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Bitcoin and the Bailout

18 Pages Posted: 15 Nov 2015 Last revised: 24 Jan 2017

William J. Luther

Kenyon College

Alexander William Salter

Texas Tech University - Rawls College of Business

Date Written: January 23, 2017


On March 16, 2013, Cyprus announced that it would accept a bailout that required imposing a one-time levy on bank deposits. It has been argued that, by making traditional deposit accounts seem less secure, the bailout announcement prompted some to consider — or reconsider — using the cryptocurrency bitcoin. Relying on rank data for a subset of apps, existing studies maintain that interest in bitcoin increased following the announcement, especially in countries with troubled banks. We argue that (1) focusing on a subset of apps does not allow one to distinguish a general increase in the demand for bitcoin apps from a substitution between bitcoin apps and (2) changes in rank data are a poor predictor of changes in the number of downloads. In order to address these concerns, we collect rank data for all fifteen bitcoin apps available at the time and use an established technique to estimate an index of downloads for each country considered. We find that, while downloads of bitcoin apps increased following the announcement, the observed effect was not especially pronounced in countries thought to have had troubled banking systems at the time.

Keywords: bitcoin, cryptocurrency, currency competition, medium of exchange, money, payment system

JEL Classification: E40, E42, E49

Suggested Citation

Luther, William J. and Salter, Alexander William, Bitcoin and the Bailout (January 23, 2017). Quarterly Review of Economics and Finance, Forthcoming. Available at SSRN: or

William J. Luther (Contact Author)

Kenyon College ( email )

Gambier, OH 43022
United States


Alexander William Salter

Texas Tech University - Rawls College of Business ( email )

Lubbock, TX 79409
United States


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