Report Overview
"Analysis of the Cryptocurrency Adoption Decision: Literature Review" is a scholarly article published by Portland State University researchers in 2019. The paper provides a comprehensive analysis of factors influencing cryptocurrency adoption decisions, covering technical, economic, social and personal factors that drive user acceptance of digital currencies.
Key Insight: Cryptocurrency adoption is influenced by a complex interplay of factors including investment opportunities, anonymity features, transaction speed and costs, technological curiosity, and social influences. The study categorizes these factors into four main groups: Technical, Economic, Social, and Personal factors.
Key Data Points
Key Insights Summary
Investment Opportunity Drives Adoption
Many users are attracted to cryptocurrency primarily as an investment vehicle rather than as an alternative transaction system or currency. The potential for high returns, despite volatility, is a major adoption driver.
Anonymity and Privacy Are Key Factors
The anonymity aspect of cryptocurrencies has attracted consumer attention, though it also poses concerns from legal authorities. Users value the privacy features that traditional banking systems don't offer.
Low Transaction Costs and Fast Transfers
Cryptocurrencies offer significantly lower transaction costs compared to traditional banking systems, along with faster transfer times, especially for international transactions.
Blockchain Technology as Foundation
Blockchain technology serves as the foundational innovation enabling cryptocurrencies. It provides benefits such as reduced transaction costs and elimination of intermediaries.
Social Influence and Global Attention
Subjective norms, peer influence, and global attention significantly impact adoption decisions. Celebrity endorsements and media coverage have accelerated cryptocurrency awareness.
Technological Curiosity Motivates Early Adopters
Many early adopters are driven by technological curiosity and the desire to explore innovative financial technologies, positioning themselves as innovators in this space.
Content Overview
Document Contents
Introduction
Cryptocurrency represents a significant innovation in the financial industry, aiming to offer a currency that is not tied, created, or backed by a government. Utilizing blockchain technology as its financial platform, cryptocurrency adoption has increased dramatically with the market growing from $31B in January 2017 to around $700B in January 2018.
Bitcoin, introduced in 2009 by pseudonymous entity Satoshi Nakamoto, was the first cryptocurrency and remains the market leader. Today, there are more than 1,650 different altcoins in the market. The cryptocurrency adoption differs from country to country due to economic and technological factors, with economically struggling countries showing the highest adoption potential.
Methodology
This research conducted a comprehensive literature review to examine cryptocurrency adoption. The goal was to review existing literature on cryptocurrency adoption, investigate current adoption levels, and classify and analyze factors influencing adoption decisions. Sources included academic references as well as high-quality websites, online news, and blogs.
Literature Review
Cryptocurrency Adoption Level
Adoption and acceptance of cryptocurrency can be measured through market capitalization, estimated number of users, and transaction volume. The cryptocurrency market value peaked at over $800B in late 2017. While exact user numbers are difficult to determine, estimates suggest the number of Blockchain wallet users reached 24 million by Q1 2018, with Coinbase reporting over 13 million active users.
Adoption Factors
The study categorizes adoption factors into four main groups:
Technical Factors
- Control over the System: Decentralized cryptocurrencies offer transparency and eliminate central authority.
- Anonymity: Pseudonymous transactions attract users but also raise regulatory concerns.
- Fast Transfer: Cryptocurrency transfers are nearly instantaneous compared to traditional banking.
- Blockchain Technology: The foundational technology enabling secure, verifiable transactions.
- System Security: While decentralized networks are secure, individual user security remains a concern.
- The Team Behind It: Strong leadership and development teams increase trust and adoption potential.
Economic Factors
- Investment Opportunity: Many view cryptocurrency primarily as an investment vehicle.
- Low Transaction Cost: Significantly lower fees compared to traditional financial systems.
- Alternative Banking System: Provides financial services in regions with unstable economies.
- The Supply Limit: Limited supply of many cryptocurrencies increases perceived value.
- Increased Demand: Growing user base and transaction volumes indicate rising adoption.
- Recognized by Businesses: Major companies accepting cryptocurrency as payment.
- Alternative Payment System: Potential to become a unified global currency.
Social Factors
- Subjective Norms: Influence of family and friends on adoption decisions.
- Global Attention: Increased media coverage and public interest.
- Influencers Involvement: Celebrity and business leader endorsements.
Personal Factors
- Technological Curiosity: Early adopters driven by interest in innovative technology.
- High Level of Control Over One's Money: Users value direct control of their assets.
- Privacy: Enhanced financial privacy compared to traditional systems.
Discussion
Cryptocurrency adoption is increasing, influenced by multiple factors across technical, economic, social, and personal dimensions. While many treat cryptocurrency as an investment vehicle, others adopt it for its innovative technical aspects. The anonymity feature, though attractive to users, raises regulatory concerns due to potential misuse.
Despite growing adoption, challenges remain including regulatory uncertainty, potential for criminal use, technological immaturity, and limited business acceptance beyond Bitcoin. The future of cryptocurrency adoption depends on addressing these challenges while leveraging the benefits that drive current adoption.
Future Directions
This literature review could be extended in multiple directions for future research. Potential approaches include developing a multi-criteria decision model to assess adoption factors, or building a model based on technology acceptance theories (such as UTAUT) and testing factor significance through surveys.
Conclusion
This research investigated cryptocurrency adoption decisions by examining influencing factors and providing in-depth analysis. Adoption levels have increased significantly, with exchange site user numbers providing the most accurate indicator of actual users.
The study categorizes adoption factors into four main groups: Technical, Economic, Social, and Personal. The most influential factors based on literature review are investment opportunity, anonymity, business acceptance as payment method, fast fund transfer, low transaction costs, and technological curiosity.
These findings help researchers, regulators, and cryptocurrency developers better understand consumer intentions toward cryptocurrency adoption, enabling more targeted development and regulation strategies.
References
The complete document contains 61 references from academic and industry sources covering cryptocurrency adoption, blockchain technology, and related financial innovations.
Note: The above is only a summary of the paper content. The complete document contains extensive data, analysis, and detailed references. We recommend downloading the full PDF for in-depth reading.