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Price Fluctuations and the Use of Bitcoin: An Empirical Inquiry

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journal contribution
posted on 22.05.2015, 12:25 by M. Polasik, A. Piotrowska, Tomasz Piotr Wisniewski, R. Kotkowski, Geoffrey Lightfoot
Over recent years, interest has been growing in Bitcoin, an innovation which has the potential to play an important role in e-commerce and beyond. The aim of our paper is to provide a comprehensive empirical study of the payment and investment features of Bitcoin and their implications for the conduct of e-commerce. Since network externality theory suggests that the value of a network and its take-up are interlinked, we investigate both adoption and price formation. We discover that Bitcoin returns are driven primarily by its popularity, the sentiment expressed in newspaper reports on the cryptocurrency, and total number of transactions. The paper also reports on the first global survey of merchants who have adopted this technology and model the share of sales paid for with this alternative currency, using both ordinary and Tobit regressions. Our analysis examines how country, customer and company-specific characteristics interact with the proportion of sales attributed to Bitcoin. We find that company features, use of other payment methods, customers’ knowledge about Bitcoin, as well as the size of both the official and unofficial economy are significant determinants. The results will be of interest to traders who seek to understand factors driving the price and will help to inform vendors as to which are the most favorable circumstances for the adoption of the currency for online transactions.

History

Citation

International Journal of Electronic Commerce, 2015, 20(1), 9-49

Author affiliation

/Organisation/COLLEGE OF SOCIAL SCIENCE/School of Management

Version

AM (Accepted Manuscript)

Published in

International Journal of Electronic Commerce

Publisher

Taylor & Francis (Routledge), formerly ME Sharpe

issn

1086-4415

Copyright date

2015

Available date

03/03/2017

Publisher version

http://www.tandfonline.com/doi/abs/10.1080/10864415.2016.1061413

Notes

The file associated with this record is under embargo until 18 months after publication, in accordance with the publisher's self-archiving policy. The full text may be available through the publisher links provided above.

Language

en