Benford’s Law Suggests Bitcoin’s Price Manipulation

The Bitcoin is a quite controversial topic among the public. Many are interested in the blockchain technology or trade the cryptocurrencies, but the Bitcoin also has many opponents. Most frequently, Bitcoin is criticized for its volatility or a lack of supervision; some even call the Bitcoin a fraud. Yet many argue that blockchain is transparent. Novel research by Peterson examines the price manipulation using Benford’s law and a linkage to the anecdotal evidence of known manipulation. In theory, the distribution of leading digits in numerical data should follow the Benford´s law and any significant deviations usually signal a fraud. According to the results, in the history of bitcoin prices, several frauds were detected. The results have important implication for the Bitcoin; therefore, this research is probably a must-read for anyone interested in cryptocurrencies.

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