Cryptocurrency technology revolution: are Bitcoin prices and terrorist attacks related?

Yu Song (), Bo Chen () and Xin-Yi Wang ()
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Yu Song: Central University of Finance and Economics
Bo Chen: Central University of Finance and Economics
Xin-Yi Wang: Central University of Finance and Economics

Financial Innovation, 2023, vol. 9, issue 1, 1-20

Abstract: Abstract As a financial innovation of the information age, cryptocurrency is a complex concept with clear advantages and disadvantages and is worthy of discussion. Exploring from a terrorism perspective, this study uses the time-varying parameter/stochastic volatility vector autoregression model to explore the risk hedging and terrorist financing capabilities of Bitcoin. Empirical results show that both terrorist incidents and brutality may explain Bitcoin price, but their effects are slightly different. Compared to terrorist brutality, terrorist incidents have a weaker impact on Bitcoin price, showing that Bitcoin investors are more concerned about the number of deaths than the frequency of terrorist attacks. In turn, the impact of Bitcoin price on terrorist attacks is negligible. Bitcoin is a potential means of financing terrorism, but it does not currently play an important role. Our research findings can help investors analyze and predict Bitcoin prices and help improve the theoretical system of anti-terrorist financing, helping to maintain world peace and security.

Keywords: Terrorist incident; Terrorist brutality; Bitcoin price; Time-varying (search for similar items in EconPapers)
JEL-codes: C32 G12 H56 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1186/s40854-022-00445-3

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