Demythifying the belief in cryptocurrencies decentralized aspects. A study of cryptocurrencies time cross-correlations with common currencies, commodities and financial indices

Abstract The main question of this article is about whether cryptocurrencies, within their decentralization aspects, are a real commodity or/and a virtual currency. To resolve such a dilemma, we compare 7 cryptocurrencies with a sample of the three types of monetary systems: 28 fiat money, 2 commodities, 2 commodity based indices, and 3 financial market indices. We use the matrix correlation method. We display dendrograms and observe “hierarchy clustering”, as a function of data coarse graining. In fact, we confirm that the cryptocurrencies are not decentralized. We observe also that most of the currencies in the world are not significantly correlated or present a weak correlation with cryptocurrencies. Our results show that the cryptocurrency market and Forex market belong to different system communities (or regions).