Abstract
Major cryptocurrencies such as bitcoin and etherium rely on the computationally expensive and energy inefficient Proof of Work (PoW) consensus mechanism to validate transactions and secure their networks. In response to such concerns digital coins that implement more energy efficient algorithms, e.g. Proof of Stake (PoS), have started to grow in popularity and some PoW based coins are planning to switch to PoS. We investigate linkages and transmission of price shocks across fourteen PoW and PoS/Other powered digital assets. PoW cryptocurrencies appear to be more strongly connected within the network of digital coins than are PoS/Other digital currencies. On average PoW coins export more uncertainty to other cryptocurrencies, while assets in both groups import similar levels of risk. PoS/Other cryptocurrency stakeholders need to be aware of the impact that PoW cryptocurrencies can exert on the riskiness of their assets.
| Original language | English |
|---|---|
| Article number | 110243 |
| Pages (from-to) | 1-4 |
| Number of pages | 4 |
| Journal | Economics letters |
| Volume | 211 |
| Early online date | 23 Dec 2021 |
| DOIs | |
| Publication status | Published - Feb 2022 |
Keywords
- Cryptocurrency connectedness
- Digital coins
- Linkages
- Network
- Proof of Stake
- Proof of Work