Bitcoin as an infection disease: evidence from SIR epidemiological model

Purpose This study explores Bitcoin’s infectious narrative through the framework of epidemiological models, specifically the Susceptible-Infected-Recovered (SIR) model with constant force of infection. Design/methodology/approach The SIR model, which is traditionally used for infectious diseases, categorizes Bitcoin wallets into three groups: susceptible (open wallets), infected (active wallets), and recovered (inactive wallets). The analysis uses monthly data from January 2011 to December 2022 to examine two significant Bitcoin price bubbles. Findings The study reveals distinct dynamics between the bubbles by incorporating time-dependent infection (β) and recovery (γ) rates. During the 2017–18 bubble, the infection spread was slower, characterized by a lower β value of 0.17 and a prolonged recovery process with a γ Value of 0.01. On the contrary, the 2020–22 bubble saw a rapid infection rate, with a β value of 0.8 and a faster recovery rate γ of 0.07. In the end, Bitcoin has a high infection rate, spreading almost as rapidly as measles or whooping cough. Originality/value The study introduces novel insights into explaining the Bitcoin price bubbles using epidemiological models. Like these diseases, Bitcoin also spreads quickly and aggressively within an exposed population (risk loving investors). Meanwhile, recovery rate shows similarities to diphtheria and tuberculosis. These diseases have prolonged infection periods and take a long time to cure. In terms of geographical distribution, Bitcoin exhibits pandemic features due to its global presence.