Cryptocurrency Value and 51% Attacks: Evidence from Event Studies

19 Pages Posted: 2 Dec 2018

See all articles by Savva Shanaev

Savva Shanaev

Northumbria University; Government of the Russian Federation - Financial University (Moscow Branch)

Arina Shuraeva

University of London

Mikhail Vasenin

Government of the Russian Federation - Financial University (Moscow Branch)

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 Vasenin, Mikhail and Kuznetsov, Maksim, Cryptocurrency Value and 51% Attacks: Evidence from Event Studies (November 24, 2018). 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

Government of the Russian Federation - Financial University (Moscow Branch) ( email )

Arina Shuraeva

University of London ( email )

Senate House
Malet Street
London, WC1E 7HU
United Kingdom

Mikhail Vasenin

Government of the Russian Federation - Financial University (Moscow Branch) ( email )

Maksim Kuznetsov

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

Москва
Russia

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