Is the consumer willing to adopt the innovative cryptocurrency Bitcoin as a payment method?

Table of Contents

Abstract

Table of Contents

List of Figures and List of Tables

1. Introduction

2. Literature review
2.1 Blockchain Technology
2.2 Attributes of Bitcoin and Cryptographic Currency
2.2.1 Mining
2.2.2 Transactions
2.2.3 Anonymity of Bitcoin
2.2.4. Payments and Fintech
2.2.5 Criminal Activity
2.3 User of Bitcoin
2.4 Consumer and Innovation
2.4.1 Adoption of Innovation
2.5 Perceived Benefit
2.6 Perceived Risk

3. Research Methodology
3.1 Theories on technology acceptance
3.2 Research aim and objectives
3.2 Research theoretical model
3.3 Extending TAM
3.4 Hypotheses development
3.5 Research sample
3.6 Data collection Method
3.7 Research Process
3.7.1 Limitations and potential problems

4. Empirical Research
4.1 Research results
4.1.1 Demographic analysis
4.1.2 Descriptive statistics
4.2 Inferential statistics
4.2.1 Hypothesis testing

Discussion

Conclusions

References

Appendices

Abstract

This research focuses on acceptance of Bitcoin by European consumer and his intention to use this technology for payments. Bitcoin in many ways is not defined yet. Depending on what purpose it will be mostly used, depends diffusion and adoption of this innovation. Role of consumer is important as consumers play significant role in technology adoption. In this research, Bitcoin is investigated from consumer’s perspective as an available innovative payment method.

Literature reviewed allowed to characterize Bitcoin and to outline factors that has effect on consumer’s intention to adopt this innovative technology for payments. These factors – Compatibility(as in Innovation Diffusion Theory), and Perceived Risk, were integrated with theoretical research model - Technology Acceptance Model (TAM) and its constructs Perceived Ease of Use, Perceived Usefulness and Behavioral Intension, in order to predict consumer’s intention to use Bitcoin for payments. Resulting development of extended Technology Acceptance Model (TAM) research model. The proposed model was empirically tested using data collected from a survey of European consumers. The structural equation modeling(SEM) technique was used to evaluate this research model and confirmatory factor analysis (CFA) was performed to test reliability and validity of proposed measurement model.

298 respondents from 27 European countries took participation in survey for this research. Findings indicated that Perceived Usefulness and Compatibility have strongest effect on consumers Behavioral Intention to use innovative payment method – Bitcoin. This research peaks by estimating behavioral intention – European consumer has intention to use Bitcoin for payments no matter risks. It predicts further adoption of Bitcoin by consumer and its use for payments.

List of Figures

Figure 1 Innovation Diffusion Theory (IDT), Rogers, 1983

Figure 2 The Technology Acceptance Model (TAM) From Davis, 1989, 1993

Figure 3. Extended TAM, proposed by author

List of Tables

Table 1 Demographic attributes of the respondents

Table 2 Payment method preference

Table 3 Knowledge about Bitcoin

Table 4 Division of consumers who possess Bitcoin and other cryptocurrency and does not

Table 5 Combined cryptocurrency portfolio

Table 6 Bitcoin use cases

Table 7 Bitcoin use frequency

Table 8 Other use cases of Bitcoin

Table 9 Descriptive statistics of construct Perceived Usefulness (PU)

Table 10 Descriptive statistics of construct Perceived Ease of Use (PEO)

Table 11 Descriptive statistics of construct Perceived Risk (R)

Table 12 Descriptive statistics of construct Compatibility (C)

Table 13 Descriptive statistics of construct Behavioral Intension to use (BI)

Table 14 Assessment of the constructs reliability

Table 15 Pearson correlation coefficient matrix

Table 16 Multiple Regression Model

Table 17 Summary of correlation and regression results, including determination coefficient value

Table 18 Pearson Correlation test. Anonymity vs all variables

Table 19 Actual Use vs all variables correlation analysis

Table 20 t-test comparison Consumers vs Consumers that are Bitcoin users

1. Introduction

Blockchain technology is considered as a very promising. It captures attention not only of various developers, investors and business operators, but also public attention. Especially it’s use cases as financial asset or money.

From current Top 20 cryptocurrencies as seen on www.coinmarketcap.com, only part of them are invented to be currencies. These are Bitcoin, Ripple, Bitcoin Cash, Litecoin, Monero, Dash, Zcash. Other coins are also distributed and investable, but are platforms to run smart contracts (Ethereum, Cardano,) offer infrastructure solutions for decentralized applications, customizable payments infrastructure (Stellar), decentralized internet(Tron) and etc,.

That these innovative financial technologies found it’s way to public we can see from Cryptocurrency market capitalizations. For 2018 December 17 it was 103 825 820 915 USD. Bitcoin dominance on 2018 December 17th was 55.0%. Bitcoin is first, most famous and most widely used cryptocurrency, thus focus in this research will be on Bitcoin. Basic principles are the same for most cryptocurrencies that are intended to be currencies or payment methods. Just Bitcoin is most known, has first mover advantage.

Bitcoin primarily was experimented by IT enthusiasts, then captured attention of innovators and was followed by investors and speculators afterwards. Cryptocurrencies and development of Blockchain technology is discussed and analyzed by IT specialists, scientists and financial experts but actual diffusion and usage of this technology, especially in different regions is not clear. With every quarter more and more merchants worldwide accepts Bitcoin and other cryptocurrency as Bitcoin Cash, Litecoin or Dash.

Bitcoin is interesting innovation because in many ways it is not defined yet. There are many discussions on what it is, and what it’s good for. Because of technology it is based on, it can shift shape – it can be used as currency, meaning offered as alternative payment method or, - can be acquired as speculative asset. Depending on what purpose it will be mostly used for, depends diffusion and adoption of this innovation. Role of consumer is important as consumers play significant role in technology adoption. In this research Bitcoin will be investigated from consumers perspective as available innovative payment method.

To define consumer’s perception of this technology and to predict intention of consumer is important for business world, as it could greatly contribute to managerial decision making. As businesses need to identify whether it is perspective and can create some kind of value for company and consumers as well.

This study can contribute for Business owners in decision making while to implement innovative payment system or not. This research will contribute for academic purposes, because theory must be applied to assess perception of Bitcoin and research model must be created to predict intention of consumer to use this innovative technology as a payment method.

Thesis aim and objectives.

To this time more academic studies and researches are made on Bitcoin’s technical properties, regulatory issues, economic impact. Only few, to date, there are researches done about acceptance of this technology by consumer and actual usability of the cryptocurrency from consumers perspective.

In this emerging multi billion industry from managerial perspective, the problem is that there is a lack of information on what are intentions of consumer in regards for using Bitcoin or other cryptocurrency for payments. Without research it is impossible to figure it out what category of consumers are Bitcoin users and how they are using it. Fact that by nature cryptocurrencies are digital, decentralized, fully or to some degree anonymous and facilitates peer to peer exchange of transactions can only explain why we know less, not more. Also less we know about how well informed is consumer about it, what is consumer attitude and intentions towards it, less likely barriers for adoption of this technology will be clearly identified.

Positioned at the intersection of technology, economics and policy, Bitcoin calls for an interdisciplinary approach to studying its usefulness, risks and usage (Hileman 2015).

Research papers and case studies and other scientific articles reviewed were searched in Emeraldinsight.com, Googlescholar.com, Researchgate.net and other data bases, using key words: Blockchain, Bitcoin, Cryptocurrencies, Payments, Adoption, Consumer.

Since Bitcoin and Blockchain technology underneath of it, is quite recent, there is a limited source of credible scientific articles and researches about acceptance of this technology by consumer.

The research question: Is consumer willing to adopt innovative, blockchain based, cryptocurrency Bitcoin as a payment method?

The aim of this thesis: to assess European consumer’s intention to use Bitcoin for payments.

The objectives of this research are:

1. To review academic articles about Bitcoin and main attributes technology brings.
2. To analyze aspects of Bitcoin usability and adoption of this innovation by consumer.
3. To apply appropriate theoretical research model in order to assess acceptance of innovative technology and to predict consumer’s behavioral intension.
4. To conduct empirical research in order to identify most important factors affecting consumer intention to use Bitcoin for payments.
5. To assess how these factors affect consumer’s intention to use Bitcoin for payments.
6. To conclude what is consumer’s behavioral intention towards Bitcoin usage as a payment method

2. Literature review

To get better all-round understanding of what is Bitcoin and how this technology intersects with consumer. In Literature review I will overview:

- Main aspects of Blockchain technology, Bitcoin and Bitcoin industry
- Main determinants and steps towards adoption of innovative technology for consumer
- Perceived Benefits and Perceived Risks this technology brings

2.1 Blockchain Technology

To understand further paragraphs about Bitcoin and cryptocurrency we need to understand at least main attributes of technology underneath it. And it is Blockchain technology. Bitcoin is first decentralized, global, trustless ledger of records . De Leon et al.,(2017) brings explanation from technological perspective that “blockchain is a digital information recording method, capable of recording data using a logbook approach”. Also, in study, they denote following four essential characteristics, that it must be : “Ordered, Incremental, Sound (cryptographically verifiable up to a given block) and Digital”. Meaning that blockchain is composed of a cryptographically linked chain of blocks of data and blocks are chained in a sequence using cryptographic hashes.(De Leon et al., 2017)

Researchers Yeoh (2017), Davidson et al., (2016) summarizes that Blockchain’s present open data is becoming more than disruptive Information Communication Technology, but it is also expanding to other economic institutional sectors like markets, networks and governments. Blockchain while adopted, will change wider population’s relationship with state. And Swan (2015) suggests in her book that blockchain being public ledger with potential of a decentralized, worldwide registration record for the inventory and transfer of property and intangible assets such as votes, software, health data, and ideas, not just finances. Granting secure exchange of value and information across networks it may become very disruptive. (Swan 2015)

2.2 Attributes of Bitcoin and Cryptographic Currency

Blockhain technology sprung into life via Bitcoin creation case. In 2008 Satoshi Nakamoto in his whitepaper explained Bitcoin protocol and how “Bitcoin system uses a blockchain as a transaction ledger” in his “peer-to-peer electronic cash system”.

According to Presthus and O'Malley (2017) Bitcoin consists of three main parts: miner, blockchain and wallet and these three parts form Bitcoin network. Roles of these components is as following: the miner secures and process the transactions, also, preventing double spending in the system. The blockchain is distributed to every wallet on the network, it is similar to bank ledger, and system is updated every 10 minutes on average. Finally, copy of whole block chain is kept in every wallet. (Presthus and O'Malley, 2017)

In their research Vergne and Mark (2014)explains how Bitcoin works from user perspective. User has to create for himself “Bitcoin wallet” which is a downloadable software, and referred to as “electronic wallet” and this wallet will contain public and private keys. Bitcoin will be held in an encrypted format within it. And then when Bitcoin is generated through computer processing power (mining) using complex algorithms and block is depicted, this distributed ledger can now be shared against network users.(Vergne and Mark, 2014)

Consumer can start use Bitcoin if he obtains Bitcoin wallet and has internet connection. Wallets are free. Also usually there is no monthly payments, no liabilities.

Wallet types suggested in www.bitcoin.org by type are:

- Desktop wallets. For PC users operating Windows, Mac or linux.
- Hardware wallets. Devices made by: “Digital Bitbox”, “KeepKey”, “Ledger Nano S”, “Trezor”
- Mobile wallets. For users operating mobile devices on Android, IOS, Windows phone
- WEB wallets

For merchants to provide customers with ability to pay with Bitcoin or some other cryptocurrency, there are payments gateways such as: Bitpay, Coinbase Commerce, Blockonomics, Coinify, GoURL, Rocketr.

It is easy to integrate Bitcoin for merchants and there are options not only for online businesses, but for regular retail as well. Part of merchants, who provide ability to pay with Bitcoin or other cryptocurrency want funds to be exchanged into regular currency immediately after transaction, is made. Most payment gateway or Fintech companies are now providing these solutions and are working on development of more effective solutions as these.

There are useful aspects from Business perspective to use Bitcoin, such as:

- More protection against fraud. Business owner doesn’t process sensitive information from customer, like in case with credit card numbers.
- PCI compliance is not required. Meaning no need for higher security measures when accepting credit cards in order to comply with PCI standard.
- Multi signature. Bitcoin can provide this function, It allows expenditure to be made only if consent from other members exists. Also ability to track who permitted such transaction and etc.,
- Accounting transparency. As Bitcoin is blockchain based, it can provide maximal transparency in accounting as there is ability to check all balances and transactions on blockchain.
- The inability to reverse confirmed payments protects merchants against chargebacks fraud

Bitcoin ATMs worldwide from January 2016 to December 2018, from 501 units went to 4,036 Bitcoin ATMs globally. As declared in www.stats.com site.

2.2.1 Mining

According to Rogers (1995), most technologies consists both of hardware and software component and the hardware component embodies the technology as a material or physical object, and software is the information or knowledge base for a tool. In Bitcoin case hardware component primarily were regular computers. But when load on the system increased special hardware was developed to provide sufficient computing power to process transactions on blockchain.

As already mentioned mining is part of Bitcoin network, and it is a special category of Business, as somebody has to take care for this hardware component, if so, it must be profitable. Conte de Leon et al.,(2017) in their study described how miners represent backbone of Bitcoin network. Miners are hosting peer-to-peer nodes and are maintaining network consensus. But processing of transactions into blocks and building the blockchain is where their reward in bitcoins comes. Mined blocks become part of public ledger. Also Bitcoin mining can be seen as a smart way to issue currency, as it creates incentive for people to mine.(Conte de Leon et al.,2017) So people and companys involved in mining of Bitcoin, or other cryptocurrencies, are also a source of these currencys to the market. They can either exchange it to wanted curency(fiat money) via exchanges or directly, or to use it for payments.

Also Rosenfeld (2011) in his analysis paper noted that users can mine Bitcoin or other cryptocurrency, collaboratively by creating mining pools as collectively computed nodes in a mining pool will discover target hash values at a more constant rate. But in such case, obviously, profits has to be shared (Rosenfeld, 2011).

2.2.2 Transactions

As bitcoin transactions are made directly between bitcoin addresses (peer-to-peer) this means banks are no longer necessary. And there is no difference is person sitting next to you, or is in another continent. Bamert et al., (2013) describes transaction in Bitcoin network, as transfer of specific amount of bitcoins from one account to another, and this transaction, while broadcasted into Bitcoin network, is recorded by the nodes as signed data structures. It encompasses references of one or more previous transactions that funded the spending party, and assignment of bitcoin to destination address or addresses. References to previous transactions can be called input to the transaction, and receiving account with meant amount to receive – output of the transaction. (Bamert et al., 2013) The balance of Bitcoin account is the sum of values of inputs and outputs in given address. After the transfer recipient or the owner of receiving account has new fund under his disposition. Important to outline, as there is no third party in transaction, transactions are irreversible.

All transactions in blockchain can be checked on internet sites, such as blockchain.info and other open source websites. According to Van Wegberg, Oerlemans, & van Deventer(2018) current bitcoin account balance is also visible in the blockchain, however bitcoin system does provide high level of anonymity. It is so because unlike to the bank account -bitcoin addresses are not registered to individuals, no names are linked to the bitcoin address and walett. As Bitcoin address, similarly to numbered Swiss bank account, by itself acts like identifier and this account can be accessed by person who knows login details of Bitcoin wallet. (Van Wegberg, Oerlemans, & van Deventer(2018)

2.2.3 Anonymity of Bitcoin

As mentioned before, Bitcoin enables to transfer funds anonymously. As cryptographic Bitcoin address is consisting of unique public keys and private keys. Where public keys can be used openly, and private keys are known only to the owner of adress(wallet) and must kept safe. According to Stallings, W (1999) Public keys function is authentication, or to verify that a paired private key(other address, or transfer input) makes a transfer. And private key’s function is encryption, when only paired private key holder can decrypt the message or amount of funds encrypted with the public keys. (Stallings, W 1999)

This structure enables to make transactions anonymously, because there is no declared identifying information. Also according to Eskandari et al.,(2015) this means that with this method when user holds public keys, and not the bank account information of other user, user actually holds not a currency, but has signing authority over accounts.

Higher level of anonymity in comparison to traditional financial platforms also refers to creating peer-to-peer transactions based on these public user keys. According to Reynolds and Irwin (2017) users are enabled to trade virtual currency regardless of their geographic location and without unveiling their identity, but also whilst hiding sources of their income.

However Bitcoin is anonymous only to certain level. User transaction history is publicly available and no matter the fact that user can obtain limitless amount of public keys, law enforcement can identify some users by tracking transaction history and searching for links that can unleash some personal information like IP addresses, various registration in exchanges or sites, shops where public keys where exhibited and etc. Reynolds and Irwin (2017) in their study demonstrated how law enforcement could de-anonymize users with identification controls applied for Bitcoin exchange services. Androulaki et al. (2013) through conducting a controlled, localized study within a university environment also discovered that user transactions can be tracked by implementing behaviuor-based clustering techniques, and in regards to geographical location of user and locations of busineses in area with eighty percent accuracy. Also forty percent of Bitcoin user profiles could be identified and they did complied with recommended privacy measures to stay anonymous. Androulaki et al.(2013)

But for those concerned with privacy and anonymity there are services that are able to keep one anonymous. There are available “mixer” services like Dark Wallet, which enables Bitcoin users transaction data to stay anonymous.

2.2.4. Payments and Fintech

Main principle of Bitcoin and other cryptocurrencies is to provide solution for fast transfer of funds, with minimal transaction cost, and privacy on default.

Bitcoin and cryptocurrency is attributable to Fintech. Fintech is an emerging field that combines financial and IT services. According to Arner et al., (2015) “Fintech is not limited to specific sectors, as it covers the entire scope of financial services and products, traditionally provided by financial institutions” Additionally Lee and Kim (2015) indicated that “Fintech is the technical process emerging from developing and establishing new financial software”, which consequently is able to affect the entire traditional system.

So we can see that Bitcoin and cryptocurrency falls under broader definition of Fintech. As Bitcoin is also fusion of IT technology and financial service. Also according to Arner et al., (2015) opportunities, risks and legal implications is where Fintech is different from traditional existing financial services.

Basis of Fintech is IT and expanding role of IT is important characteristic resulting services that are characterized as disruptive for financial sector. Fintech user can engage in variety mobile services and of course to make payments and transfer money. This field of payments and transactions, in regards to Fintech is very actual. And according to Chishti,(2016); Zavolokina et al., (2016a), Ryu, (2018) Seamless transactions is main transaction related benefit. Main idea behind is when transactions are provided by non-financial providers(IT companies) that eliminate traditional institutions like banks, very innovative and competitive products and services for a user can be provided. Moreover, these cost effective and customer friendly financial services and solutions allows Fintech companies to compete against traditional financial institutions.

Bitcoin as a payment system is available to use, but yet not many merchants are accepting it in retail. But according to Lithuanian-based blockchain gateway Coin Gate 80,000 EU-based merchants will be accepting Bitcoin and 50 other cryptocurrencies by the end of year 2018(source www.dailyhodl.com). But in real world in retailing it is obvious that Bitcoin as a payment method is not in a par with traditional payment systems yet. When consumer has to pay usually is using one of these options:

- Cash. cash is physical form of currency, such as banknotes and coins.
- Debit card. A debit card, or a bank card, is a payment card that can be used instead of cash when making purchases(when performing transaction money comes directly from original user’s bank account).
- Credit card. Similar to use like debit card. But it combines payment method with ability or extension of credit by issuer.
- Online banking. Online banking or internet banking is an electronic payment system that enables customers of a bank or other financial institution to accomplish financial transactions through website.
- Mobile payments. Mobile payment, mobile money transfer, mobile wallet. Payment services operated under financial regulation and performed from or via a mobile device.
- Online payment systems or payment service providers(PSP). Paypal, Pay U, Amazon Pay, Apple Pay, and others. Usually it is a software as a service model. It forms a single payment gateway for merchants to multiple payment methods. PSP can connect to multiple acquiring banks, card, and payment networks.

Cash is usually most popular payment method, also bank cards. There has to be a reason for consumer to start using other methods and adoption of all mentioned payments methods mentioned above have its own history, reasoning and their own advantages. Since now everything is being digitalized, IT expanding to various segments, perceived advantage for user paved way for mobile payments and PSP. Bitcoin and cryptocurrency must prove to be a worthy choice for consumer.

If Bitcoin wallet is installed on mobile device – it allows to pay with a simple two-step scan-and-pay function. Physically to receive Bitcoin payments one has to display the QR code in Bitcoin wallet app and other party has to scan it. Or if using NFC technology just to touch two phones together.

In addition, Bitcoin can be used in a way of established payment methods are as mobile payments, online payments. Recently from year 2017 Bitcoin and cryptocurrency can be integrated to use for payments with principles of debit card. Cryptocurrency debit cards are available for consumer and they solve most Bitcoin and cryptocurrency convenience problems, because to make payments with it is just about the same as with ordinary debit card and ordinary currency.

Paying by special Bitcoin/cryptocurrency debit card will exchange Bitcoin or cryptocurrency to traditional currency right before transaction. So consumer is able to make payments everywhere – in stores, restaurants or to use ATM, no matter Bitcoin(cryptocurrency) is accepted there or not.

Such solutions definitely will have positive effect for adoption of Bitcoin and cryptocurrency by mainstream consumer as it makes crypto as usable as traditional finances.

There are different cards and types with their own characteristics:

- Physical Cryptocurrency debit card – almost the same card as usual, just with ability exchange Bitcoin or crypto to fiat currency and vise versa.
- Virtual debit card – mostly to use for online payments as it has no physical form. Meaning also there is no ability to withdraw cash from ATM.
- Prepaid card – allows to load cryptocurrency on it, and will automatically exchange it to currency or back to cryptocurrency accordingly the need.
- Non prepaid debit card – it is usually linked to your Bitcoin or Cryptocurrency online wallet. Will convert it to traditional currency at the moment of payment.

Most of these cards are accepted in Europe Union(also other countries around the world, it depends). To name few: Spectrocoin Pre-paid Card, Wirex Visa Payment Card, Uquid Crypto Card, Cryptopay Bitcoin Debit Card and others.

2.2.5 Criminal Activity

Certain set of features like anonymity, unlimited transactions and speed of global transactions, attracted criminals to use Bitcoin for their transactions. While Bitcoin by itself as a resource became target of others, particularly cyber criminals.

Since Bitcoin gained some recognition and value by the same time, media reported numeral incident how Bitcoin has been used in illegal activities. Most famous was Silk Road, first biggest marketplace established in dark net on 2011 and brought down by FBI 2013, were drugs and other illegal goods were for sale for bitcoins. Other episode is hacking of Bitcoin exchanges. Biggest incident was hack of Japan based MtGOX Bitcoin exchange in 2014, when approximately 750 000 BTC were stolen. Investors lost their funds as exchange went bankrupt. (Also there were others, more recent, like Bitfinex hack in 2016 when 120 000BTC were stolen from exchange. But Bitfinex could slowly repay loss for customers.) Thus after these and many more incidents, resonance raised not only from media side, but also from institutions, politics, and bank oficials. This in general affected negatively reputation of Bitcoin. Accordingly since 2014 March, Financial Industry Regulatory Authority(United States of America) is warning investors about high risk in association with Bitcoin and cryptocurrency. Main outlined risks are: liquidity issues, speculative trading, price volatility, fraud, hack danger, depositors protection etc. Warnings come all over the world from national banks, investment funds and etc.,

Money laundering also appears to be relevant, because of certain features of Bitcoin protocol like anonymity and peer-2-peer transactions. These suspicions Wegberg et al.,(2018) confirmed in his study where he found out about bitcoin money laundering and that it’s a practically conceivable concept. According to their study “Bitcoin has a high degree of likeness to be integrated in current-day and future money laundering schemes”, as it lowers money laundering costs, also Europol reports still confirm such money laundering cases by cyber criminals.

Meanwhile risks are real. Bitcoin user account and data can be under attack. Bitcoin and other cryptocurrencies can be stolen by means of hacking computers or online wallets or even by hacking cryptocurrency exchanges if user keeps his/her fund there. In regards to consumer, it is clear that in some cases he can be targeted directly, in other cases it can be consequences that will harm. All data, especially, Bitcoin wallet private keys, user must keep securely. Still a lot of responsibility in regards to Bitcoin and cryptocurrency acceptance falls on service providers who have to guarantee no incidents to safety of funds and privacy of clients.

Constructive discussion is needed on legal Bitcoin and cryptocurrency perspective. Almost all around the globe Bitcoin or cryptocurrency is neither banned, nor regulated. Bitcoin and cryptocurrency lacks centralized monetary authority, thus naturally encourages anonymous users. This existing challenge to regulate it, and control it, causes national governments to take varied approaches.

2.3 User of Bitcoin

Probably after the media hype in recent years and wider consumer awareness about Bitcoin and cryptocurrency, academics started to pay more attention towards adoption of this technology. So from data few researches provide contours of Bitcoin user can be recognized. As Decker and Wattenhofert(2013), Bohr and Bashir (2014); Krombholz et al. (2016), Abramova and Bohme (2016) studies suggests Bitcoin user appears to be predominantly man, mostly 25-34 years old, with full time job. Some insights can be made why it is so, as according to Im, Il & Kim, Yongbeom & Han, Hyojoo (2008) research, where they using Unified Theory of Acceptance and Use of Technology (UTAUT) model for their researches discovered that gender and age moderate effects of some variables like Perceived Usefulness and Perceived Ease of Use on Behavioral Intension, and most of their studies indicated that males in similar situations perceive less risk than females. Possibly why men dominate so vastly in this stage of Bitcoin adoption is that Bitcoin is still in experimental state and risky, also perceived usefulness of it is assumed differently between genders. Adding to this Gilbert et al. (2003) propose that “technology anxiety correlates with demographic variables such as age, gender, and academic qualifications”. According to Im et al. (2003) “personal characteristics of age and income are strong predictors of innovation adoption behavior”.

According to Hileman and Rauchs (2017), there were between 2.9 million to 5.8 million active Bitcoin and cryptocurrency users in 2017. The proposed number was intact with created wallets, most of them for Bitcoin. It shows how significantly since 2013, number of users increased, as there were 300,000 to 1.3 million users at that time. (Hileman and Rauchs, 2017). Now for year 2018, there could be about 10 million active Bitcoin user wallets according to Coinbase information.

Rogers (1962) outlines five categories of innovation adopters: innovators, early adopters, early majority, late majority and laggards. According to theory, first adopters are innovators, also according to Saaksjarvi (2003) innovators (she uses term technovators) are first who recognizes benefits of new technology and adopts it, and then communicates these benefits to other segments. But it is difficult to conclude did adoption phase moved further on, and now Bitcoin is used by early adopters, or is it still used only by innovators. In year 2017 it was similar that maybe adoption of Bitcoin and cryptocurrency is striving towards chasm, but later, during all 2018, from January to December, exchange markets were on bearish trends, and market capitalizations of Bitcoin and of the rest of cryptocurencies decreased drastically. (All historical data can be seen at https://coinmarketcap.com/ site).

However it is important to distinguish speculator from an actual user of Bitcoin. As these two are completely different categories of people in regards to technology adoption. Since one is actually using it, and another only buys and sells it in order to get profit.

2.4 Consumer and Innovation

According to Zavolkina et al., (2016) innovation diffusion process is slower in financial sector than in other sectors, because customers in regards to financial sector are more conservative. Specific characteristics of financial sector like significance of structural assurance, need of trust in financial transactions and vendors, makes it difficult to create innovative financial services no matter many transaction process evolutions using IT. (Zavolkina et al., 2016)

In Fintech field, including Bitcoin and cryptocurrency, developers can sometimes be too much involved into IT and technical side of products and services. They must be thoughtful how user will be able to perceive it and get intended usefulness out of it. Nevertheless, according to Heiskanen et al.,(2007) it is welcoming practice to apply solutions that help consumers to learn about concepts, or build up experience, but “developers have to learn about consumers too”.

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