Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/251105
Authors: 
Ciaian, Pavel
Kancs, D'Artis
Rajcaniova, Miroslava
Year of Publication: 
2021
Series/Report no.: 
EERI Research Paper Series No. 01/2021
Publisher: 
Economics and Econometrics Research Institute (EERI), Brussels
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.
Subjects: 
Bitcoin
blockchain
proof-of-work
ARDL
institutional governance technology
JEL: 
D82
G12
G15
G29
Document Type: 
Working Paper

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