr Matthew Sorell

== Honours Students ==

*Jeremy Abbot
*Nikolaos Flabouris

== Project Description ==

Cryptocurrencies, such as Bitcoin, have become increasingly popular with over 600 different cryptocurrencies being actively traded. There has been much research into individual currencies (in particular Bitcoin), but very few have looked into the effect that they have on each other. This project aims to analyse the dynamics of the cryptocurrency market, including the market share distribution, behaviour of the prices, stability parameters, and the effect of the birth and deaths of new cryptocurrencies.

== Background Information ==

Most cryptocurrencies work through the use of a blockchain - a decentralised online public ledger - where all transactions are recorded. Cryptocurrency "miners" record the transactions between traders and add them to the next block in the blockchain. To trade in cryptocurrencies a trader must first acquire a cryptocurrency wallet. This can be stored on a local machine or in the cloud. To trade a trader must move their coin to an exchange. From here the trader can make market and limit orders for other currencies that the exchange supports. Market orders are orders usually around the current trading price and can be matched immediately. Limit orders are transactions that only become available when the trade price hits a certain limit. Cryptocurrency exchanges usually support trade between fiat currencies (paper currencies like USD) and the major currencies like Bitcoin. The major currencies can then be used to trade with the less popular cryptocurrencies usually referred to as alt-coins. Fees apply to traders at various stages along this process.

Due to the potential for profit and growth as a hosting grounds for new online technologies research has begun in analysing trends and relationships between cryptocurrencies. Researchers have found connections between online traffic about a currency and its price. Others have compared cryptocurrencies considering if one can be said to be better then the rest. There are many quantitative factors to compare and measure other then just price such as market share, number of active traders/transactions and fee costs as well as any potential qualitative factors.

== Methodology ==

To perform an analysis on some of the quantitative factors of this market an agent based model will be constructed. The model will create traders as agents that react to the start of the market environment. Traders will make decisions based on the state of the market. The market will record these decisions and update its state. Traders will then reassess the state of the market. At each time step information about the traders and the state of the market will be recorded. This data will then be analysed to find trends as well as compare to the real world market. The model will be initiated with real world data so that the results of the model can be compared to real world results.

== Results ==

In general, more traders ended up running at a loss, with very few traders making a net gain. The average calculated trader ranked 505th, while the average random trader ranked 499th. When comparing the percentage gain of the traders, the average calculated trader performed better, ranking at 480th, and the average random trader performing at 508th.

Throughout the runs, both the Ethereum and Ripple seemed to perform the best, though Ripple managed to perform positively more often that the other currencies.
{| class="wikitable"
|Currency|| Number of Best Performance|| Number of Positive Performance
|-
|Bitcoin|| 3|| 2
|-
|Ethereum|| 9|| 1
|-
|Ripple|| 9|| 6
|}

An interesting discovery was that on all runs that a currency resulted in a positive gain for its market value, a trader for each respected currency performed the best.
When comparing the results with that of reality, it shows that the model is underperforming when it comes to the prices of cryptocurrencies.

== Discussion ==

== Supplementary Information ==
*Blockchain
Blockchain is a new technology that was first used to create Bitcoin. Blockchain removes the need for a central authority to manage transactions between two traders. Miners around the world all maintain a local copy of the blockchain for a given cryptocurrency. A concensus is used to determine what the correct version is, the version that the majority of traders have is the correct version. Updates are propagated throughout the network and fail safes are in place to correct errors due to the delays in the network.

Each trader has a public and private cryptographic key. These keys are used to verify the identities of traders. When two traders agree to perform a transaction their cryptographic keys are used to verify their consent and the transaction is sent out into the public network. Miners collect these verified transactions and complete a proof of work task to form a block of verified transactions which is then added to the blockchain. Each block contains a reference to the previous block to form a chain. The proof of work task is used to ensure all traders have a chance to have their transaction processed. For most implementations of a blockchain the proof of work task involves guessing a random number. While having more computing power increases the chances of finding the correct number there is always a chance for any miner to find this number. This avoids the case where a large mining group could choose to completely stop including certain transactions as miners decided which transactions to include the block that they mine.

Miners end up using a considerable amount of electricity to power computers mining these blocks. As payment for their efforts in facilitating the processing of transactions miners are often rewarded with new coin of the cryptocurrency and/or the fees placed on the transactions included in the block they mine. In the case of Bitcoin both new coin and fees are allocated to the miners. Once all 21 million bitcoins are added to the market miners will only receive the fees. As miners receive the fees for the transactions they include it is more profitable for them to include transactions paying a larger fee. Traders can decide how much of a fee they are willing to pay, a large fee would encourage for the transactions to be included as soon as possible while low fees may fall down on the priority list.

==Links==
*[https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html Bitcoin Rich List]
*[https://etherscan.io/accounts Ethereum data]
*[https://metrics.torproject.org/bandwidth.csv?start=2018-02-10&end=2018-05-07 Tor Metrics]
*[https://coinmetrics.io/data-downloads/ Coin Metrics]
*[https://trends.google.com/trends/?geo=US Google Trends]

Projects:2018s1-142 Modelling the Dynamics of Cryptocurrency Market

2018-10-16T00:56:34Z

A1668483: /* Results */

== Supervisors ==

*Prof Derek Abbott
*Dr Azhar Iqbal
*Dr Matthew Sorell

== Honours Students ==

*Jeremy Abbot
*Nikolaos Flabouris

== Project Description ==

Cryptocurrencies, such as Bitcoin, have become increasingly popular with over 600 different cryptocurrencies being actively traded. There has been much research into individual currencies (in particular Bitcoin), but very few have looked into the effect that they have on each other. This project aims to analyse the dynamics of the cryptocurrency market, including the market share distribution, behaviour of the prices, stability parameters, and the effect of the birth and deaths of new cryptocurrencies.

== Background Information ==

Most cryptocurrencies work through the use of a blockchain - a decentralised online public ledger - where all transactions are recorded. Cryptocurrency "miners" record the transactions between traders and add them to the next block in the blockchain. To trade in cryptocurrencies a trader must first acquire a cryptocurrency wallet. This can be stored on a local machine or in the cloud. To trade a trader must move their coin to an exchange. From here the trader can make market and limit orders for other currencies that the exchange supports. Market orders are orders usually around the current trading price and can be matched immediately. Limit orders are transactions that only become available when the trade price hits a certain limit. Cryptocurrency exchanges usually support trade between fiat currencies (paper currencies like USD) and the major currencies like Bitcoin. The major currencies can then be used to trade with the less popular cryptocurrencies usually referred to as alt-coins. Fees apply to traders at various stages along this process.

Due to the potential for profit and growth as a hosting grounds for new online technologies research has begun in analysing trends and relationships between cryptocurrencies. Researchers have found connections between online traffic about a currency and its price. Others have compared cryptocurrencies considering if one can be said to be better then the rest. There are many quantitative factors to compare and measure other then just price such as market share, number of active traders/transactions and fee costs as well as any potential qualitative factors.

== Methodology ==

To perform an analysis on some of the quantitative factors of this market an agent based model will be constructed. The model will create traders as agents that react to the start of the market environment. Traders will make decisions based on the state of the market. The market will record these decisions and update its state. Traders will then reassess the state of the market. At each time step information about the traders and the state of the market will be recorded. This data will then be analysed to find trends as well as compare to the real world market. The model will be initiated with real world data so that the results of the model can be compared to real world results.

== Results ==

In general, more traders ended up running at a loss, with very few traders making a net gain. The average calculated trader ranked 505th, while the average random trader ranked 499th. When comparing the percentage gain of the traders, the average calculated trader performed better, ranking at 480th, and the average random trader performing at 508th.

Throughout the runs, both the Ethereum and Ripple seemed to perform the best, though Ripple managed to perform positively more often that the other currencies.
{|Currency|| Number of Best Performance|| Number of Positive Performance
|-Bitcoin|| 3|| 2
|-Ethereum|| 9|| 1
|-Ripple|| 9|| 6|}

An interesting discovery was that on all runs that a currency resulted in a positive gain for its market value, a trader for each respected currency performed the best.
When comparing the results with that of reality, it shows that the model is underperforming when it comes to the prices of cryptocurrencies.

== Discussion ==

== Supplementary Information ==
*Blockchain
Blockchain is a new technology that was first used to create Bitcoin. Blockchain removes the need for a central authority to manage transactions between two traders. Miners around the world all maintain a local copy of the blockchain for a given cryptocurrency. A concensus is used to determine what the correct version is, the version that the majority of traders have is the correct version. Updates are propagated throughout the network and fail safes are in place to correct errors due to the delays in the network.

Each trader has a public and private cryptographic key. These keys are used to verify the identities of traders. When two traders agree to perform a transaction their cryptographic keys are used to verify their consent and the transaction is sent out into the public network. Miners collect these verified transactions and complete a proof of work task to form a block of verified transactions which is then added to the blockchain. Each block contains a reference to the previous block to form a chain. The proof of work task is used to ensure all traders have a chance to have their transaction processed. For most implementations of a blockchain the proof of work task involves guessing a random number. While having more computing power increases the chances of finding the correct number there is always a chance for any miner to find this number. This avoids the case where a large mining group could choose to completely stop including certain transactions as miners decided which transactions to include the block that they mine.

Miners end up using a considerable amount of electricity to power computers mining these blocks. As payment for their efforts in facilitating the processing of transactions miners are often rewarded with new coin of the cryptocurrency and/or the fees placed on the transactions included in the block they mine. In the case of Bitcoin both new coin and fees are allocated to the miners. Once all 21 million bitcoins are added to the market miners will only receive the fees. As miners receive the fees for the transactions they include it is more profitable for them to include transactions paying a larger fee. Traders can decide how much of a fee they are willing to pay, a large fee would encourage for the transactions to be included as soon as possible while low fees may fall down on the priority list.

==Links==
*[https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html Bitcoin Rich List]
*[https://etherscan.io/accounts Ethereum data]
*[https://metrics.torproject.org/bandwidth.csv?start=2018-02-10&end=2018-05-07 Tor Metrics]
*[https://coinmetrics.io/data-downloads/ Coin Metrics]
*[https://trends.google.com/trends/?geo=US Google Trends]

Projects:2018s1-142 Modelling the Dynamics of Cryptocurrency Market

2018-09-06T04:24:22Z

A1668483:

== Supervisors ==

*Prof Derek Abbott
*Dr Azhar Iqbal
*Dr Matthew Sorell

== Honours Students ==

*Jeremy Abbot
*Nikolaos Flabouris

== Project Description ==

Cryptocurrencies, such as Bitcoin, have become increasingly popular with over 600 different cryptocurrencies being actively traded. There has been much research into individual currencies (in particular Bitcoin), but very few have looked into the effect that they have on each other. This project aims to analyse the dynamics of the cryptocurrency market, including the market share distribution, behaviour of the prices, stability parameters, and the effect of the birth and deaths of new cryptocurrencies.

== Background Information ==

Most cryptocurrencies work through the use of a blockchain - a decentralised online public ledger - where all transactions are recorded. Cryptocurrency "miners" record the transactions between traders and add them to the next block in the blockchain. To trade in cryptocurrencies a trader must first acquire a cryptocurrency wallet. This can be stored on a local machine or in the cloud. To trade a trader must move their coin to an exchange. From here the trader can make market and limit orders for other currencies that the exchange supports. Market orders are orders usually around the current trading price and can be matched immediately. Limit orders are transactions that only become available when the trade price hits a certain limit. Cryptocurrency exchanges usually support trade between fiat currencies (paper currencies like USD) and the major currencies like Bitcoin. The major currencies can then be used to trade with the less popular cryptocurrencies usually referred to as alt-coins. Fees apply to traders at various stages along this process.

Due to the potential for profit and growth as a hosting grounds for new online technologies research has begun in analysing trends and relationships between cryptocurrencies. Researchers have found connections between online traffic about a currency and its price. Others have compared cryptocurrencies considering if one can be said to be better then the rest. There are many quantitative factors to compare and measure other then just price such as market share, number of active traders/transactions and fee costs as well as any potential qualitative factors.

== Methodology ==

To perform an analysis on some of the quantitative factors of this market an agent based model will be constructed. The model will create traders as agents that react to the start of the market environment. Traders will make decisions based on the state of the market. The market will record these decisions and update its state. Traders will then reassess the state of the market. At each time step information about the traders and the state of the market will be recorded. This data will then be analysed to find trends as well as compare to the real world market. The model will be initiated with real world data so that the results of the model can be compared to real world results.

== Results ==

== Discussion ==

== Supplementary Information ==
*Blockchain
Blockchain is a new technology that was first used to create Bitcoin. Blockchain removes the need for a central authority to manage transactions between two traders. Miners around the world all maintain a local copy of the blockchain for a given cryptocurrency. A concensus is used to determine what the correct version is, the version that the majority of traders have is the correct version. Updates are propagated throughout the network and fail safes are in place to correct errors due to the delays in the network.

Each trader has a public and private cryptographic key. These keys are used to verify the identities of traders. When two traders agree to perform a transaction their cryptographic keys are used to verify their consent and the transaction is sent out into the public network. Miners collect these verified transactions and complete a proof of work task to form a block of verified transactions which is then added to the blockchain. Each block contains a reference to the previous block to form a chain. The proof of work task is used to ensure all traders have a chance to have their transaction processed. For most implementations of a blockchain the proof of work task involves guessing a random number. While having more computing power increases the chances of finding the correct number there is always a chance for any miner to find this number. This avoids the case where a large mining group could choose to completely stop including certain transactions as miners decided which transactions to include the block that they mine.

Miners end up using a considerable amount of electricity to power computers mining these blocks. As payment for their efforts in facilitating the processing of transactions miners are often rewarded with new coin of the cryptocurrency and/or the fees placed on the transactions included in the block they mine. In the case of Bitcoin both new coin and fees are allocated to the miners. Once all 21 million bitcoins are added to the market miners will only receive the fees. As miners receive the fees for the transactions they include it is more profitable for them to include transactions paying a larger fee. Traders can decide how much of a fee they are willing to pay, a large fee would encourage for the transactions to be included as soon as possible while low fees may fall down on the priority list.

==Links==
*[https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html Bitcoin Rich List]
*[https://etherscan.io/accounts Ethereum data]
*[https://metrics.torproject.org/bandwidth.csv?start=2018-02-10&end=2018-05-07 Tor Metrics]
*[https://coinmetrics.io/data-downloads/ Coin Metrics]
*[https://trends.google.com/trends/?geo=US Google Trends]

Projects:2018s1-142 Modelling the Dynamics of Cryptocurrency Market

2018-08-18T03:35:13Z

A1668483:

Projects:2018s1-142 Modelling the Dynamics of Cryptocurrency Market

2018-03-24T04:05:21Z

A1668483: Created page with "== Supervisors == *Prof Derek Abbott *Dr Azhar Iqbal *Dr Matthew Sorell == Honours Students == *Jeremy Abbot *Nikolaos Flabouris == Project Description == Cryptocurrencies..."

== Supervisors ==

*Prof Derek Abbott
*Dr Azhar Iqbal
*Dr Matthew Sorell

== Honours Students ==

*Jeremy Abbot
*Nikolaos Flabouris

== Project Description ==
Cryptocurrencies such as Bitcoin have become increasingly popular, with over 600 different cryptocurrencies being actively traded. There have been much research into individual currencies (in particular Bitcoin), but very few have looked into the effect that they have one each other. This project aims to analyse the dynamics of the cryptocurrency market, including the market share distribution, behaviour of the prices, stability parameters, and the effect of the birth and deaths of new cryptocurrencies has on Bitcoin.