Competition in the Cryptocurrency Market

By Neil Gandal, Hanna Halaburda. Social Science Research Network, 2014

197 citations recorded by the source corpus.

We analyze how network effects affect competition in the nascent cryptocurrency market. We do so by examining the changes over time in exchange rate data among cryptocurrencies. Specifically, we look at two aspects: (1) competition among different currencies, and (2) competition among exchanges where those currencies are traded. Our data suggest that the winner-take-all effect is dominant early in the market. During this period, when Bitcoin becomes more valuable against the U.S. dollar, it also becomes more valuable against other cryptocurrencies. This trend is reversed in the later period. The data in the later period are consistent with the use of cryptocurrencies as financial assets (popularized by Bitcoin), and not consistent with "winner-take-all" dynamics.

Subfields: Information Systems, Management Science and Operations Research, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/bc9289eeabeb04437b5d9e469db132f28bb010ad

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In Information Systems

In Management Science and Operations Research

In Strategy and Management

Citations in the corpus

Co-explosivity in the cryptocurrency market (2019, unknown): “Second, and unlike prior research, among leading cryptocurrencies, we pay attention to co-explosivity [4].”
Does Bitcoin hedge global uncertainty? Evidence from wavelet-based quantile-in-quantile regressions (2016, background): “The first is research on the diversification and hedging benefits of Bitcoin against equities (Halaburda and Gandal, 2014; Eisl et al., 2015; Bouri, Azzi et al., 2016; Bouri, Molnár et al., 2016; Dyhrberg, 2016) and against currencies or commodities (Bouri, Azzi et al., 2016; Bouri, Molnár et al.,…”
Some simple economics of the blockchain (2016, background): “Researchers have also examined competition between alternative cryptocurrencies and their differences (Gandal and Halaburda 2014, Gans and Halaburda 2015, Dwyer 2015, Halaburda and Sarvary 2016); the changes they entail for trading behavior (Malinova and Park 2016); their integration with…”
The economic value of Bitcoin: A portfolio analysis of currencies, gold, oil and stocks (2019, background): “Despite the findings of Gandal and Halaburda (2014) who fail to report strong cross-exchange arbitrage opportunities, as pointed by Böhme et al. (2015), risks in cryptocurrency markets are not only related to shallow markets problem, but also to the counterpart risk (e.g., temporary cease of…”
Hedging capabilities of bitcoin. Is it the virtual gold (2016, background): “2014), the diversification possibilities (Briere et al, 2013) and the arbitrage possibilities (Gandal and Halaburda, 2014).”
Negative bubbles and shocks in cryptocurrency markets (2016, unknown): “This gives Var (Xt+∆ −Xt|Xt) = σ(2)(t)∆ + Var[E(j(t + ∆)|j(t) = 0)] (35) + E[Var(j(t + ∆)|j(t) = 0)] + o(∆); (36) Var (Xt+∆ −Xt|Xt) = ( σ(2)(t) + ( μ(2)0 − σ(2) 0 )”