The Proliferation of End Users as a Success Metric for Cryptocurrencies

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2022-01-04

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Over the last decade, numerous studies have examined the remarkable appreciation of cryptocurrencies and have typically focused on their price and the factors that predict them. In contrast, this paper argues that the success of a cryptocurrency is determined not only by its monetary value but also by the proliferation of its end users. Specifically, we hypothesize that changes in developers’ and miners’ activities drive the growing proliferation of a cryptocurrency’s end users. Building on the Bitcoin case, we use a time-series model based on 4,285 Bitcoin daily observations to suggest that changes in the number of end users are anticipated by surges or drops in activity by the developers and miners who develop and maintain the network. We further find a limited relationship between these variables and the price of Bitcoin. These results support an alternative view of cryptocurrencies’ success and highlight further research avenues in this nascent domain.

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Blockchain Cases and Innovations, cryptocurrencies, blockchain, bitcoin

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10 pages

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Proceedings of the 55th Hawaii International Conference on System Sciences

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Attribution-NonCommercial-NoDerivatives 4.0 International

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