Sidechain and volatility of cryptocurrencies based on the blockchain technology

Abstract

A cryptocurrency market based on the blockchain technology is characterized by the coexistence of a steady-state supply and a volatile e-money’s demand. In this study a cointegration test establishes a long-run relationship between the internal demand of Bitcoins and prices. From this result, we propose to restrain the intrinsic volatility of any cryptocurrency based on the Blockchain technology by introducing a sidechain pegged to the parent chain.