- Professor Andrea Baronchelli (Principal Investigator)
Research undertaken at City, University of London has demonstrated that four per cent of developers – considered a significant fraction – contribute to the code of two or more cryptocurrencies.
What did we explore and how?
Dr Baronchelli and colleagues analysed 297 cryptocurrencies whose code is stored in GitHub, and whose daily trading volume has averaged larger than US$100k during their lifetime.
He set about to challenge the view that open code is enough to grant transparency to cryptocurrencies, allowing literate users to check out the code.
Benefits and influence of this research
Dr Baronchelli says that given the central importance of code as an important social regulator challenging traditional institutions – from national laws to financial markets – his study published in the Sciences Advances, will have broad implications.
Cryptocurrencies are open source digital assets designed to work as a medium of exchange. Noting the 'Code is law' operating principle in cryptocurrency generation, Dr Baronchelli says the security, transferability, availability and other properties of a crypto-asset are determined by the code through which it is created.
If code is open source, as it happens for most cryptocurrencies, this principle would prevent manipulations and grant transparency to users and traders. However, this approach considers cryptocurrency as isolated entities and neglects the possible connections between them.
Dr Baronchelli’s study revealed that the first coding event linking two cryptocurrencies through a common developer leads to the synchronisation of their returns.
By identifying such a simple event in the development space that anticipates a corresponding behaviour in the market, Dr Baronchelli has established a first direct link between the realms of coding and trading. In this perspective, he and his colleagues anticipate that their results will be of interest to researchers investigating how code and algorithms may affect the non-digital realm and spark further research in this direction.
Details of this research
Research status: Ongoing
Industry/sector: Data Science, Cryptography, Cybersecurity, Fintech