Background of the Study
Exploration into the human endeavour of trade not only reveals the importance of currency in commerce but also money’s importance in the advancement of human civilisation from subsistence based to export based economies (Cannan, 1950; Sullivan et al, 2003; Einzig, 1966). The ability to specialise in an industry is just as much to do with an effective trade medium as well as a specialised skill in order to effective exchange what one produces with what one needs.
Gold has historically fulfilled this role but as times, governments and environments change so do the acceptance of trade mediums. This line of succession has led to the currently used nation issued, state controlled fiat currencies. While perceived as stable due to its government backing current events such as the financial crash of 2007 with the repercussions manifested as quantitative easing by meddling bankers and economists; along with the incident of freezing personal Euro accounts in Greece 2013 has resulted in a statistic of only 38% public confidence in the government (Edelman Report, 2013).
The ever increasing capabilities and spread of high speed internet have enabled a new avenue for goods and service retailers to trade both physical and virtual products. The internet, instrumental in a “flat-world” (Friedman, 2007) has erased distances between buyers and sellers. Yet both companies and customers alike incur bank remittance charges; banker’s fees; or the necessity to perform currency exchanges. This is a glaring disparity of how traditional money is limited within country borders or economic zones (for example, Eurozone) and not designed for the scope of the internet which is borderless. With the advent of digital currencies such as Bitcoin both companies and customers are realising that the trade restrictions and costly fees of traditional currency can be avoided and is perhaps an outdated medium of trade.
Bitcoin is a virtual trade medium and just as an Adobe .pdf file it can be sent online free of charge and opened universally. To extend this analogy, with all users using the same .pdf format there is no need to convert this file to any other format. The digital trade medium is likewise accessible through cloud computing and not subject to international exchange rates or regulations.
The flaw of this .pdf analogy is the fact that a user may copy the original file to commit fraud although computer files are not the only things subject to copying, “almost 3% of Britain’s pound coins are fakes” (The Economist.com 2013b). Thus buyers, sellers and governments themselves are looking for an improved trade medium. Cryptocurrency, namely Bitcoin possesses the technological innovations to deal with internet transactions and solve the problem of fraud. Bitcoin’s block chain and cloud ledger technology are developed not to prevent the copying of Bitcoin computer files, but prohibits the spending of the same Bitcoin in separate transactions; thus meeting the same end.
The current total value of all Bitcoins exceeds one billion US dollars (IEEE Spectrum magazine, 2013) and the 50,000 transactions daily (Ferrara 2013) is a testimony of Bitcoin as a proof of concept with active users. Present hurdles to the proliferation of Bitcoin are crime and scalability. Firstly crime; Bitcoin does have the potential to enable uncontrollable, liquid, cross-jurisdictional transfer and activities that can: avoid taxation, purchase illegal goods and money launder. Yet it must be stated that criminal activities are in intrinsically inherent with all forms of currency as the root of crime is people and not the currency itself. The second hurdle- scalability; a mathematically built in limitation of 21 million Bitcoins is slowly released on a predetermined schedule as a self-control mechanism to inflation until 2040. Compounded with Bitcoin’s obliviousness to the dynamic and complex environmental factors which affect traditional central bank decisions such as interest rates; it is uncertain whether Bitcoin can survive as built or it remain as just a current proof of concept.
Regardless of longevity, Bitcoin’s growing following is taking advantage of the real benefits in this new medium. It is not only online either; whole streets of shops in Berlin, Germany and a few pubs in London, UK are exchanging goods and pints at the counter for these electronic files. Digital currencies are making waves politically; socially; technologically; and central to this research paper, commercially. It is therefore pertinent to understand the perspectives of Bitcoin companies and its users today in order to formulate business models and strategies for the future.
Using Venkatesh and Davis (1996) technology acceptance model (TAM), an update of Davis (1986) model with the same name the researcher investigates how companies utilise the perceived usefulness (PU) and perceived ease of use (PEOU), to create a customer value proposition. A 360-degree appraisal is completed when the researcher uses the TAM to examine: external factors; PU; PEOU; and intent of use of Bitcoin customers. The two sets of results can be compared and contrasted to gauge whether current business strategies are targeting the market in the most suitable way. In light of these unprecedented findings the author proposes new models for business in the Bitcoin community. The scarcity of published academic papers pertaining to Bitcoin and TAM, or commerce, has not only challenged the author to synthesise original data and insights but provided the opportunity to be among the pioneers in this new research topic.
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