PoW, PoS, & Hybrid protocols: A Matter of Complexity?
This work addresses the risk of chaotic behavior in cryptocurrencies for financial systems, but it is incremental as it builds on prior research without new findings.
The paper extends a previous analysis to assess whether various cryptocurrencies using PoW, PoS, and hybrid protocols can be considered complex systems, potentially chaotic, by applying Information Theory and Crutchfield's Statistical Complexity measure, with no concrete results reported as it is a work-in-progress.
In a previous paper, it was discussed whether Bitcoin and/or its blockchain could be considered a complex system and, if so, whether a chaotic one, a positive response raising concerns about the likelihood of Bitcoin/blockchain entering a chaotic regime, with catastrophic consequences for financial systems based on it. This paper intends to simplify and extend that analysis to other PoW, PoS, and hybrid protocol-based cryptocurrencies. As before, this study was carried out with the help of Information Theory of Complex Systems, in general, and Crutchfield's Statistical Complexity measure, in particular. This paper is a work-in-progress. We intend to uncover some other measures that capture the qualitative notion of complexity of systems that can be applied to these cryptocurrencies to compare with the results here obtained.