Osiris Finance has always been more than a cryptocurrency trading platform. We are a community of enthusiasts standing at the frontier of contemporary blockchain, machine learning and finance issues. That is why we are dedicating significant amount of time to formal research on the topics that are relevant to our investments. In November 2018, the Osiris Team has authored an article “Cryptocurrency Value and 51% Attacks: Evidence from Event Studies”, where we were the first in the field to suggest a framework of measuring fundamental risk exposures of proof-of-work cryptocurrencies to majority attacks. The manuscript is currently under review in one of the finance journals, and the preprint is available free of charge at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3290016. We believe it is crucial to inform cryptocurrency investors and the blockchain community in particular of material risk associated with the asset class. Back in November, we envisioned that due to a number of reasons (to name a few, rentable hash power and the emergence of a wide variety of small PoW coins with low hash rate), frequent 51% attacks is “the new reality”, and investors might suffer double-digit losses on positions in coins undergoing or suspected to be undergoing an attack. Since November, two 51% attacks has already been recorded, affecting Vertcoin in December (Source: https://www.ccn.com/vertcoin-hit-by-51-attack-allegedly-lost-100000-in-double-spending/) and, just a couple of days ago, Ethereum Classic (Source: https://news.sky.com/story/ethereum-classic-hackers-hijack-blockchain-in-rare-51-attack-11601786). The pattern we revealed and documented in the article is being preserved here, providing us with a natural out of sample tests for our findings. Vertcoin and Ethereum Classic plunged in value 16.89% and 10.55%, respectively, on the day the attack has become public knowledge. You can consult the extensive sample of 51% attacks on proof-of-work blockchains in the table, tracing the phenomenon as early back as 2013 (Source: https://www.osirisfinance.com/digests-and-forecasts/ethereum-classic-51-attack-special) or in the preprint of the article (link above).
As for the predictions on future price movements for ETC, our research generalised from 14 attacks on 13 cryptocurrencies suggests that the price hardly recovers to pre-attack levels in the short to medium term, so there is probably no scope of realising significant gains by purchasing the coin now.
Overall, we are glad to announce our assertions regarding the 51% attacks for the blockchain community were correct, and we will be producing more cutting-edge research on cryptocurrency investment in 2019 so you could trade safely and well-informed. Stay tuned and good luck in your today’s trades!
All the best,
The Osiris Team.
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