The economic dependency of the Bitcoin security

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: EERI Research Paper Series ; No. 01/2021

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Asset Pricing; Trading Volume; Bond Interest Rates ; International Financial Markets ; Financial Institutions and Services: Other
• Subject: Bitcoin ; blockchain ; proof-of-work ; ARDL ; institutional governance technology

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ciaian, Pavel ; Kancs, D'Artis ; Rajcaniova, Miroslava
• Event: Veröffentlichung
• (who): Economics and Econometrics Research Institute (EERI)
• (where): Brussels
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/251105
• Last update: 10.03.2025, 11:45 AM CET