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Factors Impacting Cryptocurrencies’ Adoption Research Paper

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Updated: Jun 13th, 2021

Today we live in a digitalized society that significantly depends on the functioning of different technologies and their further integration in various processes. The high speed of the world’s transformation under the impact of innovations was increased by the emergence of the Internet, and it is becoming a potent tool in managing various activities. The creation of the worldwide net facilitated the development of ways of cooperation between individuals, organizations, and companies to achieve better results. It also preconditioned a need for a specific currency that could be used in various online deals. Under these conditions, the crypto currency (CC), as one of the potent payment options of the modern world, emerged.

Background

CC can be determined as a digital asset that serves as one of the payment instruments in financial operations performed via the Internet. One of its main features is the use of strong cryptography to protect all transactions and control the process (Kethineni & Cao, 2019). The first decentralized cryptocurrency was introduced in 2009 and was called Bitcoin, which served as the turning point in the history of this tool. Today, the topicality of the given issue remains high; however, there are both people who adopt and do not adopt CC for various reasons. For this reason, the given paper presents a literature review focused on the investigation of barriers and facilitators to the further spread of cryptocurrency, and it’s becoming a popular payment instrument.

Literature Review

First of all, delving into the issue, it is essential to outline the tendency towards the further rise in popularity levels of cryptocurrency such as bitcoins, Ethereum, and Monero. Kethineni and Cao (2019) explain this growing interest in innovative means of payment by the overall digitalization of the society and the increased convenience of deals or agreements that can be made using this very tool. From this perspective, it serves as the main factor for the adoption of CCs and their further use in everyday life. However, there are also some fears that can slow down the speed of the development of this technology, and it’s becoming the dominant option.

The criminal activity associated with bitcoins is one of the most significant fears and barriers preventing people from using them (Kethineni & Cao, 2019). A big percentage of users state that they are afraid of being cheated while using CC or engaging in financial operations presupposing its exchange (Kethineni & Cao, 2019). Additionally, Brown (2016) assumes that the image of this tool is now being corrupted by the fact that it becomes the currency of criminals who prefer to use bitcoins for drug dealing or other illegal activities. Realizing this fact, people acquire some fears related to the further use of CC and their promotion.

The existence of security concerns is also evidenced by Ducas & Wilner (2017), who state that is used outside the formal financial sphere, cryptocurrency becomes vulnerable to various schemes that can be used by malefactors who try to use the growing popularity of bitcoins to generate benefit. In many cases, simple users become cheated, and the level of trust in the innovational payment method decreases significantly, which prevents it from further rise. It becomes one of the barriers limiting the number of trading options and deteriorating the image of bitcoins.

Among factors stimulating the further adoption of CC and its use in transactions, many researchers admit the increased convenience which results from the digitalized character of society. For instance, McKay and Peters (2018) introduce the idea that bitcoin can be used to pay for the majority of services or goods if a person has a clear understanding of how it works and what devices can be used to make the transaction.

The tendency towards increased comfort becomes one of the major facilitators of the further adoption of cryptocurrencies and the rise of their popularity. Continuing cogitations about the given issue, Vidan and Lehdonvirta (2019) emphasize the fact that CC can also benefit people who correctly realize the mechanisms of its functioning and are ready to engage in operations associated with CC’s trading or exchange. In this regard, there is a limitless number of opportunities to improve the current financial state by using bitcoin, Monero, or Ethereum to participate in transactions and guarantee a stable revenue. The past peaks of the price for bitcoin evidence the fact that there are multiple chances to generate high income.

The level of knowledge related to the issue can also be considered one of the factors impacting individuals’ readiness to adapt to CC and use it in financial operations. It can serve both as the facilitator of the further spread of this payment method and as a significant barrier slowing down the speed of its integration with society. Acknowledging the fact that tools such as bitcoin have become an integral part of the modern business world, Hayes (2019) is still sure that the vast majority of users do not understand principles that regulate its functioning and how it can have a certain value.

For this reason, this gap in knowledge still prevents persons from using CC in their activities and decreases the level of trust in it. On the contrary, the correct understanding of how the innovative payment method functions and what opportunities are associated with its further development contribute to the emergence of the stable interest to CC and its use in financial operations, which serves as the main facilitator of its adoption and rise (Elliott, 2018). The critical differences in knowledge observed today also evidence the necessity of simplification of processes that are associated with this sort of transaction.

Among possible barriers for the further adoption of CC and its widespread, specialists also outline price fluctuation. For a majority of users, it can become a serious challenge as having invested a particular amount of money; they can obtain a much lower amount back (Trekk, 2018). For this reason, there are many fears associated with the significant differences in price at different periods of time. Statistics show that among individuals who have the experience of using CC, there is a high percentage of dissatisfied persons who failed to generate income because of this very aspect (Nallapati, 2018). In such a way, there is a critical need for additional stability to ensure that barriers for the further introduction and use of bitcoins and other cryptocurrencies will be eliminated. Only under these conditions, some success can be achieved.

Nevertheless, the rise of technologies preconditioned drastic changes in the structure of society and the accessibility of cryptocurrencies for broad populations. This factor becomes one of the main facilitators of the further adoption of CC by people regardless of their social status, occupation, and available finances (Kuznetsov, 2018). The existence of the ability to buy a bitcoin by any individual ensures its further spread and growing popularity among various communities (Black, 2018). At the moment, there are about two billion people who have access to the Internet and cannot use conventional exchange systems (ET Online, 2017).

For this reason, they can become owners of various CCs who will contribute to the further development of the approach, and it’s becoming one of the leading options. This factor should also be considered while speaking about the future of the discussed payment method and opportunities for its further rise.

Conceptual Framework Analysis and Hypothesis

The following hypothesis regarding the discussed issue:

Elimination of the main barriers such as gaps in knowledge, fears associated with cryptocurrencies, criminal elements, and poor understanding of price fluctuations via the training and additional information can help to increase CC’s adoption speed and facilitate their further rise.

The issue can be investigated with the help of the following conceptual framework.

Conclusion

Altogether, the reviewed sources evidence that at the moment, there are multiple barriers and facilitators of further bitcoin development and its integration with society. The accessibility of CCs, many opportunities associated with their use, and the increased convenience attract people and precondition their decisions to use this payment method. At the same time, the existence of criminal issues related to the topic, the increased complexity, the lack of knowledge, and the difference in prices can distract individuals and prevent CCS from further evolution. However, the majority of authors are united in the opinion that the future development of technologies will help to fill the gap and create an environment beneficial for the extensive use of CC in various spheres of people’s functioning.

References

Black, R. (2018). Medium. Web.

Brown, S. D. (2016). Cryptocurrency and criminality: The bitcoin opportunity. The Police Journal, 89(4), 327–339. Web.

Ducas, E., & Wilner, A. (2017). The security and financial implications of blockchain technologies: Regulating emerging technologies in Canada. International Journal, 72(4), 538–562. Web.

Elliott, C. (2018). Learn something new every day. British Journalism Review, 29(4), 45–50. Web.

ET Online. (2017). . The Economic Times. Web.

Hayes, A. (2019). The socio-technological lives of bitcoin. Theory, Culture & Society. Web.

Kethineni, S., & Cao, Y. (2019). The rise in popularity of cryptocurrency and associated criminal activity. International Criminal Justice. Web.

Kuznetsov, N. (2018). . Entrepreneur. Web.

McKay, D. R., & Peters, D. A. (2018). Digital gold: A primer on cryptocurrency. Plastic Surgery, 26(2), 137–138. Web.

Nallapati, V. (2018). . Crypto sales. Web.

Trekk. (2018). The top 7 barriers to mass adoption of cryptocurrency. Digitex. Web.

Vidan, G., & Lehdonvirta, V. (2019). Mine the gap: Bitcoin and the maintenance of trustlessness. New Media & Society, 21(1), 42–59. Web.

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