{"title":"Bitcoin Transaction Behavior Modeling Based on Balance Data","authors":"Yu Zhang, Claudio Tessone","doi":"arxiv-2409.10407","DOIUrl":null,"url":null,"abstract":"When analyzing Bitcoin users' balance distribution, we observed that it\nfollows a log-normal pattern. Drawing parallels from the successful application\nof Gibrat's law of proportional growth in explaining city size and word\nfrequency distributions, we tested whether the same principle could account for\nthe log-normal distribution in Bitcoin balances. However, our calculations\nrevealed that the exponent parameters in both the drift and variance terms\ndeviate slightly from one. This suggests that Gibrat's proportional growth rule\nalone does not fully explain the log-normal distribution observed in Bitcoin\nusers' balances. During our exploration, we discovered an intriguing\nphenomenon: Bitcoin users tend to fall into two distinct categories based on\ntheir behavior, which we refer to as ``poor\" and ``wealthy\" users. Poor users,\nwho initially purchase only a small amount of Bitcoin, tend to buy more\nbitcoins first and then sell out all their holdings gradually over time. The\ncertainty of selling all their coins is higher and higher with time. In\ncontrast, wealthy users, who acquire a large amount of Bitcoin from the start,\ntend to sell off their holdings over time. The speed at which they sell their\nbitcoins is lower and lower over time and they will hold at least a small part\nof their initial holdings at last. Interestingly, the wealthier the user, the\nlarger the proportion of their balance and the higher the certainty they tend\nto sell. This research provided an interesting perspective to explore bitcoin\nusers' behaviors which may apply to other finance markets.","PeriodicalId":501273,"journal":{"name":"arXiv - ECON - General Economics","volume":"101 1","pages":""},"PeriodicalIF":0.0000,"publicationDate":"2024-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"arXiv - ECON - General Economics","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/arxiv-2409.10407","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 0
Abstract
When analyzing Bitcoin users' balance distribution, we observed that it
follows a log-normal pattern. Drawing parallels from the successful application
of Gibrat's law of proportional growth in explaining city size and word
frequency distributions, we tested whether the same principle could account for
the log-normal distribution in Bitcoin balances. However, our calculations
revealed that the exponent parameters in both the drift and variance terms
deviate slightly from one. This suggests that Gibrat's proportional growth rule
alone does not fully explain the log-normal distribution observed in Bitcoin
users' balances. During our exploration, we discovered an intriguing
phenomenon: Bitcoin users tend to fall into two distinct categories based on
their behavior, which we refer to as ``poor" and ``wealthy" users. Poor users,
who initially purchase only a small amount of Bitcoin, tend to buy more
bitcoins first and then sell out all their holdings gradually over time. The
certainty of selling all their coins is higher and higher with time. In
contrast, wealthy users, who acquire a large amount of Bitcoin from the start,
tend to sell off their holdings over time. The speed at which they sell their
bitcoins is lower and lower over time and they will hold at least a small part
of their initial holdings at last. Interestingly, the wealthier the user, the
larger the proportion of their balance and the higher the certainty they tend
to sell. This research provided an interesting perspective to explore bitcoin
users' behaviors which may apply to other finance markets.