What is Bitcoins:
Bitcoin is an online currency and its popularity has been growing in recent years. It was create to be a purely online cryptocurrency, which has been decentralized as an electronic currency, and it was first introduced to the public in 2008 on the domain name Bitcoin.org. The growth of this currency did not accelerate until 2015 to 2018. It peak in the late 2017, where 1 Bitcoin was worth nearly twenty thousand dollars USD. After three years, the value of a single Bitcoin did drop; nonetheless, it is still worth an impressing fourteen thousand dollar USD. As the value of each Bitcoin rose, the interest of people mining and using them as virtual currency also increased. Mining for Bitcoin became a very common phrase, where people visualize programmers online digging large data worth of riches with a fantasy pickaxe. In reality, Bitcoin mining is performed by high-powered computers that solve complex computational math problem some of these problems are so complex that it is impossible to be solved by normal computers.
Interests:
The uniqueness of the Bitcoin online transaction is the users and their transactions can remain anonymous, while in traditional bank records all transactions between all users. The connection and users of normal banks would create an intriguing graph to analyze; however, the graph between anonymous Bitcoin users will be much more interesting to analyze. Each user of Bitcoin contain their special key that allows them to access their Bitcoin account anonymously, yet all the transactions of these anonymous nodes can all be accessed and tracked publicly, which can provide an unusual graph.
User Analysis:
The main contributors to Bitcoin’s success are the data miners and the users who use and bank them. Many type of contributers:
- The user that deposits Bitcoins into the bank and receives a public key
- The user that incorporates his public key and allows bank to track his transactions
- The transactions that allows the network to flow
- The transactions between the miners and transaction block
- The linking of transactional blocks
In the following simple graph displays the micro transactions between users, banks and miners.
From this simple depiction of a simple Bitcoin transaction, the user’s relationship with Bitcoin forms the structure of a bowtie. The interaction of each user and other users forms a strongly connected component. The public key received from the bank to each user and the transaction blocks formed by users can represent as the IN of the structure. The OUT structure of this bow-tie structure would be the miners. The Tube connecting the miners to the transaction block allows new currency to flow back into the network.
Graph Analysis:
In the following data graph shows the visualization of the user network. The large clusters shows the external incomes, such as Bitcoins received from other clusters. The edge between any two nodes represents at least 200 transactions.
The nodes are colored by category: blue nodes are mining pools; orange are fixed-rate exchanges; green are wallets; red are vendors; purple are bank exchanges; brown are gambling; pink are investment schemes; and grey are uncategorized.
The three main clusters in this graph are between satoshi, mtgox and deepbit/slush. Satoshi is the pseudonymous of the inventor of bit coin, as he holds a large share of the Bitcoin transaction between him and other users should be most frequent. Mtgox is arguably the second largest cluster center in this graph as they are a Bitcoin exchange base for Japan that process most bank exchanges. Deepbit/slush are large mining sites for Bitcoins, they provide new funding for rest of the graph, resulting them to become the third largest cluster hot zone. These three large clusters form a strongly connected graph. The connection between each cluster centers forms strong ties as they contain millions of transactions.
Conclusion:
In conclusion the graphs show the characterization of the Bitcoin network, focusing on the user to user transaction with no real identification of each user other than a public key. To accomplish this task, the analysis of the new clustering heuristic of each graph. This shows the intricate network of Bitcoin transaction and the connection between anonymous users.
Reference:
Meiklejohn, S., Pomarole, M., Jordan, G., Levchenko, K., Mccoy, D., Voelker, G. M., & Savage, S. (2013). A fistful of bitcoins. Proceedings of the 2013 Conference on Internet Measurement Conference – IMC ’13. doi:10.1145/2504730.2504747