Bitcoin: Users’ characteristics, motivations and investment behaviours

Dr Corey Carter, Federation Business School

Supervisors,  Dr Ernesto Valenzuela, Assoc Prof Jerry Courvisanos

In less than a decade, the cryptocurrency known as Bitcoin has gone from a fringe phenomenon to a topic of increasing interest to academia and mainstream investors. However, despite a growing body of research seeking to understand Bitcoin, the pseudonymous, decentralised, and globally-diffused nature of its user base means that the individuals who use it remain poorly understood. In particular, the motivations, risk-appreciation, and investment behaviours of early adopters and innovators are subject to supposition in the absence of adequate data.

This thesis seeks to address this gap in knowledge by employing a multi-stage, mixed methodology approach and a theoretical framework to understand the Bitcoin user base.  Utilising  semantic analysis, a survey of online cryptocurrency communities, and econometric time-series analysis, this thesis addresses the extent and nature of Bitcoin in hedging; how individual users perceive their own motivations, uses, and risks that have driven their  behaviour; and the nature of the relationship between the prices of cryptocurrency and indices of confidence.

Analysis of the data determined that the use of Bitcoin as an instrument of hedging is limited and influenced by political and institutional factors.  Likewise, its motivations, uses, and risks are reflective of the users’ political ideology, with the community and marketplace becoming more sophisticated as they evolve over time.  Additionally, despite several case studies demonstrating risk averse adoption of Bitcoin, there is no relationship between its prices and confidence.

Dr Corey Carter was supported by an Australian Government Research Training Program (RTP) Fee Offset Scholarship through Federation University Australia and by scholarship funds from the Federation Business School.