Do consumers really trust cryptocurrencies?

Abstract

PurposeIn this study, we focus on consumer perceptions of cryptocurrencies. We hypothesize that knowledge of cryptocurrencies, trust in government, and the speed of transactions are the main factors contributing to consumers' trust in cryptocurrencies.Design/methodology/approach451 MTurk workers, a convenient sample incentivized with a small monetary payment, participated in a cross-sectional online study with cryptocurrencies serving as the focal product category.FindingsWe obtained support for our hypothesized notion that knowledge of cryptocurrencies, trust in government, and the speed of transactions are the main factors contributing to consumers' trust in cryptocurrencies. Our research makes several important theoretical contributions. First, we demonstrate that consumers who understand and know how cryptocurrencies work are more likely to trust and invest in the currency. Next, we demonstrate that consumers are more likely to trust cryptocurrencies and their peer-to-peer transactions if, preferably, they take place via a central issuer and are regulated by their respective governments.Originality/valueThis study is the first known paper to focus on cryptocurrencies from the consumers' perspective. Next, we identify key antecedents of trust towards cryptocurrencies. Second, we reveal the role of government concerning cryptocurrencies. Finally, FinTech firms and banks (should they choose to enter the cryptocurrency market) need not spend time and money on marketing, advertising, and promotions in order to try to allay consumers' anxiety when it comes to their uptake in the different digital currencies. Rather, this would allow the FinTech firms and banks to allocate resources to focus their attention on marketing, advertising and promoting the factors (i.e. knowledge, trust in government, and speed of transaction) that drive intent to invest in cryptocurrencies.