Can We Predict the Winner in a Market with Network Effects? Competition in Cryptocurrency Market

Games

卷:7

Hanna Halaburda¹  Neil Gandal² 

[1] Bank of Canada, Ottawa, ON K1A 0G9, Canada;

[2] Department of Economics, Tel Aviv University, Tel Aviv 6997801, Israel;

关键词: network effects;    cryptocurrencies;    first mover advantage;   

DOI  :  10.3390/g7030016

来源: DOAJ

【 摘 要 】

We analyze how network effects affect competition in the nascent cryptocurrency market. We do so by examining early dynamics of exchange rates among different cryptocurrencies. While Bitcoin essentially dominates this market, our data suggest no evidence of a winner-take-all effect early in the market. Indeed, for a relatively long period, a few other cryptocurrencies competing with Bitcoin (the early industry leader) appreciated much more quickly than Bitcoin. The data in this period are consistent with the use of cryptocurrencies as financial assets (popularized by Bitcoin), and not consistent with winner-take-all dynamics. Toward the end of our sample, however, things change dramatically. Bitcoin appreciates against the USD, while other currencies depreciate against the USD. The data in this period are consistent with strong network effects and winner-take-all dynamics. This trend continues at the time of writing.

【 授权许可】

Unknown