The economic dependency of bitcoin security

We studied the extent to which bitcoin blockchain security permanently depends on the underlying distribution of cryptocurrency market outcomes using daily blockchain and bitcoin data for 2014-2019 and employing the autoregressive-distributed lag (ARDL) approach. We tested 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 bitcoin price and mining rewards were intrinsically linked to bitcoin security outcomes.The bitcoin blockchain security's dependency on mining costs was geographically differenced - it was more significant for the global mining leader China than for other world regions. Bitcoin blockchain security tended to revert relatively fast to its equilibrium security level after the input or output of price shocks.

Automated summary

The study found that the security outcomes of the bitcoin blockchain were closely linked to bitcoin price and mining rewards. Additionally, the dependency of blockchain security on mining costs varied geographically, with China being more significant than other regions. After price shocks, bitcoin blockchain security tended to quickly return to its equilibrium level.