Christopher S. Henry, Kim P. Huynh, Gradon Nicholls, Mitchell Nicholson
The Bank of Canada continues to use the Bitcoin Omnibus Survey (BTCOS) to monitor trends in Canadians’ awareness, ownership and use of Bitcoin. The most recent iteration was conducted in late 2018, following an 85 percent decline in the price of Bitcoin throughout the year.
Quốc Trung Phạm, Hiep Hai Phan, Matteo Cristofaro, Sanjay Misra · 5 authors
Among investors of cryptocurrencies there are supporters and detractors; this claims for the identification of the behavioral and socio-demographic factors that push to invest (or not) in cryptocurrencies. A survey has been administered to 275 Italian investors. Together with socio-demographic features (gender, income, age, and education), behavioral factors derived from the theory of planned behavior (attitude, subjective norm, and perceived control behavior) and from the financial behavior literature (illegal attitude, herding behavior, perceived risk, perceived benefit, and financial literacy) have been collected and analyzed. While attitude, illegal attitude, subjective norms, perceived behavioral control, herding behavior, and perceived risk have a positive impact on investors' intentions. Socio-demographic factors and financial literacy have no influence on the intention to invest in cryptocurrencies. This is the first study that comprehensively investigates the influence of behavioral and socio-demographic factors on the intention of investors to invest in cryptocurrencies.
Purpose The purpose of this study was to investigate how financial literacy and investment experience impact cryptocurrency investment behavior and explore which factor is more influential in cryptocurrency investment. Design/methodology/approach Using a sample of US individual investors from the 2018 National Financial Capability Study Investor Survey, a three-step hierarchical logistic regression was conducted following a model-comparison approach. In addition, a mediation analysis was conducted using the Karlson−Holm−Breen (KHB) method to further explore the mediating effect of investment experience between financial literacy and cryptocurrency investment. Findings This study found that while both financial literacy and investment experience were positively associated with investing in cryptocurrencies, investment experience was more influential in cryptocurrency investment. The findings also demonstrated that investment experience, especially risky asset holding, had a significant mediating effect between subjective financial knowledge and cryptocurrency investment behavior. Practical implications The findings of this study offer insight to researchers by providing a deeper understanding of the determinants of cryptocurrency investment in the United States. This study also provides detailed implications for financial institutions, financial professionals and policymakers to guide rational cryptocurrency investment behavior. Originality/value This study is one of the initial attempts to explore the determinant factors in cryptocurrency investment, an area that has rarely been studied in the literature.
This study investigates whether cryptocurrencies can be considered a viable addition to pension funds. Using the regulatory setting of Switzerland, it is assessed whether adding crypto-components to a standard pension fund portfolio has positive effects on the fund’s risk and return figures. The empirical data supports the notion that cryptocurrency components may well increase the yield of a pension fund portfolio, yet this enhancement of yield comes at slightly higher risk levels. This increase in risk can be mitigated by adding an actively managed crypto-component to the portfolio rather than a passive investment product. The paper contributes to the ongoing debate in the area of financial innovations on the purpose and solidity of cryptocurrencies as an asset class.
The four essays contained herein this study focus on recently emerged questions in the field of Financial Technology (FinTech). This new finance domain has a growing importance in the finance discipline, policy, and practice. The FinTech is the common theme, while the thesis is organised to investigate the open questions separately in the essays. The first essay assesses the required human capital in FinTech. Recent technological developments have enabled a wide array of new applications in financial markets, e.g. big data, cloud computing, artificial intelligence, blockchain, cryptocurrencies, peer-to-peer lending, crowdfunding, and robo-advising, inter alia. While traditionally comprising of computer programs and other technology used to support or enable banking and financial services, the new FinTech is often seen as enabling transformation of the financial industry. A more moderate and critical view suggests that for the full transformative potential of FinTech to be enabled, there is a need for an updated educational curriculum that balances knowledge and understanding of finance and technology. A curriculum that provides a skill portfolio in these two core components and complements them with applied knowledge. This essay also makes an inquiry into the educational curriculum in finance and technology, aiming to inform this modern educational agenda, and into the skills shortages, as identified by firms and experts with examining some of the first educational programmes in FinTech. The second essay investigates the relationship between financial literacy and attitudes to cryptocurrencies, using microdata from 15 countries. The financial literacy proxy exerts a large negative effect on the probability of currently owning cryptocurrencies. The financially literate are also more likely to be aware of cryptocurrencies, and less to own them due to their price volatility. In addition, data from a second survey of retail investors in three Asian countries is used to externally validify the financial literacy proxy and findings. I show that the relationship between financial literacy and attitudes to cryptocurrencies is moderated by a different perception of the financial risk involved in cryptocurrencies versus traditional investments by the more financially literate. The findings shed light on the demand for cryptocurrencies among the general population and suggest has been largely driven by unsophisticated investors. The third and fourth essays are closer in their empirical investigation of asset price timeseries data. In the third essay, I assess the bitcoin futures introduction into the retail investor driven marketplace. Bitcoin futures were introduced in December 2017 as an effort to provide institutional and retail investors with additional trading tools for bitcoin. This study analyses the bitcoin Futures mid-quote data from CBOE, and Bitcoin market index applying VAR and VECM process methodologies, Hasbrouck’s information share and the Gonzalo-Granger component share measurement to examine price discovery in bitcoin markets. The results drawn on the intra-day prices show that the futures are leading the price discovery at different frequencies even with comparably low futures trading volumes. The empirical results support the extant literature of futures-spot market price discovery and the role of informed traders in the futures market. Finally, the fourth essay attempts to evidence the network externalities on digital assets using exchange-listed Initial Coin Offerings (ICOs) data. Utilising an online database comprising of self-reported ICO characteristics, measures of post-ICO performance, along with information on business social networks, higher fundraising figures are found to contribute positively to the ICO long-term success. This positive impact is multiplied by six times when fundraising is conducted to an existing, proprietary blockchain. This large impact is explained by the network effect. The modified information ratio measure is introduced to approximate the comparative quality signalling of ICO organisations using price timeseries and benchmarking these to already functioning blockchain technology, e.g. ethereum in the long-term. The ICO sample’s mean trading period on an exchange is 1.5 years and is used for long-period asset analysis. Additionally, the cointegration to the market technology benchmark is found to have a large, significant negative effect on long-term ICO organisational success as this indicates lower ICO intrinsic value. The final concluding chapter summarises the thesis contribution, implications and a selection of future research avenues relating to FinTech research sub-field.
Cryptocurrency has been increasingly popular with investors. Using the 2018 National Financial Capability Study Investor survey, we examined the association between investment literacy and cryptocurrency investment—about 13% of investors invested in cryptocurrency directly or indirectly. Results from regression analyses show that objective investment literacy was negatively while sub- jective literacy was positively associated with holding cryptocurrency. Overconfident investors were more likely to invest in cryptocurrency, and results were robust across three overconfidence meas- ures. This study has implications for investment advice, financial education, and research.
Cardano was launched in October 2017 and by May 2021 has been operational for 44 months. Comparison with its closest rival, Ethereum, reveals that their prices are highly correlated but the change in daily closing prices do not always move in unison. Cardano is also more volatile than Ethereum and In terms of growth Cardano is lagging behind. Cardano’s only saving grace is its transaction fees, which are considerably lower than Ethereum. However, care must be taken in understanding the structure of any data source. In this case three data sources are used and results vary depending on the precision of the price data, particularly Cardano which for a number of years did not trade above one dollar.
Atte Oksanen, Eerik Mantere, Ilkka Vuorinen, Iina Savolainen
OBJECTIVES: Online platforms enable real-time trading activities that are similar to those of gambling. This study aimed to investigate the associations of traditional investing, real-time stock trading, and cryptocurrency trading with excessive behavior and mental health problems. STUDY DESIGN: This was a cross-sectional population-based survey. METHODS: The participants were Finnish people aged 18-75 years (N = 1530, 50.33% male). Survey asked about monthly regular investing, real-time stock-trading platform use, and cryptocurrency trading. The study had measures for excessive behavior: gambling (Problem Gambling Severity Index), gaming (Internet Gaming Disorder Test), internet use (Compulsive Internet Use Scale), and alcohol use (Alcohol Use Disorders Identification Test). Psychological distress (Mental Health Inventory), perceived stress (Perceived Stress Scale), COVID-19 anxiety, and perceived loneliness were also measured. Background factors included sociodemographic variables, instant loan taking, and involvement in social media identity bubbles (Identity Bubble Reinforcement Scale). Multivariate analyses were conducted with regression analysis. RESULTS: Within the sample, 22.29% were categorized into monthly regular investors only, 3.01% were investors using real-time stock-trading platforms, and 3.59% were cryptomarket traders. Real-time stock-trading platform use and cryptocurrency trading were associated with younger age and male gender. Cryptomarket traders were more likely to have an immigrant background and have taken instant loans. Both real-time stock-trading platform use and cryptomarket trading were associated with higher excessive behavior. Cryptomarket traders especially reported higher excessive gambling, gaming, and internet use than others. Cryptomarket traders reported also higher psychological distress, perceived stress, and loneliness. CONCLUSIONS: Regular investing is not a risk factor for excessive behavior. However, rapid online trading platforms and applications were significantly more commonly used by participants reporting excessive behavior and mental health problems. The strong association between cryptomarket trading and excessive behavior in particular underlines the need to acknowledge the potential risks related to real-time trading platforms.
Kim P. Huynh, Christopher S. Henry, Gradon Nicholls, Mitchell Nicholson
The Bank of Canada commissioned the Bitcoin Omnibus Survey in 2016 to monitor trends in the adoption and use of Bitcoin and other cryptoassets. This report presents findings from the latest iteration of the survey, which was conducted in 2018. We find that between 2016 and 2018 the share of Canadians who were aware of Bitcoin increased from 62 percent to 89 percent and those that owned Bitcoin increased from 3 percent to 5 percent. However, the share of past owners also increased, suggesting an influx of Bitcoin owners who subsequently divested after the steep rise of prices in 2017. The main reason for owning Bitcoin remains speculation, though this share decreased slightly since 2017. On the other hand, the share of Canadians who reported using Bitcoin for transactions a few times a month or more increased. Finally, we discuss how Bitcoin adopters differ from overall Canadians with respect to their financial literacy and cash holdings.
The emergence of digital financial technology, such as blockchain, cryptocurrencies, and decentralized finance (DeFi) has created new opportunities in the field of financial inclusion, although gender differences are still very strong. The research paper examines the acceptance and effects of Web3 financial tools on the economic empowerment of women, the access and use as well as the financial literacy levels of women in the developed and emerging economies. The research design is a mixed-method study that will involve quantitative data based on blockchain transaction data, the use of digital wallets, and financial inclusion indicators, and qualitative data collection based on structured interviews and focus groups with female users and fintech providers. The results show that there are also a great difference in the adoption: women in technologically developed areas are better equipped with access, financial literacy, and institutional support, and women in resource-deprived regions have challenges with limited internet connectivity, lack of digital literacy, and socio-cultural constraints. In spite of such difficulties, Web3 technologies can contribute to making women more financially independent through facilitating inexpensive and safe transactions, decentralized savings, and having access to alternative credit structures. In addition to this, the user interaction also indicates subtle preferences: digitally literate users prefer convenience, transparency, and privacy, whereas the less digitally equipped ones focus on trust, education, and community support. Strategic interventions presented in the paper, such as female-sensitive policy models, specific financial literacy interventions, and onboarding strategies driven by communities, are also suggested to facilitate fair involvement in the Web3 ecosystem. Through the identification of both prospects and obstacles to digital finance that is inclusive of gender, this paper illustrates that Web3 can be used as an empowering opportunity in the economy and financial sustainability. The findings can be added to the increasing body of research on digital finance and presented as evidence-based policies to help policymakers, fintech developers, and advocacy organizations to enhance the gender gap in digital financial technology adoption.
In this note I show that quadratic funding achieves decentralized social efficiency in the extent there are enough (donor) matching funds to cover the quadratic funding objective. If individual backers internalize that matching funds will not be sufficient to reach the quadratic level, allocation will be biased towards the capitalist allocation, the more so, the less matching funds are available. This result emerges even when individual contributors are not required to finance the deficit (i.e., the difference between total contributions and available matching funds). I also show properties of the level of required matching fund, in order to better understand under which conditions social efficiency will most likely be compromised.
The purpose of this study is to reveal whether cryptocurrency and non-cryptocurrency investors are different in terms of financial threats. In order to measure financial threat, 5-Item Financial Threat Scale (FTS) is used. It is found that the Turkish version of a 5-Item Financial Threat Scale (FTS) is highly reliable, unidimensional and a valid instrument for measuring the financial threat. According to the analysis, non-cryptocurrency investors have a more significant financial threat than cryptocurrency investors. Moreover, it is investigated that the working sector difference is not a distinguishing factor for financial threat. It is found that financial threat is associated with age, level of education, and monthly income. On the other hand, it is obtained that gender and marital status are not affecting factors for financial threat.
Abstract Over the past decade, technological innovations have changed the dynamics of the financial system. As a result, firms have used cellular phones, the Internet, and digital currencies to facilitate exchanges and operate their businesses. This course of action affects the transmission mechanism of monetary policy. The goal of the present study is to examine the role that fintech plays in the transmission mechanism of monetary policy. First, we analyse the income velocity and the money multiplier during pre‐fintech and post‐fintech periods. The results confirm that there is no change in income velocity and the money multiplier during these periods. Second, we develop the money demand function to examine the effect of monetary policy and demonstrate that low monetary policy rates lead to an increase in money demand. When we introduce fintech components to examine their impact on money demand, we find that mobile and Internet technologies and all digital currencies considered in this study are robust predictors of money demand. Third, we analyse the product market equation and report that after the initiation of fintech, monetary policy has a significant effect. To examine the cost function, we incorporate fintech components and identify that cellular phones, Internet technology, Litecoin, and Ethereum are the determinants of the output gap. Finally, we examine the drivers of fintech and determine that the real interest rate, GDP, inflation, the financial development index, and stock market indices are significant determinants of fintech.
This paper aims to propose some behavioural biases of trading in Bitcoin. It is review literature in the areas of behavioural finance that address issues related to Bitcoin to underpin the conceptual model. A conceptual model for understanding the behavioural bias that affects investing in cryptocurrency is proposed. The biases are herding, optimism, overconfidence, confirmation bias, loss aversion, and gamblers’ fallacy. This paper ought to fill the research gap on cryptocurrency from the behavioral perspective. This paper implies that prices and Bitcoin transactions are more determined by psychological factors.
The 2017 were remarkable times for Bitcoin and other cryptocurrencies.In January 2017, the market price for one unit of Bitcoin (1 BTC)' was approximately $1,000; by December 2017, it had climbed to almost $20,000.2Despite the collapse of this speculative bubble, Bitcoin remains an important development in economics, finance, technology, and law.Also in 2017, Bitcoin produced an offshoot cryptocurrency, Bitcoin Cash.Bitcoin Cash arose because members of the Bitcoin community disagreed on how Bitcoin should change in response to its growing popularity and allow for a greater number of transactions. 3 Bitcoin and other cryptocurrencies are governed by "communities" and "consensus.' Community members who wanted deeper, more structural, changes effectively departed the Bitcoin community and created a new one, Bitcoin Cash.The dissidents did not create Bitcoin Cash from scratch.Instead, they cloned Bitcoin as it existed on August 1, 2017 and grafted their desired changes onto the cloned system.sSince Bitcoin is not backed by any external assets or business enterprise, 6 the dissidents could create Bitcoin Cash seemingly out of thin air, writing some computer code and garnering support of users.There was no severance, spin off, or other division of the Bitcoin system in a formal or legal sense.Since its creation, Bitcoin Cash has become a successful cryptocurrency, currently ranking sixth in terms of market ' See infra Part III.B.
Georgios A. Panos, Tatja Kärkkäinen, Adèle Atkinson
We examine the relationship between financial literacy and attitudes to cryptocurrencies, using microdata from 15 countries. Our financial literacy proxy exerts a large negative effect on the probability of currently owning cryptocurrencies. The financially literate are also more likely to be aware of cryptocurrencies, and more likely to report that they do not intend to own them. We confirm the external validity of our financial literacy proxy and findings using data from a second novel survey of retail investors in 3 Asian countries. More financially literate retail investors are more likely not to have held any cryptocurrencies. We show that the relationship between financial literacy and attitudes to cryptocurrencies is moderated by a different perception of the financial risk involved in cryptocurrencies versus alternative instruments by the more financially literate. Our findings shed light on the demand for cryptocurrencies among the general population and suggest that it is largely driven by unsophisticated users.
Long Finance's Distributed Futures research programme is pleased to announce the publication of the report, “Smart Ledgers & Collective Defined Contribution Pensions”
Veterans of the UK pensions scene often describe a former world in which pensions were organised on a best efforts basis. They tend to lament its passing and view the current situation, in which pensions promises are either hard and immutable, as is the case with UK defined benefit (DB) schemes, or non-existent, as is the case with defined contribution (DC) schemes, unfavourably. However, in recent years, there has been an aspiration to allow greater flexibility and innovation in pension provision, than is allowed by these two extremes.
The report focuses on collective defined contribution (CDC) pensions, a new integrated system of accumulation and decumulation, which brings with it some new technological challenges. There is a need for an integrated administration and management system. Some aspects of a CDC scheme are rooted in practices arising in the DB world and some in DC, but there are also some which are entirely new, such as risk-sharing among members.
The use of smart ledger technology is a natural solution to many of the challenges a CDC structure poses for pensions governance and administration. First, smart ledgers, ensure the accuracy and immutability of previous records including the assumptions and decisions of trustees. Consequently, there is transparency as to the decision process, which is not something that currently exists in pensions. Second, the multi-period accruals of assets, contributions, and the entitlements of scheme members, as well as the payment of pensions are all linked in chains over time. This technology therefore affords transparency for members; they may view both the capital value and the pension income equivalent of this in near real-time, as well as its historic evolution.
As Michael Parsons, Chairman of Cardano Foundation, wrote in his Foreword “There couldn’t be a more pertinent publication for Distributed Futures than one on pensions. Why? Because pensions require long-term, complex administration against a set of rules with good governance. Think immutable ledgers, smart code, and well-thought-out long-term governance, i.e. smart ledgers.“
The invention of Bitcoin in 2008/2009 gave consumers and businesses the possibility to transfer money nationally and internationally on a truly peer-to-peer basis (i.e. without a trusted central party such as a bank). Few people realised the full potential of the technology in the early days, but today blockchains are often referred to as the “internet of trust”. This term relates to the universal potential of blockchain technology, which goes beyond payment systems and enables people that do not trust each other to directly exchange (digitally representable) goods and services with each other. Today’s variety of blockchain technologies, including many crypto currencies, is impressive. Start-ups and IT incumbents are constantly reducing the speed, cost and effort it requires to transfer crypto currencies globally, while also increasing transaction capacity and offering services that go beyond payments. This discussion paper characterises the 10 biggest crypto currencies in terms of market capitalisation and explains the functioning principles of their underlying technologies. These variants of the technology are also essential for non-financial applications. A focus of this paper is the potential of blockchain technologies to improve (international) payments and land registries. Bitcoin-enabled payments were the first application of blockchain technology, and frictionless (international) payments are an essential part of financial inclusion. In contrast, improving land registries is a more innovative use of the technology, but the connection to financial inclusion is not straightforward. However, land registries may indeed play an important role in fostering access to credit for financially underserved people. Almost any technology comes with new risks, and blockchains are no exception to this rule. Although blockchains can provide a very high level of safety and immutability, it depends on the concrete design of the implementation whether this potential is realised. In addition, some blockchain technologies are very energy-intensive, which is an environmental risk. Finally, the high levels of volatility of most crypto currencies represent an economic risk for their users. National and international regulators are challenged by the rapid evolvement of the technology and should aim to mitigate its risks without compromising its potential.
The accounting profession has long occupied a role and fiduciary responsibility aligned with fraud prevention and safeguarding consumer data and finances. As cryptocurrencies become more prominent and widespread, including utilization by both individual consumers and organizations, the risk of unethical actors entering the market continues to rise. This research approaches the situation from two angles. First, a review of cryptocurrency and blockchain technology, including an overview of the initial coin offering (ICO) process is conducted, including regulatory updates in the space. Second, and important for both academic and practitioner end users of this research, a checklist, guide, and items to consider to assist in preventing fraud connected to cryptocurrencies will be provided.
In 2008, following the outbreak of the global financial crisis, a new trading system emerged that was made possible by cryptographically-produced currencies. Among them, the most popular digital cryp-tocurrency is undoubtedly the Bitcoin. This alternative way of trading quickly captured the interest of both businesses and consumers. Combined with a general lack of confidence towards financial institu-tions, central governments, and the effect of capital controls imposed across several countries, Bitcoins begun being used extensively for funds transfer across borders and general payments. How-ever, it is unclear whether the use of Bitcoins is extensive enough so as to lead to complete or partial disintermediation of monetary transactions, and whether users understand how the technology works and what are the inherit risks of this alternative payment mechanism. This paper addresses these ques-tions through a survey-based study, conducted within the Greek context, where capital controls are still active and awareness regarding cryptocurrencies seems to be on the rise. Our findings show that despite that end-users of Bitcoin are somewhat concerned with regards to security issues, they are nevertheless interested in its use for identifying new business opportunities and bypassing residency-based measures, such as capital controls.