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Cyber-Attacks, Cryptocurrencies, and Cyber Security

Author

Listed:
  • Guglielmo Maria Caporale
  • Woo-Young Kang
  • Fabio Spagnolo
  • Nicola Spagnolo

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.

Suggested Citation

  • Guglielmo Maria Caporale & Woo-Young Kang & Fabio Spagnolo & Nicola Spagnolo, 2020. "Cyber-Attacks, Cryptocurrencies, and Cyber Security," CESifo Working Paper Series 8124, CESifo.
    • Handle: RePEc:ces:ceswps:_8124
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    cyber-attacks; cryptocurrencies; risk-adjusted returns; cyber security;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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