Global Drivers of Cryptocurrency Infrastructure Adoption
Forthcoming in Small Business Economics
54 Pages Posted: 14 Jan 2019 Last revised: 27 Feb 2021
Date Written: April 15, 2019
A vast digital eco-system of entrepreneurship and exchange has sprung up with Bitcoin’s digital infrastructure at its core. 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). Specifically, we investigate the role of legal, criminal, financial and social determinants of the adoption of Bitcoin infrastructure. 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. On the other hand, our findings also suggest that active support for Bitcoin is higher in locations with well-developed banking services. Finally, we find support for the view that bitcoin adoption is also partly driven by cryptocurrencies’ usefulness in engaging in illicit trade.
Keywords: Bitcoin Network; Digital Currencies; Cryptocurrencies; Financial Technology (FinTech); Bitcoin Nodes, Bitcoin Merchants
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