Cryptocurrency Value and 51% Attacks: Evidence from Event Studies

The Journal of Alternative Investments Winter 2020; DOI: https://doi.org/10.3905/jai.2019.1.081

Posted: 2 Dec 2018

See all articles by Savva Shanaev

Savva Shanaev

Northumbria University

Arina Shuraeva

University of London; University of Northumbria at Newcastle

Mikhail Vasenin

Northumbria University

Maksim Kuznetsov

Financial University under the Government of the Russian Federation

Date Written: November 24, 2018

Abstract

In this article, an event studies approach is utilised to assess the influence of 51% attacks on proof-of-work 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 percent. 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 proof-of-work coins with low hash rates.

Keywords: cryptocurrency, alternative investment, 51% attack, event studies

JEL Classification: C33, G14, G23

Suggested Citation

Shanaev, Savva and Shuraeva, Arina and Shuraeva, Arina and Vasenin, Mikhail and Kuznetsov, Maksim, Cryptocurrency Value and 51% Attacks: Evidence from Event Studies (November 24, 2018). The Journal of Alternative Investments Winter 2020; DOI: https://doi.org/10.3905/jai.2019.1.081, Available at SSRN: https://ssrn.com/abstract=3290016 or http://dx.doi.org/10.2139/ssrn.3290016

Savva Shanaev (Contact Author)

Northumbria University ( email )

Pandon Building
208, City Campus East-1
Newcastle-Upon-Tyne, Newcastle NE1 8ST
United Kingdom

Arina Shuraeva

University of London ( email )

Senate House
Malet Street
London, WC1E 7HU
United Kingdom

University of Northumbria at Newcastle ( email )

Pandon Building
208, City Campus East-1
Newcastle-Upon-Tyne, Newcastle NE1 8ST
United Kingdom

Mikhail Vasenin

Northumbria University ( email )

Pandon Building
208, City Campus East-1
Newcastle-Upon-Tyne, Newcastle NE1 8ST
United Kingdom

Maksim Kuznetsov

Financial University under the Government of the Russian Federation ( email )

Москва
Russia

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