[2019-13]

Technological Change and Market Conditions: Evidence from the Bitcoin Market

Kim, Hyeonoh
Moon Soul Graduate School of Future Strategy, KAIST

Yi, Eojin

Moon Soul Graduate School of Future Strategy, KAIST

Lee, Daeyong

Department of Human Development & Family Studies, Iowa State University

Ahn, Kwangwon

Department of Industrial Engineering, Yonsei University
 
Abstract
This article examines the impact of technological changes—referred to as “forking,” which triggers
blockchain splits—to cryptocurrency given its market conditions. Despite the explicit distinction in the
log return distributions between two splitting blockchains, adopting new technology does not lead to a
disparity in market conditions: no significant difference exists in market efficiency and long-term
market equilibrium between the two splitting blockchains. Technological change accompanying the
market separation does not impede the underlying uniformity in market conditions. The findings suggest
that mutual information flows, linked to market liquidity, explain the results between the new and old
forks

Keywords: Hard fork; Efficient market hypothesis; Market equilibrium; Information flow JEL Classification: 90.01 Social phenomena