![]() 2019), there are, as of yet, no empirical studies exploring determinants of adoption of the infrastructure supporting cryptocurrencies. While recent studies have shed light on determinants of fintech startup activity or fundraising using cryptocurrencies (Fisch 2019 Haddad and Hornuf 2019 Huang et al. Digital infrastructures enable innovation (Henfridsson and Bygstad 2013 Sussan and Acs 2017), anchor open entrepreneurship (Ingram Bogusz and Morisse 2018), allow for fintech platforms to grow (Yermack 2018), and create decentralized work organizations (Tilson et al. Thereby, we seek to offer a novel and broader account for the growth of this type of financial technology.ĭigital entrepreneurial ecosystems have two foundational pillars of digital infrastructure and users (Sussan and Acs 2017) and infrastructure facilitating connectivity, e.g., digital infrastructure, are found to particularly enhance startup activity (Audretsch et al. In this paper, we focus on socio-economic and institutional factors related to potential drivers for interest in cryptocurrency development. The development and spread of technology is in this sense a prerequisite-but not a sufficient factor-for the spread of cryptocurrencies. However, recent studies have emphasized that in order to understand the historical growth and future prospect of fintech innovations, we must also understand the nature of the needs addressed by such innovations (Cohen 2017 Huang et al. The emergence of cryptocurrencies has often been viewed as driven by the opportunity for radical innovation and entrepreneurship in financial solutions as created through the spread of new Internet-based technology (Iyidogan 20). ![]() 2015), there is a scarcity of global empirical studies on drivers of their adoption. While theoretical papers are emerging discussing why cryptocurrencies, or digital currencies in general, may be adopted by individuals or businesses (e.g., Cohen 2017 Dierksmeier and Seele 2018 Dodgson et al. In short, cryptocurrencies are being adopted rapidly and broadly. Footnote 2 Bitcoin transactions and unique accounts alone have grown at nearly 60% per annum over the past 5 years. ![]() Footnote 1 The average daily trading of cryptocurrencies has surpassed 1% of trading in foreign exchange markets, the world’s largest market by trading volume. As of November 2019, bitcoin is the world’s sixth largest currency in circulation. To put that in perspective, there is $1.7 trillion USD and $1.4 trillion Euros in circulation today (European Central Bank 2019 U.S. A decade on since their dawn with the invention of Bitcoin, the value of all cryptocurrencies reached $0.25 trillion. ![]() Finally, we find support for the view that bitcoin adoption is also partly driven by cryptocurrencies’ usefulness in engaging in illicit trade.Ĭryptocurrencies are proliferating. On the other hand, our findings also suggest that active support for Bitcoin is higher in locations with well-developed banking services. We offer some support for the view that the adoption of cryptocurrency infrastructure is driven by perceived failings of traditional financial systems, in that the spread of Bitcoin infrastructure is associated with low trust in banks and the financial system among inhabitants of a region, and with the occurrence of country-level inflation crises. Specifically, we investigate the role of legal, criminal, financial, and social determinants of the adoption of Bitcoin infrastructure. We explore the worldwide spread of infrastructure necessary to maintain and grow Bitcoin as a system (Bitcoin nodes) and infrastructure enabling the use of bitcoins for everyday economic transactions (Bitcoin merchants). A vast digital ecosystem of entrepreneurship and exchange has sprung up with Bitcoin’s digital infrastructure at its core.
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