Exploring the Rich get Richer Phenomenon
https://www.technologyreview.com/s/518541/rich-get-richer-effect-observed-in-bitcoin-digital-currency-network/
Bitcoin began as an economic experiment as a new form of digital cash and it rapidly gain popularity and in value, reaching its heights in 2014 and remaining at roughly 714$ per bitcoin currently. Because the Bitcoin marketplace transactions are all publicly available, researchers at Eotovs Lorand university downloaded the complete financial history of each account to study and recreate cash flows throughout the vast network. through recreating the network so that each node represented a Bitcoin address, they aimed to determine how the network evolved over time in regards to the linkage of nodes. Through analysis, they found that the network grew in a trend that resembled preferential attachment. Nodes with a large number of links attracted more links than nodes with a small number of links. In addition to this, they found that the popular nodes’ wealths grew at a much faster pace as well. This indicates that on a fundamental and overall basis, the rich and well connected grew their network and wealth at a much faster pace. While the transactions remain anonymous and illegal service/drug sales may amount to this phenomenon in the Bitcoin network, it is nevertheless an interesting practical example of the rich get richer phenomenon.
In essence, this article and concept relates back to the phenomenon of rich get richer explored throughout this class. More specifically, it can be applied to networks; well connected nodes are more likely to attract new links while the poorly connected nodes cannot compete with these well connected nodes. As a result, the well connected nodes progress further while the other nodes can be disproportionately left behind to remain poor. This effect has actually been theorized to drive the evolution of networks in the real world. For example, if a network has twice the nodes of a competing network, it is actually twice as likely to connect or receive another link.