Ransomware Activity and Blockchain Congestion

40 Pages Posted: 21 May 2018 Last revised: 8 Oct 2020

See all articles by Konstantin Sokolov

Konstantin Sokolov

University of Memphis - Fogelman College of Business and Economics

Date Written: May 9, 2018

Abstract

I examine blockchain congestion episodes caused by more than 4,400 triggers for ransomware attacks over a two-year period. When demand for settlement exceeds blockchain capacity, blockchain users engage in fee competition to prioritize their transaction settlement. A typical surge in ransomware activity causes transaction fees to increase by 2.1% and up to 28% in extreme cases. Consistent with theory literature, some users forego blockchain settlement when transaction fees increase. An event study around an extreme spike in ransomware activity supports the findings of the main analysis.

Keywords: Blockchain, Congestion, Cryptocurrency, Cybersecurity, Ransomware

JEL Classification: G10, G14

Suggested Citation

Sokolov, Konstantin, Ransomware Activity and Blockchain Congestion (May 9, 2018). Journal of Financial Economics (JFE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=3175986 or http://dx.doi.org/10.2139/ssrn.3175986

Konstantin Sokolov (Contact Author)

University of Memphis - Fogelman College of Business and Economics ( email )

Memphis, TN 38152
United States

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