The economic dependency of the Bitcoin security

Pavel Ciaian, d'Artis Kancs and Miroslava Rajcaniova

Papers from arXiv.org

Abstract: We study to what extent the Bitcoin blockchain security permanently depends on the underlying distribution of cryptocurrency market outcomes. We use daily blockchain and Bitcoin data for 2014-2019 and employ the ARDL approach. We test three equilibrium hypotheses: (i) sensitivity of the Bitcoin blockchain to mining reward; (ii) security outcomes of the Bitcoin blockchain and the proof-of-work cost; and (iii) the speed of adjustment of the Bitcoin blockchain security to deviations from the equilibrium path. Our results suggest that the Bitcoin price and mining rewards are intrinsically linked to Bitcoin security outcomes. The Bitcoin blockchain security's dependency on mining costs is geographically differenced - it is more significant for the global mining leader China than for other world regions. After input or output price shocks, the Bitcoin blockchain security reverts to its equilibrium security level.

Date: 2021-02
New Economics Papers: this item is included in nep-cwa, nep-mon and nep-pay
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: The economic dependency of bitcoin security (2021)
Working Paper: The Economic Dependency of the Bitcoin Security (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2102.08378

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