Since the introduction of Bitcoin in 2009, cryptocurrencies have known an increasing growth in terms of different digital coins and their market capitalization. However, despite their profound impact on our society,  the mechanisms underlining their success are not yet fully understood.

In this paper, researchers  Giordano De Marzo(1,2,3,4,), Vito DP Servedio(4), and Francesco Pandolfelli(2), tackle this problem by analyzing the evolution of the cryptocurrency ecosystem from 2013 to the present day.

They propose a model based on the observation that new blockchains and their associated crypto coins emerge mainly from forking already existing blockchain projects. They can describe the creation of new cryptocurrencies as an adjacent possible mechanism, where new blockchain projects open roads to brand new ones.

Using numerical simulations and analytical results, they use their model to predict that each cryptocurrency triggers the creation of around 1.58 novel crypto coins. The analysis of the Bitcoin historical forking tree confirms the model. Despite its simplicity, their model can thus successfully reproduce how the cryptocurrency ecosystem grows over time and explains the inherent mechanisms behind its expansion.

Read the full paper on Scientific Reports


1) Centro Ricerche Enrico Fermi,  2)Dipartimento di Fisica Università “Sapienza” 3)Sapienza School for Advanced Studies, “Sapienza”,  4)Complexity Science Hub, Vienna, email: giordano.demarzo@gmail.com