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Bitcoin adoption and beliefs in Canada

Author

Listed:
  • Daniela Balutel
  • Christopher Henry
  • Jorge Vásquez
  • Marcel Voia

Abstract

We develop a tractable model of Bitcoin adoption with network effects and social learning, which we then connect to unique data from the Bank of Canada's Bitcoin Omnibus Survey for the years 2017 and 2018. The model determines how the probability of Bitcoin adoption depends on: (i) network effects, (ii) individual learning effects and (iii) social learning effects. After accounting for the endogeneity of beliefs, we find that both network effects and individual learning effects have a positive and significant direct impact on Bitcoin adoption, whereas the role of social learning is to ameliorate the marginal effect of the network size on the likelihood of adoption. In particular, in 2017 and 2018, a one percentage point increase in the network size increased the probability of adoption by 0.45 and 0.32 percentage points, respectively. Similarly, a one percentage point increase in Bitcoin beliefs increased the probability of adoption by 0.43 and 0.72 percentage points. Our results suggest that network effects, individual learning and social learning were important drivers of Bitcoin adoption in 2017 and 2018 in Canada. Adoption du bitcoin et croyances au Canada. Nous élaborons un modèle souple d'adoption du bitcoin avec effets de réseau et apprentissage social, que nous lions ensuite aux données uniques de l'enquête‐omnibus sur le bitcoin réalisée par la Banque du Canada pour les années 2017 et 2018. Le modèle détermine la mesure dans laquelle la probabilité d'adoption du bitcoin dépend 1) des effets de réseau; 2) des effets de l'apprentissage individuel; et 3) des effets de l'apprentissage social. En tenant compte de l'endogénéité des croyances, nous constatons que les effets de réseau et les effets de l'apprentissage individuel ont une incidence directe, positive et significative sur l'adoption du bitcoin, tandis que le rôle de l'apprentissage social consiste à améliorer considérablement l'effet marginal de la taille du réseau sur les chances d'adoption du bitcoin. Plus particulièrement, en 2017 et 2018, une augmentation d'un point de pourcentage de la taille du réseau augmentait la probabilité d'adoption de 0,45 et 0,32 point de pourcentage, respectivement. De même, une augmentation d'un point de pourcentage dans les croyances au bitcoin augmentait la probabilité d'adoption de 0,43 et 0,72 point de pourcentage. Nos résultats laissent croire que les effets de réseau, l'apprentissage individuel et l'apprentissage social ont été d'importants facteurs de l'adoption du bitcoin au Canada en 2017 et 2018.

Suggested Citation

  • Daniela Balutel & Christopher Henry & Jorge Vásquez & Marcel Voia, 2022. "Bitcoin adoption and beliefs in Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(4), pages 1729-1761, November.
    • Handle: RePEc:wly:canjec:v:55:y:2022:i:4:p:1729-1761
    DOI: 10.1111/caje.12620
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    1. Heng Chen & Walter Engert & Kim Huynh & Daneal O’Habib & Joy Wu & Julia Zhu, 2022. "Cash and COVID-19: What happened in 2021," Discussion Papers 2022-8, Bank of Canada.

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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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