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

Author

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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)

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.

Suggested Citation

  • Yu Song & Bo Chen & Xin-Yi Wang, 2023. "Cryptocurrency technology revolution: are Bitcoin prices and terrorist attacks related?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-20, December.
    • Handle: RePEc:spr:fininn:v:9:y:2023:i:1:d:10.1186_s40854-022-00445-3
    DOI: 10.1186/s40854-022-00445-3
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    References listed on IDEAS

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    More about this item

    Keywords

    Terrorist incident; Terrorist brutality; Bitcoin price; Time-varying;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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