Can Bitcoin be Trusted? Quantifying the economic value of blockchain transactions

【Author】 Cole, Benjamin M.; Dyhrberg, Anne H.; Foley, Sean; Svec, Jiri

【Source】JOURNAL OF INTERNATIONAL FINANCIAL MARKETS INSTITUTIONS & MONEY

【影响因子】4.217

【Abstract】Bitcoin is the largest blockchain, and provides the underlying UTXO architecture used by many other cryptocurrencies. We identify an inherent bias embedded in this architecture (the Note -breaker mechanism) which forces users to 'spend' the entire content of a wallet address in order to make a payment, receiving 'change' into a unique new address. This inflates both the apparent volume transacted and network users, as well as minimizing the apparent fees of transacting. We develop an innovative Transaction Identification Methodology (TIM) to quantify the economic value of transactions from raw blockchain data. Using four different algorithms across three stages, we achieve 95% accuracy in quantifying the degree of bias in these measures. Validated across more than 430 million Bitcoin transactions involving 600 million wallet addresses, our methodology reveals that the Notebreaker mechanism inflates transaction volumes 8 times, makes the actual costs of blockchain transactions appear 3-7 times more expensive than what is commonly reported, and inflates wallet counts - a common heuristic of unique adopter counts. We provide a remediation strategy to make Bitcoin blockchain data a more accurate represen-tation of reality, and provide a daily data set of these remediated volumes and transaction fees.

【Keywords】Transaction Identification; Blockchain; Bitcoin; Unspent transaction output (UTXO)

【发表时间】2022 JUL

【收录时间】2022-11-01

【文献类型】实证数据

【主题类别】

区块链治理-市场治理-数字货币