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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 (1) network effects; (2) individual learning effects; and (3) 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.

Suggested Citation

  • Daniela Balutel & Christopher Henry & Jorge Vásquez & Marcel Voia, 2021. "Bitcoin Adoption and Beliefs in Canada," Staff Working Papers 21-60, Bank of Canada.
    • Handle: RePEc:bca:bocawp:21-60
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    References listed on IDEAS

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    Cited by:

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    2. Marie-Hélène Felt & Angelika Welte & Katrina Talavera, 2024. "Untapped Potential: Mobile Device Ownership and Mobile Payments in Canada," Staff Working Papers 24-25, Bank of Canada.

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    More about this item

    Keywords

    Digital currencies and fintech; Econometric and statistical methods; Economic models;
    All these keywords.

    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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