Limitations of Imitation: Lessons from another Bitcoin Copycat

40 Pages Posted: 9 Dec 2019 Last revised: 2 Nov 2020

See all articles by Daniel Cahill

Daniel Cahill

University of Western Australia

Zhangxin Frank Liu

The University of Western Australia Business School

Date Written: October 30, 2020

Abstract

We find strong evidence that imitation to the leader in an uncertain environment provides short-term early success without enhancing long-term survival. Using a unique setting in cryptocurrencies where Bitcoin has been the centre focus, we define copycats as cryptocurrencies that have a name similar to Bitcoin. Our results show copycats earn higher returns in the first four weeks of trading but have a lower survival rate comparing to non-copycats and are robust to an alternative definition of copycat and an instrumental variable. Our results highlight that in an age of information, coupled with an uncertain market created by a novel technology, the name of an organization may be a strong signal to investors when other signals are unclear.

Keywords: Copycats, Imitation, Isomorphism, Blockchain

JEL Classification: G10, G40, L10, L20

Suggested Citation

Cahill, Daniel and Liu, Zhangxin (Frank), Limitations of Imitation: Lessons from another Bitcoin Copycat (October 30, 2020). Available at SSRN: https://ssrn.com/abstract=3491600 or http://dx.doi.org/10.2139/ssrn.3491600

Daniel Cahill

University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia

Zhangxin (Frank) Liu (Contact Author)

The University of Western Australia Business School ( email )

School of Business
35 Stirling Highway
Crawley, Western Australia 6009
Australia

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