Cyber-Attacks, Cryptocurrencies, and Cyber Security

Guglielmo Maria Caporale, Woo-Young Kang, Fabio Spagnolo and Nicola Spagnolo

No 8124, CESifo Working Paper Series from CESifo

Abstract: This paper provides comprehensive evidence on the effects of cyber-attacks (cyber-crime, cyber espionage, cyber warfare and hacktivism) and cyber security on the risk-adjusted returns, realised volatilities and trading volumes of the three main cryptocurrencies (Bitcoin, Ethereum and Litecoin). We find that stronger cyber security is generally effective in increasing the risk-adjusted returns of cryptocurrencies and trading activity even in the presence of cyber-attacks. Hacktivism appears to be the most significant threat to cryptocurrency investors. Further, cyber-attackers hitting the cryptocurrency exchanges are most likely to attack other sectors (government, industry and finance) as well. In addition, in the case of the US they target the government and industry sectors in preference to the cryptocurrency exchanges given the corresponding potential benefits and costs. In all cases appropriate strategies should be designed to enhance cyber security.

Keywords: cyber-attacks; cryptocurrencies; risk-adjusted returns; cyber security (search for similar items in EconPapers)
JEL-codes: C22 E40 G10 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-mac, nep-ore and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8124

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