To analyze characteristics and performance drivers for this new asset class and compare the crypto ecosystem with traditional financial data in terms of market valuation and liquidity risk, our study focuses on four cryptocurrencies with a large market cap (Bitcoin, Ether, XRP, and Binance coin) and three stablecoins (Tether, USD Coin, and multi-collateral Dai). A blockchain’s core building blocks are hash cryptography (including digital signatures), immutable ledgers, a peer-to-peer network, mining or staking, and a consensus protocol to allow new blocks (see chart 2). The crypto ecosystem, on the other hand, is driven more by market adoption and technology.Ĭhart 1 The Basics Of The Crypto EcosystemĬryptocurrencies are a digital transfer of value that function on a blockchain public ledger. Traditional markets comply with government-enforced regulations, and tend to be more transparent and to abide by basic economic laws. Of note, understanding volatility risk is paramount to appropriately assessing capital and margin requirements when crypto assets are included in portfolios and in trading and lending protocols.Ĭhart 1 below juxtaposes key performance drivers for crypto markets and for traditional financial assets. To better understand this asset class, its valuation, and the varying volatilities of the diverse crypto markets, we are doing a deep dive into the crypto ecosystem by performing a study that compares various crypto assets among themselves and with more traditional assets (such as equity markets, bond indices, gold, and fiat-pegged currencies) using data through August 2022. The feedback from all market participants, however, is that the crypto world is volatile. Market participants still debate as to whether they behave like currencies, commodities, or financial securities, or are something else, such as synthetic financial instruments backed by a new technology and an algorithmic trading protocol. Crypto assets and blockchain define an ecosystem that exhibits significant differences from the existing financial system (although the demise of TerraUSD illustrates that the basic laws of finance continue to apply to this ecosystem). There are still challenges in understanding crypto assets' performance and their relationship with traditional financial assets. Nevertheless, we believe that crypto assets and blockchain technology are here to stay. As of August 2022, the total market capitalization of cryptocurrencies stood at $1.1 trillion (down from its all-time high of $3 trillion), or about 2.5% of the U.S. While it's been more than a decade since the introduction of cryptocurrencies and the disruptive technology that enables them, cryptocurrencies and the broader ecosystem remain a relatively small segment of the financial market. This up and coming project will involve communicating with the Steem blockchain and working with the dsteem API.Nicholas Weaver, senior staff researcher at the International Computer Science Institute, chief mad scientist at Skerry Technologies and known cryptocurrency skeptic, joins the Essential Podcast to discuss the recent news surrounding FTX and today's cryptocurrency landscape. In the coming days I will be posting another project I have recently been working on that pertains to Steemit and cryptocurrency. The project itself is hosted on Codepen here. The tutorial that breaks down the process of creating this line graph project can be found here. This project was originally posted on the Steemit social media site as a tutorial. I incorporated the CryptoCompare API and make requests to the API to retrieve real time and up to date Bitcoin prices. Everything from bar graphs, choropleth maps, force directed graphs, bubble graphs and much more can be made for the web using D3 and HTML/SVG/CSS.įor this project I used D3 to create a line graph that plots Bitcoin prices in real time. Although the learning curve is a bit steep learning D3 is worth the time due to the tremendous amount of data visualization projects you can create with it. D3 is one of the best Javascript data visualization libraries out there and is extremely popular. D3.js is an open source Javascript library that stands for Data Driven Documents.
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