U.S. Consumers Adoption and Use of Bitcoin and other Virtual - - PowerPoint PPT Presentation
U.S. Consumers Adoption and Use of Bitcoin and other Virtual Currencies Scot t Sch u h a n d Oz Sh y P r e s e n t e d a t D N B P a ym e n t s Co n fe r e n ce R e t a il p a y m e n t s : m a p p in g o u t t h e r o a d a h e
* The view s are those of the author and do not reflect the view s of the Federal Reserve Bank of Boston or the Federal Reserve System .
Awareness and familiarity Adoption and use for payments Value of holdings (VC and cash)
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Source: blockchain.info and Google Trends. Bitcoin search interest is based on Google Trends in the US, scaled to overlay with prices.
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Source: mapofcoins.com and Google Trends. Number of virtual currencies include 112 defunct coins. Cumulative Bitcoin search interest is based on Google Trends in the US, scaled to overlay with number of coins.
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Bitcoin = “A peer-to-peer electronic cash system” Digital = electronic, esp. computerized technology (Internet or cellular);
Virtual = digital + never physical
US dollar is digital (debit, ACH) and physical (currency)
Network (peer-to-peer) – closed loop versus open loop
Crypt0 = security based on modern encryption algorithms
Used to secure transactions and to control the creation of new virtual currency units.
Money or currency
Ownership – public (“sovereign”) versus private
Value – asset-backed (gold) versus “fiat” (promise)
e-Money = public money stored electronically on a physical device (card) 7
Source: “Virtual Currency Schemes”, ECB 2012.
More VC details
closed or open loop
(“math-based”)
loop, cryptographic (by far the largest of about 700 of these)
8 BIS (20 15): used “d igita l currency ” but v iew ed “v irtua l currency ” a s equiv a lent.
Origin of Bitcoin
Nakamoto (2008)
Bitcoin/ VC as technology and m oney
ECB (2012), Velde (2013), Greene and Shy (2014), Lo and Wang (2014), Böhme
et al (2015), BIS (2015), Badev and Chen (2014)
Bitcoin/ VC as an asset and pricing
Glaser et al (2014), Hencic and Gouriéroux (2014), Donier and Bouchard (2015),
Dywer (2015), Bolt and van Oordt (2015)
Network econom ics of the Bitcoin/ VC industry
Gandal and Halaburda (2014), Möser and Böhme (2015)
Acceptance and use of Bitcoin/ VC
MERCHANTS: Polasik et al (2015) CONSUMERS: Christin (2013) , Tsanidis et al (2015), Saito (2015), Coinbase
(2015), MIT Digital Currency Project (ongoing)
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31.4 14.2 11.8 11.1 10.7 8.2 7.5 5.1 0.0 3.7 10.9 32.4 9.4 5.6 15.1 7.9 2.0 13.0
Primary Secondary
Percentage of virtual currency adopters 2015 Survey of Consumer Payment Choice Preliminary result, unofficial and subject to revision
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18.7 17.7 16.0 15.2 14.5 12.8 5.1
It is not easy to acquire or use. I do not understand the technology. Not accepted for payment very often. The U.S. dollar value of the virtual currency varies too much. My current payment methods meet all of my needs. It is not guaranteed by the U.S. government. Other
Percentage of virtual currency nonadopters who are aware of virtual currency 2015 Survey of Consumer Payment Choice Preliminary result, unofficial and subject to revision
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Method: Bass (1969). "A new product grow th for m odel consum er durables". Managem ent Science 15 (5).
11 15 58 14 3 12 8 45 20 14 5 6 28 33 28
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Awareness and fam iliarity
Models of information diffusion (Bass 1969); financial literacy
Dem and for Bitcoin/ VC
OPTION 1 – Adoption (extensive margin) To own or not to own? (Literature on consumer demand for payments) OPTION 2 – Amount of holdings (intensive margin) Extension of money demand?
M1 – Baumol (1952), Tobin (1956) etc.; cash– Briglevics and Schuh (2013)
New type of asset demand, pricing?
Expectations of future price ($ exchange rate) – Bolt & van Oordt (2015)
Use of Bitcoin/ VC
Two-step Heckman selection models (e.g., Schuh and Stavins 2010) Prelim inary results are single-equation m odels
Adoption/ use sim ultaneous equations
Application of KRSS (2016) left for future research…
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26 Awareness Adoption Use Holdings Online retail share na na na Use of internet bank + na na na Expectations (week) na + na Expectations (month - week) na + na Expectations (year - month) na + na Interested in new technology na na
na Buy Goods and Services na na + na Remittances na na + na Anonymity na na + na Investment na na + na Blockchain technology na na + na No trust in banks na na + na No trust in government na na na Checking account pays interest na na na Checking account interest na na na Savings account pays interest na na na Savings account interest na na na
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