APPLICATION OF BENFORD’S LAW ON TRADE VOLUME OF CRYPTOCURRENCIES
Keywords:Benford’S Law, Cryptocurrencies, Chi-Square Test, Manipulation, Trade Volume
Cryptocurrencies have become a global phenomenon and its trading volume has been increasing since 2017 Aloosh and Li (2019). However, cryptocurrencies have been accused of market manipulation in the past. Benford’s law is widely used for detecting probability of frauds and manipulation in various fields. This study applied Benford’s law on trade volume of cryptocurrencies. Chi- square statistics revealed that except for Cardano and USDT all the other cryptocurrencies did not conform to the distribution and reveals the dataset could have been manipulated. This method may be used as the pre-requisite before doing fine-grain screening such as machine learning and graph-based searching.
Balamurugan, A., Harish, A., and Gandhi, S. (2019). Application of Benford’s Law on Stock Turnover. International Journal of Business and Management Invention, 8(01), 63–67.
Corazza, M., and Ellero, A. (2008). Checking Financial Markets Via Benford’s Law. Services. Economía.Unitn.It, 1–4. http://dx.doi.org/10.1007/978-88-470-1481-7_10. DOI: https://doi.org/10.1007/978-88-470-1481-7_10
Jayasree, M., Jyothi, C. S. P., and Ramya, P. (2018). Benford’s Law and Stock Market—The Implications for Investors: The Evidence From India Nifty Fifty. Jindal Journal of Business Research, 7(2), 103–121. https://doi.org/10.1177/2278682118777029. DOI: https://doi.org/10.1177/2278682118777029
Karavardar, A. (2014). Benford’s Law and An Analysis in Istanbul Stock Exchange (BIST). International Journal of Business and Management, 9(4), 160–172. https://doi.org/10.5539/ijbm.v9n4p160. DOI: https://doi.org/10.5539/ijbm.v9n4p160
Newcomb, S. (1881). Note on The Frequency of Use of The Different Digits in Natural Numbers. American Journal of Mathematics, 4(1/4), 39–40. https://doi.org/10.2307/2369148. DOI: https://doi.org/10.2307/2369148
Nigrini, M., and Wells, J. (2012). Benford’s Law – Application for Forensic Accounting, Auditing, and Fraud Detection. John Wiley and Sons. DOI: https://doi.org/10.1002/9781119203094
Peterson, T. (2020). Benford’s Law Suggests Bitcoin’s Price Manipulation – Quantpedia. Quantpedia.
Rauch, B., Goettsche, M., and El Mouaaouy, F. (2013). LIBOR Manipulation Empirical Analysis of Financial Market Benchmarks Using Benford’s Law. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2363895. DOI: https://doi.org/10.2139/ssrn.2363895
Vaasa. (2019). Assessing The Conformity of Cryptocurrency Market Data With Benford’s Law.
Vičič, J., and Tošić, A. (2021). Application of Benford’s Law on Cryptocurrencies. Journal of Theoretical and Applied Electronic Commerce Research, 17(1), 313–326. https://doi.org/10.3390/jtaer17010016. DOI: https://doi.org/10.3390/jtaer17010016
What is Market Manipulation in Cryptocurrency? (2021). Binance Blog.
How to Cite
Copyright (c) 2022 Ann Mary Alexander, Dr. Resia Beegam. S
This work is licensed under a Creative Commons Attribution 4.0 International License.
License and Copyright Agreement
In submitting the manuscript to the journal, the authors certify that:
- They are authorized by their co-authors to enter into these arrangements.
- The work described has not been formally published before, except in the form of an abstract or as part of a published lecture, review, thesis, or overlay journal.
- That it is not under consideration for publication elsewhere.
- That its release has been approved by all the author(s) and by the responsible authorities – tacitly or explicitly – of the institutes where the work has been carried out.
- They secure the right to reproduce any material that has already been published or copyrighted elsewhere.
- They agree to the following license and copyright agreement.
Authors who publish with International Journal of Engineering Technologies and Management Research agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License (CC BY-SA 4.0) that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors can enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or edit it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
For More info, please visit CopyRight Section