Disclaimer: This research is part of the Summer Research Scholar Program project "Trust Mechanism Design: Blockchain for Social Good," led by Prof. Luyao Zhang at Duke Kunshan University 2022. The summer research scholar Haoyang Yu is a rising junior student majoring in Applied Mathematics and Computational Science.

Research Summary

Information

“A Verification of Metaphor: Bitcoin Gold, Litecoin Silver?” (work in progress)

corresponding authors: Profs Yulin Liu and Luyao Zhang

student co-authors: Haoyang Yu and Yutong Sun

Abstract

Bitcoin and Litecoin are two popular tokens with different advantages in the cryptocurrency market. Regarding the relationship between Bitcoin and Litecoin, Charlie Lee, the founder of Litecoin said that Litecoin is considered as silver and Bitcoin is regarded as gold. Gold and silver support a gold-silver multi-currency system and substitute for each other in the market. If Bitcoin and Litecoin want to act like gold and silver in the cryptocurrency market, they are supposed to support a multi-currency system, that is, they should coexist in the market and be accepted as alternatives to each other like gold and silver. To investigate whether there is a multi-currency system that is supported by Bitcoin and Litecoin in the cryptocurrency market, first, we should figure out what makes gold and silver a multi-currency system in the real-currency market. Could these factors also be carried by Bitcoin and Litecoin in the cryptocurrency market? If so, is the multi-currency system supported by Bitcoin and Litecoin enough to be a gold-silver type? We discuss these questions by comparing the functions, and properties of Bitcoin and Litecoin with gold and silver, conduct research using data from the BigQuery Public Dataset, and compare the results of existing token-properties research methods with our methods.

The methods we use include visualization of Age Distribution of UTXO, Lifespan Distribution of STXO, and Weighted Average Lifespan (WAL) of UTXO in order to analyze the return property, volatility, and spending behavior of tokens. We also investigate other properties like earning difficulty for a certain outcome, and storage amount from existing papers. We conclude that Litecoin can be accurately regarded as sliver in the gold-silver market system, and Bitcoin can be regarded as gold, because they are general payment tokens of value circulating in the market. The verification of the metaphor in this paper and the method we use to verify it can provide a reference for future analysis of the properties of cryptocurrencies.

Related Research

Exploratory Research Articles Published on SciEcon insights

Yutong Sun. 2022. “Supply Chain Finance Risk Identification and the Corrective Role of the Blockchain” SciEcon Insights.

URL：https://medium.com/p/52e563e1a78b/edit

Haoyang Yu. 2022. ‘‘Spotlight of Prof. Cong William Lin’s Event: Staking, Token Pricing, & Crypto Carry & Inclusion and Democratization Through Web3 and Defi? Initial Evidence from the Ethereum Ecosystem” SciEcon Insights.

URL: Coming Soon

Academic Research in progress

“A Verification of Metaphor: Bitcoin Gold, Litecoin Silver?”

corresponding author: Prof. Luyao Zhang

student co-author: Yutong Sun, Haoyang Yu

Summer Research Scholar

Haoyang Yu

Haoyang Yu’s research interests are the development of the Blockchain marketplace and the Central Bank Digital Currency (CBDC) mechanism design. He is currently the interim executive co-chair of SciEcon AMA. He has also co-authored research articles that are being prepared to submit to world-leading conferences. Besides his experience in SciEcon, he is a junior student at Duke Kunshan University majoring in Applied Mathematics & Computational Sciences. He also has rich working experience in financial industries, such as strategic consulting, management consulting and investment banking, etc. His last position was as a summer intern at PricewaterhouseCoopers during his sophomore-year summer break and he is currently an intern at a top Chinese brokerage (securities) company.

Yutong Sun

This is Yutong Sun, the research assistant at SciEcon CIC and a senior student majoring in Applied Mathematics and Computational Science at Duke Kunshan University. Her research interest is in financial technology and financial mathematics. Previously, she has published some research papers on commercial leverage ratios, stock price-predicting, and stock quantitative investment strategy using machine learning models. And in the summer of 2022, she has done researches related to smart contract, contract theory, and Non-Fungible Token with Prof. Luyao Zhang.