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A Pavia-based economic sociologist studies the social structures in which Bitcoin is enmeshed, as well as how the cryptocurrency becomes reliant on trust. The short study offers some intriguing Bitcoin social science research concepts.
Bitcoin is one of those technologies that has the potential to permanently alter the global landscape. Everything and everyone, not just the economy and the Internet. That is why I believe it is unfortunate that every week there is a deluge of technical and economic research papers on Bitcoin, blockchain, and cryptocurrencies, while sociological and cultural studies publications remain few.
Bitcoin is heavily researched from a social science standpoint. Perhaps it's because cryptocurrency tests most humanities scholars' technical and intellectual ability. A new research by Italian sociologist Fiammetta Corradi does not change this. But at the very least, the scientist is able to identify some of the most important social aspects of Bitcoin and derive hypotheses that can be pursued by other academics.
Corradi inquires about "embedding" Bitcoin in societal institutions, causing one of the cryptocurrency's sacred shrines to be shaken: asserting that Bitcoin is a money that cannot be trusted. This is a myth, according to the scientist's most important premise.
Embedding and trust
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However, the sociologist must first clarify the concepts and phrases. In economic sociology, "embedding" is a key phrase. It's a "theoretical essential instrument" for looking at how economically justified - i.e. selfish - behaviour is weaved into and incorporated into social institutions. The idea originated with Hungarian philosopher Karl Polanyi, who utilised it to demonstrate how business and society are intertwined. However, it gained popularity once Mark Granovetter, an American economist, took it up and expanded it into an economic-social research paradigm. Embedding is both a condition and an effect of economic operations.
Corradi questions how it links to the concept of trust in order to transfer the concept of embedding it into Bitcoin. It draws on the philosophy of money written by German sociology Georg Simmel in 1900 to achieve this goal. She quotes a charming excerpt from Simmel's book that explains how everyday money use necessitates trust:
"[...] Without trust, financial transactions would collapse. This trust has its nuances [...] If a farmer didn't believe his field would produce the same amount of fruit as last year, he wouldn't seed it; if a trader didn't believe the public would buy his goods, he wouldn't sell them, and so on. [...] However, in the case of credit, we face an additional aspect that is difficult to describe: it is mostly founded on religious conviction [...] 'trusting someone,' without adding or expressing why one trusts him, means using a very delicate and profound phrase [...] This supra-theoretical assumption is reflected in economic credit, as is the confidence that the community would confirm the validity of a token against which labour products have been exchanged."
This phrase is particularly interesting since Simmel blends two types of faith with money: First, a belief based on personal experience, such as the dealer's, that there is a demand for commodities that have previously been in demand. It's possible to define it as the belief that what worked yesterday will continue to work tomorrow.
However, there is a less rational trust, which Simmel refers to as "kinda-religious faith": trust in relationships that one cannot evaluate or judge, a kind of blind trust. This underpins both the trust in the credit system and the notion that money acquires its value.
"We interpret embedding as a source of trust that is subject to economic action; on the other hand, we understand it as the result of economic activities based on trust," Corradi says, combining Simmel's theory of trust with the embedding of economic action in social structures.
Blind faith in technology
Now we can observe how the sociologist learns about trust while integrating Bitcoin into social processes.
Bitcoin claims to have solved the double-spending problem without the need for a central authority such as a bank or central bank, according to her. You don't need a trustworthy middleman to know if you've been paid with Bitcoin. This is the assumption that fuels the fervour of the bitcoin and crypto sector. Corradi begins in the city's core.
She begins by explaining Bitcoin's technical foundation. In her brief overview of the system, she emphasises two points: first, that only miners are capable of forming blocks, and second, that the system's operation is dependent on cryptographic technologies. "First and foremost, Bitcoin is involved in working with mathematical procedures and computing equipment, and secondly, there are both computational and cognitive asymmetries, both between nodes and between investors," she writes.
"A form of institutional / systematic trust," according to Corradi, "in the sense that, to be a part of the system, one must have faith in the set of technological and automatic procedures designed to handle the double-spending problem."
In fact, we come across a blind faith - perhaps even a quasi-religious belief - in the functionality of software and, most importantly, encryption.
Bitcoin will crash if the SHA256 or ECDSA crypto algorithms are broken. Apart from a few mathematicians, no one can genuinely rate their merit. Users may have less trust in cryptography as a whole, but the scientific-technical community method for reviewing and implementing cryptographic algorithms appears to be working effectively; it will continue to work tomorrow because it did yesterday.
Regrettably, Corradi does not appear at this critical juncture. She prefers to concentrate on integrating Bitcoin into societal systems.
Trust as cause and result of pool mining
The social structures of Bitcoin are found in the technological linkages that Corradi identified after a cursory examination of the network: "the computational and cognitive inequalities between the network's nodes." Essentially, it's about the miners, as nodes that can generate blocks pool their resources to increase their profitability. Miners have faith in the pools, much as investors have faith in the pools when purchasing cloud mining contracts.
A study of the hashrate distributions on the pools reveals that one's power grows while the hashrates of others fall. This might be interpreted as a reaction, in the sense that trust is both the foundation and the product of economic contact - some pools earn their trust, while others lose it. At the same time, it displays the changing of system variables on whose integrity the users rely - so they trust that the change will not result in extreme effects, such as a mining pool with more than 50% and you must trust him as much as you must trust PayPal.
Bitcoin is also embedded as a speculative object in certain social structures that control the price. These are irrational surpluses of confidence in the future of Bitcoin in a bubble, and irrational lacks of confidence in the future of Bitcoin in a bear market. Unfortunately, Corradi just touches on these points without delving too far.
Her essay is merely nine pages long. However, it lays out an intriguing and likely effective strategy for economic sociologists to investigate key notions in Bitcoin, such as trust, and categorise them into a theoretical framework. It's possible that this will serve as the foundation for future study.
Bitcoin is also embedded as a speculative object in certain social structures that control the price. These are irrational surpluses of confidence in the future of Bitcoin in a bubble, and irrational lacks of confidence in the future of Bitcoin in a bear market. Unfortunately, Corradi just touches on these points without delving too far.
Her essay is merely nine pages long. However, it lays out an intriguing and likely effective strategy for economic sociologists to investigate key notions in Bitcoin, such as trust, and categorise them into a theoretical framework. It's possible that this will serve as the foundation for future study.
I inquired at the Seeholz Farm as to why they allow clients to pay with cryptocurrencies such as IOTA. Markus Zollinger claims that he intends to make a positive contribution to society by bringing attention to cryptocurrencies:
In recent weeks, IOTA has formed a number of partnerships and published additional information about its Qubic project.
DNB Asa, Norway's largest financial services company, will investigate how IOTA's Tangle technology may help streamline and extend its own business model and internal procedures.
IOTA has also released additional details on their project Q. Qubic should be able to run Smart Contracts and Oracle machines to swiftly and easily handle data from complex sources, according to the current releases.
In recent weeks, IOTA has formed a number of partnerships and published additional information about its Qubic project.
DNB Asa, Norway's largest financial services company, will investigate how IOTA's Tangle technology may help streamline and extend its own business model and internal procedures.
IOTA has also released additional details on their project Q. Qubic should be able to run Smart Contracts and Oracle machines to swiftly and easily handle data from complex sources, according to the current releases.
IOTA will be able to do numerous quorum-based actions thanks to Qubic, a specific protocol. These include Oracle machine features, complicated computing, and smart contract execution, to name a few. The long-term goal is to build a world-class computer that uses unused processing power to secure the tangle while performing the previously outlined functions.
Qubic leverages Oracle computers to acquire complicated data from external sources, evaluate it, and prepare it for predetermined targets, among other things. For instance, consider the following:
Data from real-time temperature sensors
File values (current or historical)
Personal characteristics such as present age, marital status, and so on.
Furthermore, as is the case with Ethereum, Smart Contracts should be possible to implement. This enables two or more parties to enter into a contract that is tracked, confirmed, and carried out (further details are not yet known).
Qubic should also have the capability of collecting unused processing power through a decentralised network and making the generated power available for external calculations. People who do not have powerful hardware can make an order, which the powerful decentralised platform will execute, and only the outcome will be returned to the user.
At this moment, there is no precise timeline for when the project will begin. The IOTA Foundation has been working on its development for a while, but it continues to provide updates.
IOTA has confirmed that there will be no new token or cryptocurrency, as well as no Airdrop, to avoid additional speculation. This knowledge was frequently brought up in heated international debates.
Iunera, Tim Frey's startup, specialises in large data analysis. They recently included a cryptocurrency index that is ordered by Twitter popularity. I inquired as to how the analysis works and the significance of such rankings.
Mr. Frey, I'd like to extend a warm welcome to you. The analysis of large amounts of data is your forte. For the first part of the interview, could you describe what Big Data is? What size is it that's being discussed?
That's an interesting question, haha. A data stream of one gigabyte per day is the bare minimum for us. We don't think of data as static entries in a database; rather, we think of it as a stream, or something that moves. Even if the Bitcoin blockchain will soon be 200 terabytes in size, blockchains themselves are not large data. However, the ecosystem and stock markets that surround it generate data streams that may be classified as big data. The data used in Coinmarketcap's rating is a fantastic illustration of this.
Mr. Frey, I'd like to extend a warm welcome to you. The analysis of large amounts of data is your forte. For the first part of the interview, could you describe what Big Data is? What size is it that's being discussed?
That's an interesting question, haha. A data stream of one gigabyte per day is the bare minimum for us. We don't think of data as static entries in a database; rather, we think of it as a stream, or something that moves. Even if the Bitcoin blockchain will soon be 200 terabytes in size, blockchains themselves are not large data. However, the ecosystem and stock markets that surround it generate data streams that may be classified as big data. The data used in Coinmarketcap's rating is a fantastic illustration of this.
You've created your own cryptocurrency rating based on tweets. There are some unexpected spots in it, therefore Tron came in third. What procedure is used to rank the items?
We sorted the tweets by currency, which included cryptocurrency. In the previous 24 hours, for example, there have been 89,000 tweets and retweets mentioning #Bitcoin, #BTC, or $ BTC. We do not assign a value to terms that do not contain hashtags or dollar signs. This would be fine for currencies like Bitcoin or Ethereum, but it would be problematic for currencies like Tron or Waves because the terms are used differently, causing the outcome to be distorted.
The number of tweets, the number of tweeters, and the number of tweets relative to market capitalization have all been derived from the big data study.
Technically, how does the ranking work?
We get real-time tweets from Twitter that contain specific words and phrases, such as Bitcoin, Ethereum, and so on. In sum, several gigabytes of data are received each day. This data is processed on our cluster. The amount is less of a problem than I anticipated, and we could process a lot more data than we do now.
What does the amount of tweets on a phenomenon say about it? Is there any way to make any reasonable inferences from this?
This is an enthralling and intriguing query. It could be useful to make a comparison to another issue. We also looked at tweets related to the general election. The AFD was intriguing because, while polling at 9%, it had the most Twitter followers of any party, with roughly 40% supporting air sovereignty. Early on, the tone on Twitter was very positive for the party, and the AFD eventually caught up to 12 to 13 percent in the election. Of course, the figure is lower than the 40% we discovered on Twitter, but it does represent a trend.
So, are tweets more likely to be change indicators?
Yes, I believe that is correct. If something moves in the long run, you can see it in the tweets. If you go to a poll and only receive 3% of the vote, but get a 30% twitter share because of a hype, that does not guarantee they will get 30% on the poll. However, there is a path to follow.
When it comes to cryptocurrency, Ripple is a good example. Although there are few tweets per market capitalization, ripple retains its worth because numerous professional organisations use it. Positive effects, in my opinion, are far superior to negative effects.
Consider Tron. The community surrounding the coin is mostly positive. The number of tweets spiked on a certain day, the Mainnet launch. Tron had a lot more tweets than any other coin, at 350,000. Of course, this does not imply that Tron will overtake Bitcoin very soon. But it was merely a one-time occurrence.
Is it possible to trade with the tweet indicators?
That, I believe, is difficult. Although you can determine how many tweets there are, it's difficult to make a real connection between them and the course. Between the two, there is no deterministic interaction. We try to make predictions or discover patterns when there exist causal linkages.
There were a lot of tweets when the Tron Mainnet was launched. That gets a lot of attention, and it doesn't seem to matter whether it's good or bad. The important thing is that it is discussed. This does not imply that the price will climb, but it does indicate that there is movement and possibility. Silence is always preferable to polarisation.
In the Tron Twitter study, the launch of the Mainnet is clearly visible.
Take a look at the tweets by market capitalization as a second indicator. Bytom is currently the best, followed by Sumokoin. However, these are small coins, and it's difficult to say what's behind them. Zclassic intrigues me more. There are a lot of tweets per market cap, but only a few tweets from a small number of people. That is a small but highly motivated force, to put it that way. SmartCash is unique. There are just over 1,000 persons, but only 1,500 tweets, which may be intriguing.
However, I feel that these are merely isolated signs that only make sense in the context of the whole picture. They don't offer much on their own, but they can be useful as part of a larger analysis.
What do you mean by how manipulated the tweets are?
Do you mean bots manipulating the system? That's a fascinating subject. Bots are undoubtedly present, as we saw during the general election. We include not just the number of tweets, but also the number of tweeters in our data. Creating new accounts or bots is more difficult than shooting tweets per account.
We can spot potential bots or other abnormalities by comparing these two figures. There are around three tweets per person for Bitcoin and Ethereum, barely two for Tron, and Ripple is somewhere in the middle. In general, this appears to be the case. A deviation from this, like in the case of Zclassic, does not always imply that it is being manipulated. There may also be an event, such as a conference, that generates a lot of tweets.
Overall, it doesn't matter to us whether a tweet is sent by a human or a machine. It will have the same effect if a person or a bot sends out 100 random tweets per day. Because not only traders use Twitter, we have a noise floor that often has little to do with the course. It doesn't really matter whether this noise is currently created by bots or humans.