Year of Graduation
Network Effects in the Digital Currencies’ Market: Evidence from Bitcoin
Economics: Research Programme
The aim of this paper is to explore the network effects in the digital currencies market. It provides a general overview of digital currencies and market participants that use them. I employ Bitcoin as an example of existence of network effects. In the theoretical part, I model the decision to use bitcoins for transaction and speculation. I then test a number of direct network and indirect effects present in the market for digital currencies. The important conclusion is that there is no convergence to the single currency in the digital currencies market, meaning that currency adoption is a less important driver of demand than adoption as a financial asset.