Modeling innovation in the cryptocurrency ecosystem

Blockchains are among the most relevant emerging technologies of recent times and, according to many, they will have a central role in shaping the future of our society. Since the introduction of Bitcoin in 2009, the first notorious blockchain system bound to a cryptocurrency, the blockchain ecosystem has experienced a huge growth, driven by innovations both in conceptual and algorithmic terms, and in the creation of a large number of new cryptocoins. New blockchains and their associated cryptocoins, emerge mostly as the result of forking already existing projects. Here, we show that the appearance of new cryptocoins can be well described by a sub-linear power-law (Heaps’ law) of the total crypto-market capitalization. At the same time, we propose a model that well reproduces the evolution of the cryptocurrency ecosystem. Our model suggests that each cryptocurrency triggers, on average, the creation of ca. 1.58 novel cryptocoins, a result confirmed by the analysis of the Bitcoin historical forking tree. Moreover, we deduce that the largest cryptocurrency, nowadays Bitcoin, will comprise around the 50% of the whole crypto-market and that this fraction is going to stabilize in the near future, provided that the present fundamental macro-economic conditions do not change radically.