Document Type
White Paper
Publication Date
11-2022
Publication Title
Canadian Journal of Economics / Revue canadienne d'économique
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.
Keywords
digital currencies, fintech, economic models, economic methods, statistical methods
Volume
55
Issue
4
First Page
1729
Last Page
1761
DOI
10.1111/caje.12620
Rights
©2021 Bank of Canada
Recommended Citation
Balutel, Daniela; Henry, Christopher; Vásquez, Jorge; and Voia, Marcel, "Bitcoin Adoption and Beliefs in Canada" (2022). Economics: Faculty Publications, Smith College, Northampton, MA.
https://scholarworks.smith.edu/eco_facpubs/78
Comments
The open access working paper version, published by Bank of Canada in 2021, is archived in this repository. Click this link to see the published work .