Bitcoin : users’ characteristics, motivations and investment behaviours

In less than a decade, the cryptocurrency known as Bitcoin has gone from a fringe phenomenon to a topic of increasing interest to academia and mainstream investors. However, despite the growing body of research seeking to understand Bitcoin, the pseudonymous, decentralised, and globally-diffused nature of its user base means that the individuals who use it remain poorly understood. In particular, the motivations, risk-appreciation, and investment behaviours of early adopters and innovators are subject to supposition in the absence of data derived from the user base. This thesis seeks to address this gap in knowledge by employing a multi-stage, mixed methodology approach and a theoretical framework to understand the Bitcoin user base. Utilising semantic analysis, a survey of online cryptocurrency communities, and econometric time-series analysis, this thesis addresses the extent and nature of Bitcoin in hedging; how individual users perceive their own motivations, uses, and risks that have driven their behaviour; and the nature of the relationship between the prices of cryptocurrency and indices of confidence. Analysis of the data determined that the use of Bitcoin as an instrument of hedging is limited, and influenced by political and institutional factors. Likewise, its motivations, uses, and risks are reflective of the users’ political ideology, with the community and marketplace becoming more sophisticated as they evolve over time. Additionally, despite several case studies demonstrating risk-averse adoption of Bitcoin, there is no relationship between its prices and confidence.Doctor of Philosoph

Distributed Ledger Technology (DLT) Applications in Payment, Clearing, and Settlement Systems:A Study of Blockchain-Based Payment Barriers and Potential Solutions, and DLT Application in Central Bank Payment System Functions

Payment, clearing, and settlement systems are essential components of the financial markets and exert considerable influence on the overall economy. While there have been considerable technological advancements in payment systems, the conventional systems still depend on centralized architecture, with inherent limitations and risks. The emergence of Distributed ledger technology (DLT) is being regarded as a potential solution to transform payment and settlement processes and address certain challenges posed by the centralized architecture of traditional payment systems (Bank for International Settlements, 2017). While proof-of-concept projects have demonstrated the technical feasibility of DLT, significant barriers still hinder its adoption and implementation. The overarching objective of this thesis is to contribute to the developing area of DLT application in payment, clearing and settlement systems, which is still in its initial stages of applications development and lacks a substantial body of scholarly literature and empirical research. This is achieved by identifying the socio-technical barriers to adoption and diffusion of blockchain-based payment systems and the solutions proposed to address them. Furthermore, the thesis examines and classifies various applications of DLT in central bank payment system functions, offering valuable insights into the motivations, DLT platforms used, and consensus algorithms for applicable use cases. To achieve these objectives, the methodology employed involved a systematic literature review (SLR) of academic literature on blockchain-based payment systems. Furthermore, we utilized a thematic analysis approach to examine data collected from various sources regarding the use of DLT applications in central bank payment system functions, such as central bank white papers, industry reports, and policy documents. The study's findings on blockchain-based payment systems barriers and proposed solutions; challenge the prevailing emphasis on technological and regulatory barriers in the literature and industry discourse regarding the adoption and implementation of blockchain-based payment systems. It highlights the importance of considering the broader socio-technical context and identifying barriers across all five dimensions of the social technical framework, including technological, infrastructural, user practices/market, regulatory, and cultural dimensions. Furthermore, the research identified seven DLT applications in central bank payment system functions. These are grouped into three overarching themes: central banks' operational responsibilities in payment and settlement systems, issuance of central bank digital money, and regulatory oversight/supervisory functions, along with other ancillary functions. Each of these applications has unique motivations or value proposition, which is the underlying reason for utilizing in that particular use case

Why We Use a New Currency: The Role of Trust and Control in Explaining the Perception and Usage of Bitcoin

Social media, e-commerce, global peer-to-peer technologies, and the near ubiquity of computers and smartphones allow people to interact, trust, and exchange value across traditional socio-economic control boundaries and over significant distances. Since the creation in 2008 of a new cryptographic currency system called Bitcoin, a financial technology market sector of about 250 billion USD has rapidly emerged, raising questions about the nature of currency in society and whether new types of non-national money are warranted and viable. This debate has pitted heterodox economic interests against orthodox economic interests while it has rekindled interest in theories that view money as a social construct with a multitude of potential forms beyond ‘state’ or fiat money, and in forms that are increasingly predicted to be purely digital in the future. This study seeks to explain the policy, social, and economic factors that underlie perceptions and usage of these new currency types. First, I develop a novel theoretical matrix of trust and control to explain the conditions under which people choose to use any monetary system. Then, I test this theory with a quantitative analysis of policy, trust, socio-economic, and cultural factors affecting the perceptions and usage of the new currency systems of Bitcoin and other cryptocurrencies in 28 countries. This analysis draws on usage metrics recorded from the Bitcoin and cryptocurrency network systems, attitudinal data from the World Values Survey (WVS) and European Values Study (EVS), and a proprietary survey of Bitcoin and cryptocurrency perceptions and usage in 15 countries conducted by Ipsos for the behavioral economics research department at ING Group. I performed principal component analyses (PCA) to reduce factors among collected metrics, and I then integrated the findings of the PCA into a series of ordinary least squares (OLS) regressions along three primary vectors: trust, control, and culture. Based on my empirical findings, I group these new currency system users’ personality perspectives into four categories: Evangelists, Pragmatists, Skeptics, and Speculators. The analysis finds Bitcoin and cryptocurrency perceptions and usage are not correlated with the strictness or laxness of public policies concerning Bitcoin and cryptocurrencies. The analysis also finds Bitcoin interest as measured by Google Search Trends is not correlated to Bitcoin and cryptocurrency perceptions and usage but is correlated to several lower socio-economic metrics related to crime and lack of confidence in law enforcement and government control. There is more favorable perception and usage of Bitcoin and cryptocurrency in countries with less developed socio-economic profiles, and less favorable perceptions and usage in countries with more developed socio-economic profiles. There is more favorable perception and usage of Bitcoin and cryptocurrency in countries with aggregate lower generalized trust and lower democratic tendencies, and less favorable perceptions and usage in countries with aggregate higher generalized trust and higher democratic tendencies. Overall, the findings show the extent to which trends in usage and perception of the emergent currencies of Bitcoin and other cryptocurrencies are associated with basic cultural and attitudinal tendencies that are not necessarily related to public policy or other typical monetary theory-based controls. I conclude that a matrix of trust and control is effective at demonstrating how sociological factors explain the landscape of historical, extant, and emergent currency systems and this matrix predicts where Bitcoin and cryptocurrencies situate in society relative to these other currency systems

Cryptocurrencies in Modern Finance: A Literature Review

The focus on cryptocurrencies in the finance and banking sectors is gaining momentum. In this paper, we investigate the role of cryptocurrencies in modern finance. We apply a narrative literature review method to synthesize prior research and draw insights into the opportunities and challenges of leveraging cryptocurrencies. The results indicate that cryptocurrencies offer businesses and individuals’ lower transaction costs, higher efficiencies, increased security and privacy, meaningful diversification benefits, alternative financing solutions, and financial inclusion.Challenges exist related to the integration of cryptocurrencies in modern finance. These include the lack of regulatory standards, the risk of criminal activity, high energy and environmental costs, regulatory bans and usage restrictions, security and privacy concerns, and the high volatility of cryptocurrencies.The current review is useful for scholars and managers, including those seeking to have a more balanced understanding of these emerging financial instruments.JEL Classification: E42, F30, F65, G21, G23How to Cite:Rejeb, A., Rejeb, K., & Keogh, J. G. (2021). Cryptocurrencies in Modern Finance: a Literature Review. Etikonomi, 20(1), 93 – 118. https://doi.org/10.15408/etk.v20i1.16911

Evaluating prevailing Bitcoin valuation models – how do they work and how do they perform today?

Bitcoin has, since the first coin was mined in 2009, taken the world by storm. Today, millions of people are embracing the digital currency, and is evident that the growth is not going to halt any time soon. The increased adoption of Bitcoin raises the question about the fair value of the asset. What is the best way to fairly value Bitcoin, if it has any fundamental value at all? Numerous valuation models for Bitcoin have been proposed throughout the years. The majority of today's most popular models were presented between 2017 and 2019, and much has transpired since then. In this thesis, we will examine Bitcoin's underlying technology and the opportunities and challenges it brings for the contemporary world. Currently, we are discovering that digital assets and Bitcoin offer a number of opportunities that provide utility and convenience for consumers that utilize the digital asset market. To maintain objectivity, we will also discuss the issues connected with the widespread use of digital assets like Bitcoin. Finally, we will explore whether present techniques of valuing Bitcoin may be regarded as a "fair" manner of valuing Bitcoin. In addition, we will contribute to the existing research on Bitcoin valuation by suggesting improvements in the current valuation methods that we believe holds merit

Evaluating prevailing Bitcoin valuation models – how do they work and how do they perform today?

Bitcoin has, since the first coin was mined in 2009, taken the world by storm. Today, millions of people are embracing the digital currency, and is evident that the growth is not going to halt any time soon. The increased adoption of Bitcoin raises the question about the fair value of the asset. What is the best way to fairly value Bitcoin, if it has any fundamental value at all? Numerous valuation models for Bitcoin have been proposed throughout the years. The majority of today's most popular models were presented between 2017 and 2019, and much has transpired since then. In this thesis, we will examine Bitcoin's underlying technology and the opportunities and challenges it brings for the contemporary world. Currently, we are discovering that digital assets and Bitcoin offer a number of opportunities that provide utility and convenience for consumers that utilize the digital asset market. To maintain objectivity, we will also discuss the issues connected with the widespread use of digital assets like Bitcoin. Finally, we will explore whether present techniques of valuing Bitcoin may be regarded as a "fair" manner of valuing Bitcoin. In addition, we will contribute to the existing research on Bitcoin valuation by suggesting improvements in the current valuation methods that we believe holds merit

Exploring Blockchain Governance

Blockchain systems continue to attract significant interest from both practitioners and researchers. What is more, blockchain systems come in various types, such as cryptocurrencies or as inter-organizational systems in business networks. As an example of a cryptocurrency, Bitcoin, one of the most prominent blockchain systems to date and born at the time of a major financial crisis, spearheaded the promise of relying on code and computation instead of a central governing entity. Proponents would argue that Bitcoin stood the test of time, as Bitcoin continues to operate to date for over a decade. However, these proponents overlook the never-ending, heated debates “behind the scenes” caused by diverging goals of central actors, which led to numerous alternative systems (forks) of Bitcoin. To accommodate these actors’ interests in the pursuit of their common goal is a tightrope act, and this is where this dissertation commences: blockchain governance. Based on the empirical examples of various types and application domains of blockchain systems, it is the goal of this dissertation to 1) uncover governance patterns by showing, how blockchain systems are governed, 2) derive governance challenges faced or caused by blockchain systems, and, consequently, to 3) contribute to a better understanding to what blockchain governance is. This dissertation includes four parts, each of these covering different thematical areas: In the first part, this dissertation focuses on obtaining a better understanding of blockchain governance’s context of reference by studying blockchain systems from various application domains and system types, for example, led by inter-organizational networks, states, or an independent group of actors. The second part, then, focuses on a blockchain as an inter-organizational system called “cardossier”, a project I was involved in, and its governance as a frame of reference. Hereupon, for one, I report on learnings from my project involvement in the form of managerial guidelines, and, for two, I report on structural problems within cardossier, and problems caused by membership growth and how they can be resolved. The third part focuses on a wider study of blockchains as inter-organizational systems, where I summarize findings of an analysis of 19 blockchain consortia. The findings, for one, answer the question of why blockchain consortia adopt blockchain technology, and, for two, show internal and external challenges these systems faced to derive managerial recommendations. The fourth and last part studies blockchain governance’s evolution and contributes an analysis of blockchain’s governance features and its contrast to established modes of governance. These four parts, altogether, have scientific value as they increase our understanding on blockchain governance. Consequently, this dissertation contributes to the body of knowledge on modes of governance, distributed system governance, and blockchain governance in general. I do so, by grounding the concept of blockchain governance in empirical detail, showing how these systems are governed on various application domains and system types, and by studying empirical challenges faced or caused by these systems. This approach is relevant and necessary, as blockchain systems in general, but particularly outside of cryptocurrencies, mostly still are in pursuit of a sustainable blockchain governance. As blockchains can be expected to continue to mature, the upcoming years offer very fruitful ground for empirical research along the empirical insights and theoretical lines shown in this dissertation

Knowledge-mapping of blockchain technology applications for a banking institution

Abstract : Blockchain technology is a relatively new technology which provides many opportunities for knowledge-mapping. Blockchain technology is best described as a decentralised ledger system that stores information about transactions and uses digital currencies such as Bitcoin. The best possible utilisation of a new technology usually depends on how quickly people can develop and apply new knowledge of the technology. Knowledge is a key component to leverage the most useful features of any new technology. Moreover, it is crucial to know how to avoid the pitfalls of a new technology in order to develop solutions. This study’s unit of analysis is knowledge of blockchain technology, that is, the knowledge possessed by people operating in the banking industry. The banking industry is sternly regulated in all jurisdictions and employee know-how is a valuable resource. The recent wide dissemination of blockchain technology, the popularity of cryptocurrencies, and the Initial Coin Offering have contributed to the fact that financial institutions’ management underline the vast potential of blockchain technology in the financial industry. For example, large banks are conducting tests of decentralised asset technology and implementing decentralised ledger systems in business processes. Banks are investing in projects and start-ups that are developing blockchain-based solutions. Therefore, bank employees with know-how and prior experience with blockchain are essential to create blockchain solutions. The objective of this study is to map the existing know-how and identify knowledge gaps of blockchain technology know-how and its possible application in a South African Banking Institution (SABI). This is done through an analysis of knowledge of how the utilisation of blockchain technology changes the existing operations models of financial institutions. The research methodology consists of an inductive knowledge-mapping strategy and mixed-method approach. The quantitative data collection method involved gathering data via an online questionnaire sent to a purposive sample, namely, SABI’s clients, investors, experts, and individuals with the common denominator: Blockchain technology knowledge interest who had attended the Blockchain Africa Conference. The qualitative data collection method was an interview with individuals who had a specific technical knowledge of blockchain technology, with the common denominator: SABI blockchain knowledge group. iv The data analysis was sequential; the quantitative data analysis was followed by qualitative data analysis. The findings identify categories of knowledge that are needed to inform and build new blockchain technology-based operations models. Knowledge gaps were identified in the SABI. Based on the findings, the study conceptualises a knowledge map and develops a theory, namely: If the blockchain knowledge maps of financial institutions integrate knowledge across their Core Banking Application pillars, then the financial services industry will create an Internet of Value-Exchange advantage for everyone on the network. Further study is required in order to test this theory. A key recommendation is to perform knowledge-mapping of the Core Banking Application pillars as the next step of SABI’s knowledge maturity of blockchain technology. In conclusion, knowledge maturity of blockchain technology is essential to create an Internet of Value-Exchange advantage for everyone within the network. The mapping of knowledge provides a measurement of knowledge maturity. Blockchain technology provides many opportunities for knowledge-mapping.M.Phil. (Information Management