Does currency substitution (CS) explain the phenomenon of cryptocurrency adoption (CA)?
Date
2022?
Authors
Acosta Pimentel, Tomás
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López del Valle, Juan Cruz
Journal Title
Journal ISSN
Volume Title
Publisher
Universidad de San Andrés. Departamento de Economía
Abstract
Literature has proved that Currency Substitution (CS) is manifested when a country is
experiencing macroeconomic instability, characterized by the existence of economic
phenomenon’s that put in risk the use of local money. Macroeconomic determinants push
countries national currencies to fail in effectively perform the functions of: medium of
exchange, store of value and value of account. Consequently, loss of confidence in the
national currency induced market participants to replace it for foreign currency, where the
most popular solution had been demonstrated to be the US dollar. In the last decade,
technological progression permitted the existence of a new form of money, cryptocurrencies
appeared to take a leader character in the scene of the financial market. Both as money or
investment purposes, cryptocurrencies had gained a lot of popularity with the emergence of
Bitcoin and current investigation had declared that it has a promising future. The objective
of this paper is to investigate up to what extent the phenomenon of CS can explain
cryptocurrency adoption. Literature determined that CS is enhanced in certain
macroeconomic conditions, but what happen with cryptocurrencies when they are exposed
to them? Do determinants of CS have any relationship with cryptocurrency adoption? Panel
data analysis and lineal regressions are examined in this paper in order to investigate the
relationship of the use of crypto actives with some macroeconomic variables that had been
declared by literature and recent studies as the main determinants of CS, between 2013 and
2020.
Description
Fil: Acosta Pimentel, Tomás. Universidad de San Andrés. Departamento de Economía; Argentina.