Who wants cryptocurrency? The effects of expectations and conjectures

Abstract

PurposeThis study aims to investigate the factors that make people want to hold cryptocurrency. Besides prior experience with holding crypto, this paper considers various expectations and conjectures about the future as key determinants.Design/methodology/approachData for this study come from an online survey in the USA. Econometric analyses help to quantify the relative importance of drivers of demand for cryptocurrency.FindingsSurvey respondents will more likely hold cryptocurrency in the future the more they expect cryptocurrency to replace government money, to increase transparency in monetary affairs and to yield high profits. Importantly, demand is shown to be driven by the anticipation that nonmonetary uses of the Blockchain technology will have a spillover effect on the Bitcoin price. By contrast, subjective expectations of a crypto-induced financial crisis dampen demand. Econometric analyses show that differences in the future demand among people with and without prior holdings of cryptocurrency largely stem from differences in their expectations.Originality/valueBy relating individuals’ expectations to their plans, the present approach offers more insights than the mere attitude surveys already available. This paper’s insights on crypto demand drivers indicate that regulators should be wary about signaling safety of an asset whose fundamental value is still uncertain.