MicroVelocity: rethinking the Velocity of Money for digital currencies

Campajola, Carlo; D’Errico, Marco; Tessone, Claudio J.

doi:10.48550/arxiv.2201.13416

Cited by 3 publications

(10 citation statements)

References 12 publications

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“…Notably, these methods rely on scalable algorithms meaning that our approach can be applied to study sizeable currency systems where transaction data is recorded in digital form. This includes other community currencies 6,16,17,21 as well as major global cryptocurrencies 19,20,26,40 . Recent methodological advances 10,52 promise to extend applicability also to payment systems that are not themselves full currency systems, such as mobile money systems 10,53,54 , large value payment systems [55][56][57][58][59][60][61] , major banks 12,[62][63][64] , and, in an exciting development, centralized national payment infrastructures [65][66][67] or central bank digital currencies 68 .…”

Section: Discussionmentioning

confidence: 99%

“…Finally, the structural features we identify in the Sarafu network-degree disassortativity and an elevated cycle density-are likely to be general features of the economic networks underlying currency systems. Indeed, degree disassortativity has been found across many economic networks 19,[38][39][40] . And our results regarding the presence of cycles are closely in line with prior analysis of the Sardex currency system 21 .…”

Section: Discussionmentioning

confidence: 99%

“…Degree disassortativity is an expected feature of specifically currency networks 19,40 and of economic networks, more broadly 38,39 . In networks with this property, high-degree nodes generally interact with low-degree nodes, not other high-degree nodes, and local "hubs" play a key structural role.…”

Section: Structural Correlationsmentioning

confidence: 99%

“…What network structures support the circulation of Sarafu? Degree disassortativity has been noted in a variety of economic networks 19,[38][39][40] in that high-degree nodes generally transact with low-degree nodes. It has also been noted that network cycles may be key to the 'health' of currency systems and of individual accounts 21 .…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Circulation of a digital community currency

Mattsson¹,

Criscione²,

Takes³

2022

Preprint

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Circulation is the characteristic feature of successful currency systems, from community currencies to cryptocurrencies to national currencies. In this paper, we propose a network analysis methodology for studying circulation given a system's digital transaction records. This is applied to Sarafu, a digital community currency active in Kenya over a period that saw considerable economic disruption due to the COVID-19 pandemic. Representing Sarafu as a network of monetary flow among the 40,000 users reveals meaningful patterns at multiple scales. Circulation was highly modular, geographically localized, and occurring among users with diverse livelihoods. Network centrality highlights women's participation, early adopters, and the especially prominent role of community-based financial institutions. These findings have concrete implications for humanitarian and development policy, helping articulate when community currencies might best support interventions in marginalized areas. Overall, networks of monetary flow allow for studying circulation within digital currency systems at a striking level of detail.

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Section: Discussionmentioning

confidence: 99%

Section: Discussionmentioning

confidence: 99%

Section: Structural Correlationsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Circulation of a digital community currency

Mattsson¹,

Criscione²,

Takes³

2022

Preprint

View full text Add to dashboard Cite

show abstract

“…What network structures support the circulation of Sarafu? Degree disassortativity has been noted in a variety of economic networks 19,[34][35][36] in that high-degree nodes generally transact with low-degree nodes. It has also been noted that network cycles may be key to the 'health' of currency systems and of individual accounts 21 .…”

mentioning

confidence: 99%

Circulation of a digital community currency

Mattsson

Criscione

Takes

2023

Sci Rep

View full text Add to dashboard Cite

Circulation is the characteristic feature of successful currency systems, from community currencies to cryptocurrencies to national currencies. In this paper, we propose a network analysis approach especially suited for studying circulation given a system’s digital transaction records. Sarafu is a digital community currency that was active in Kenya over a period that saw considerable economic disruption due to the COVID-19 pandemic. We represent its circulation as a network of monetary flow among the 40,000 Sarafu users. Network flow analysis reveals that circulation was highly modular, geographically localized, and occurring among users with diverse livelihoods. Across localized sub-populations, network cycle analysis supports the intuitive notion that circulation requires cycles. Moreover, the sub-networks underlying circulation are consistently degree disassortative and we find evidence of preferential attachment. Community-based institutions often take on the role of local hubs, and network centrality measures confirm the importance of early adopters and of women’s participation. This work demonstrates that networks of monetary flow enable the study of circulation within currency systems at a striking level of detail, and our findings can be used to inform the development of community currencies in marginalized areas.

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Bitcoin Gold, Litecoin Silver: An Introduction to Cryptocurrency’s Valuation and Trading Strategy

Yu¹,

Sun²,

Liu³

et al. 2023

Preprint

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Historically, gold and silver have played distinct roles in tra- ditional monetary systems. While gold has primarily been revered as a superior store of value, prompting individuals to hoard it, silver has com- monly been used as a medium of exchange. As the financial world evolves, the emergence of cryptocurrencies has introduced a new paradigm of value and exchange. However, the store-of-value characteristic of these digital assets remains largely uncharted. Charlie Lee, the founder of Lite- coin, once likened Bitcoin to gold and Litecoin to silver. To validate this analogy, our study employs several metrics, including unspent transac- tion outputs (UTXO), spent transaction outputs (STXO), Weighted Average Lifespan (WAL), CoinDaysDestroyed (CDD), and public on-chain transaction data. Furthermore, we’ve devised trading strategies centered around the Price-to-Utility (PU) ratio, offering a fresh perspective on crypto-asset valuation beyond traditional utilities. Our back-testing re- sults not only display trading indicators for both Bitcoin and Litecoin but also substantiate Lee’s metaphor, underscoring Bitcoin’s superior store-of-value proposition relative to Litecoin. We anticipate that our findings will drive further exploration into the valuation of crypto assets. For enhanced transparency and to promote future research, we’ve made our datasets available on Harvard Dataverse and shared our Python code on GitHub as open source.

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MicroVelocity: rethinking the Velocity of Money for digital currencies

Cited by 3 publications

References 12 publications

Circulation of a digital community currency

Circulation of a digital community currency

Circulation of a digital community currency

Bitcoin Gold, Litecoin Silver: An Introduction to Cryptocurrency’s Valuation and Trading Strategy

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