Savva Shanaev, Arina Shuraeva, Mikhail Vasenin, M. Kuznetsov
{"title":"Cryptocurrency Value and 51% Attacks: Evidence from Event Studies","authors":"Savva Shanaev, Arina Shuraeva, Mikhail Vasenin, M. Kuznetsov","doi":"10.3905/jai.2019.1.081","DOIUrl":null,"url":null,"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. TOPIC: Currency Key Findings • 51% attacks on Proof-of-Work cryptocurrencies decrease their market prices by 12.60% on average. • The effect is robust to different measurement techniques and in various event windows. • There is evidence of insider trading and “pump-and-dump” schemes prior to the attacks.","PeriodicalId":45142,"journal":{"name":"Journal of Alternative Investments","volume":null,"pages":null},"PeriodicalIF":0.4000,"publicationDate":"2019-10-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"44","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Alternative Investments","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.3905/jai.2019.1.081","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q4","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 44
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. TOPIC: Currency Key Findings • 51% attacks on Proof-of-Work cryptocurrencies decrease their market prices by 12.60% on average. • The effect is robust to different measurement techniques and in various event windows. • There is evidence of insider trading and “pump-and-dump” schemes prior to the attacks.
期刊介绍:
The Journal of Alternative Investments (JAI) provides you with cutting-edge research and expert analysis on managing investments in hedge funds, private equity, distressed debt, commodities and futures, energy, funds of funds, and other nontraditional assets. JAI is the official publication of the Chartered Alternative Investment Analyst Association (CAIA®). JAI provides you with challenging ideas and practical tools to: •Profit from the growth of hedge funds and alternatives •Determine the optimal mix of traditional and alternative investments •Measure and track portfolio performance •Manage your alternative investment portfolio with proven risk management practices