Does the transition to the proof-of-stake consensus protocol tame the response of cryptocurrency volatility to energy shocks?
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https://creativecommons.org/licenses/by-nc/4.0/
Lataukset37
Pysyvä osoite
Kuvaus
This author accepted manuscript is deposited under a Creative Commons Attribution Non-commercial 4.0 International (CC BY-NC) licence. This means that anyone may distribute, adapt, and build upon the work for non-commercial purposes, subject to full attribution. If you wish to use this manuscript for commercial purposes, please contact permissions@emerald.com.
Purpose
This study investigates the impact of transitioning from the proof-of-work (PoW) to the proof-of-stake (PoS) consensus protocol on the relationship between cryptocurrency volatility and energy shocks.
Design/methodology/approach
We exploit the random nature of the transition to the PoS consensus algorithm as a quasi-natural experiment. We analyze this issue for the volatility processes of four digital currencies with high market capitalization using GARCH models.
Findings
Our cross-sectional findings suggest that after the transition to the PoS consensus protocol, cryptocurrency volatility becomes significantly less responsive to energy market shocks.
Originality/value
The findings of this study advocate for the migration from the energy-intensive PoW consensus protocol to the more environmentally sustainable PoS protocol. Moreover, this study advances the literature on green finance by documenting a strong case for cryptocurrency stakeholders to switch to the PoS protocol.
Emojulkaisu
ISBN
ISSN
1746-8817
1746-8809
1746-8809
Aihealue
Kausijulkaisu
International journal of emerging markets
OKM-julkaisutyyppi
A1 Alkuperäisartikkeli tieteellisessä aikakauslehdessä (vertaisarvioitu)