The rise of rationality in blockchain dynamics

Abstract

Taking informed decisions, namely acting rationally, is an individual attitude of paramount relevance in nature and human societies. In this work, we study how rationality spreads in a community. To this end, through an agent-based model, we analyse the dynamics of a population whose individuals, endowed with a rational attitude controlled by a numerical parameter, play a simple game. The latter consists of multiple strategies, each associated with a given reward. The proposed model is then used as a benchmark for studying the behaviour of Bitcoin users, inferred by analysing transactions recorded in the Blockchain. Remarkably, a population undergoing a sharp transition from irrational to rational attitudes shows a behavioural pattern similar to that of Bitcoin users, whose rationality showed up as soon as their cryptocurrency became worth just a few cents (USD). To conclude, a behavioural analysis that relies on an entropy measure combined with a simple agent-based model allows us to detect the rise of rationality across a community. Although further investigations are essential to corroborate our results, we deem the proposed approach could also get used for studying other social phenomena and behaviours.

Keywords

• time series entropy
• blockchain and cryptocurrencies
• complex systems