Cryptocurrency Value and 51% Attacks: Evidence from Event Studies

Shanaev, Savva, Shuraeva, Arina, Vasenin, Mikhail and Kuznetsov, Maksim (2019) Cryptocurrency Value and 51% Attacks: Evidence from Event Studies. The Journal of Alternative Investments, 22 (3). pp. 65-77. ISSN 1520-3255

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Official URL: https://doi.org/10.3905/jai.2019.1.081

Abstract

In this article, an event studies approach is utilized to assess the influence of 51% attacks on proof-of-work (PoW) cryptocurrency prices. The study uses an exhaustive sample of 14 individual attacks on 13 cryptocurrencies. Across multiple event studies techniques, majority attacks on blockchains are consistently shown to immediately decrease corresponding coin prices by 12% to 15%. Significantly negative price response is robust in various event windows. Coin prices do not recover to pre-attack levels one week after the event. There is evidence of pump-and-dump schemes prior to the 51% attack, however the market demonstrates high efficiency after the attacks. 51% attacks are suggested to be a fundamental risk factor for cryptocurrency investments, primarily characteristic of small PoW coins with low hash rates.

Item Type: Article
Subjects: N100 Business studies
N300 Finance
Department: Faculties > Business and Law > Newcastle Business School
Depositing User: Elena Carlaw
Date Deposited: 16 Apr 2020 15:09
Last Modified: 16 Apr 2020 15:17
URI: http://nrl.northumbria.ac.uk/id/eprint/42811

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