Bitcoin investment: a mixed methods study of investment motivations

ABSTRACT Bitcoin is a well-established blockchain-based cryptocurrency that has attracted a great deal of attention from media and regulators alike. While millions of individuals invest in bitcoin, their motivations for doing so are less clear than with traditional investment decisions. We argue that the technical nature of bitcoin investments gives it unique characteristics and, consequently, that we lack a thorough understanding of how this affects the motivations behind bitcoin investment. We use a mixed method approach consisting of qualitative (n = 73) and quantitative (n = 150) studies and fuzzy-set qualitative comparative analysis (fsQCA) to identify seven bitcoin-specific motivations (profit expectancy, ease of bitcoin acquisition, support of bitcoin ideology, investment skills, risk affinity, anticipated and experienced inaction regret) and how configurations of them explain bitcoin investment. The findings reveal, among others, that some individuals invest in bitcoin because they support the bitcoin ideology. Contrary to the traditional investment literature, profit expectancy is not a necessary condition to the extent that there is one empirical configuration of motivations that explains that individuals also invest in bitcoin even if they do not expect profits. The results disclose non-trivial investment motivation configurations and lay the groundwork for future studies of the role of cryptocurrencies in society.

[1]  Claudius Wagemann,et al.  QCA and business research: Work in progress or a consolidated agenda? , 2016 .

[2]  Elena Karahanna,et al.  Reconceptualizing Compatability Beliefs in Technology Acceptance Research , 2006, MIS Q..

[3]  Qing Bai,et al.  How Does Social Media Impact Bitcoin Value? A Test of the Silent Majority Hypothesis , 2018, J. Manag. Inf. Syst..

[4]  Luo Zuo,et al.  A Global Equilibrium Asset Pricing Model with Home Preference , 2011, Manag. Sci..

[5]  Suprateek Sarker,et al.  Guest editorial: qualitative studies in information systems: a critical review and some guiding principles , 2013 .

[6]  Prachi Jain,et al.  Behavioral Biases in the Decision Making of Individual Investors , 2015 .

[7]  R. Nagy,et al.  Factors Influencing Individual Investor Behavior , 1994 .

[8]  Bruno Solnik,et al.  Applying Regret Theory to Investment Choices: Currency Hedging Decisions , 2008 .

[9]  Shaokun Fan,et al.  Stability of Transaction Fees in Bitcoin: A Supply and Demand Perspective , 2021, MIS Q..

[10]  A. Lusardi,et al.  Financial Literacy and Stock Market Participation , 2007 .

[11]  Edward G. Carmines,et al.  Reliability and Validity Assessment , 1979 .

[12]  Claire Ingram Bogusz,et al.  Patterns of Self-Organising in the Bitcoin Online Community: Code Forking as Organising in Digital Infrastructure , 2017, ICIS.

[13]  Geoffrey N. Soutar,et al.  Individual Investor Preferences: A Segmentation Analysis , 2005 .

[14]  Joern H. Block,et al.  Motives and profiles of ICO investors , 2019, Journal of Business Research.

[15]  Terrance Odean,et al.  The Courage of Misguided Convictions , 1999 .

[16]  Christian Fisch Initial Coin Offerings (ICOs) to Finance New Ventures , 2018, Journal of Business Venturing.

[17]  Scott Andrew Yetmar What Is Cryptocurrency? , 2023, Journal of Business Theory and Practice.

[18]  Christian Maier,et al.  Bitcoin Resistance Behavior: A QCA Study Explaining Why Individuals Resist Bitcoin as a Means of Payment , 2018 .

[19]  D. Allen,et al.  Turnover intentions and voluntary turnover: the moderating roles of self-monitoring, locus of control, proactive personality, and risk aversion. , 2005, The Journal of applied psychology.

[20]  Sven Laumer,et al.  Technostress and the hierarchical levels of personality: a two-wave study with multiple data samples , 2019, Eur. J. Inf. Syst..

[21]  Charles C. Ragin,et al.  Set Relations in Social Research: Evaluating Their Consistency and Coverage , 2006, Political Analysis.

[22]  Shlomo Benartzi,et al.  Excessive Extrapolation and the Allocation of 401(k) Accounts to Company Stock , 2001 .

[23]  Avanidhar Subrahmanyam,et al.  Behavioral Finance: A Review and Synthesis , 2007 .

[24]  Christian Maier,et al.  Overcoming pathological IT use: How and why IT addicts terminate their use of games and social media , 2020, Int. J. Inf. Manag..

[25]  Christian Maier,et al.  Is Cryptocurrency Money?: Three Empirical Studies Analyzing Medium of Exchange, Store of Value and Unit of Account , 2020, SIGMIS-CPR.

[26]  M. Zeelenberg,et al.  Regret in Repeat Purchase versus Switching Decisions: The Attenuating Role of Decision Justifiability , 2002 .

[27]  Jan Marco Leimeister,et al.  Not just an ego-trip: Exploring backers' motivation for funding in incentive-based crowdfunding , 2017, J. Strateg. Inf. Syst..

[28]  Peer C. Fiss Building Better Causal Theories: A Fuzzy Set Approach to Typologies in Organization Research , 2011 .

[29]  S. Nakamoto,et al.  Bitcoin: A Peer-to-Peer Electronic Cash System , 2008 .

[30]  Jonathan Mummolo,et al.  Demand Effects in Survey Experiments: An Empirical Assessment , 2018, American Political Science Review.

[31]  Justus J. Randolph Free-Marginal Multirater Kappa (multirater K[free]): An Alternative to Fleiss' Fixed-Marginal Multirater Kappa. , 2005 .

[32]  Nancy K. Lankton,et al.  Technology, Humanness, and Trust: Rethinking Trust in Technology , 2015, J. Assoc. Inf. Syst..

[33]  H. Willmott,et al.  Qualitative research in business and management , 2014 .

[34]  Ping Zhang,et al.  The Effects of Animation on Information Seeking Performance on the World Wide Web: Securing Attention or Interfering with Primary Tasks? , 2000, J. Assoc. Inf. Syst..

[35]  M. Sarstedt,et al.  A new criterion for assessing discriminant validity in variance-based structural equation modeling , 2015 .

[36]  B. Lucey,et al.  The Role of Feelings in Investor Decision-Making , 2004 .

[37]  R. East,et al.  Investment decisions and the theory of planned behaviour , 1993 .

[38]  R. Thaler,et al.  Financial Decision-Making in Markets and Firms: A Behavioral Perspective , 1994 .

[39]  Carsten Q. Schneider,et al.  Set-Theoretic Methods for the Social Sciences: Potential pitfalls and suggestions for solutions , 2012 .

[40]  Axel Marx,et al.  Crisp-set qualitative comparative analysis (csQCA) and model specification: Benchmarks for future csQCA applications , 2010 .

[41]  Ethan Mollick The Dynamics of Crowdfunding: An Exploratory Study , 2014 .

[42]  S. Bi,et al.  The influence of online information on investing decisions of reward-based crowdfunding , 2017 .

[43]  Holger A. Rau The Disposition Effect in Team Investment Decisions: Experimental Evidence , 2015 .

[44]  W. D. Bondt A portrait of the individual investor , 1998 .

[45]  Martin Weber,et al.  Volatility Inadaptability: Investors Care About Risk, But Can't Cope with Volatility , 2013 .

[46]  Axel Hund,et al.  How an Enterprise Blockchain Applicationin the U.S. Pharmaceuticals Supply Chain isSaving Lives , 2019, MIS Q. Executive.

[47]  M. Maggetti,et al.  Dealing with Errors in QCA , 2013 .

[48]  Daniel J. Veit,et al.  How do investors decide? An interdisciplinary review of decision-making in crowdfunding , 2017, Electronic Markets.

[49]  Dennis Philip,et al.  Stock Market Literacy, Trust and Participation , 2014 .

[50]  John Hulland,et al.  Use of partial least squares (PLS) in strategic management research: a review of four recent studies , 1999 .

[51]  Kai Zimmermann,et al.  Bitcoin - Asset or Currency? Revealing Users' Hidden Intentions , 2014, ECIS.

[52]  Michael Tsiros Releasing the Regret Lock: Consumer Response to New Alternatives after a Sale , 2009 .

[53]  Markku Kaustia 10. Disposition Effect , 2011 .

[54]  Omar El Sawy,et al.  The Role of Business Intelligence and Communication Technologies in Organizational Agility: A Configurational Approach , 2017, Journal of the Association for Information Systems.

[55]  Viswanath Venkatesh,et al.  Bridging the Qualitative-Quantitative Divide: Guidelines for Conducting Mixed Methods Research in Information Systems , 2013, MIS Q..

[56]  Vassilis Kostakos,et al.  Applying configurational analysis to IS behavioural research: a methodological alternative for modelling combinatorial complexities , 2017, Inf. Syst. J..

[57]  Nancy K. Lankton,et al.  Uncertainty and Industry Structure Effects on Managerial Intuition About Information Technology Real Options , 2008, J. Manag. Inf. Syst..

[58]  Volatility Inadaptability: Investors Care About Risk, But Can't Cope with Volatility , 2014 .

[59]  John Gardner,et al.  A Comparison of Socially Responsible and Conventional Investors , 2004 .

[60]  Christian Maier,et al.  The Curse of Mobile Marketing: A Mixed Methods Study on Individuals' Switch to Mobile Ad Blockers , 2017, ICIS.

[61]  Christian Fisch Initial coin offerings (ICOs) to finance new ventures , 2019, Journal of Business Venturing.

[62]  Heshan Sun,et al.  Understanding Post-Adoption Regret from the Perspectives of Herding and Mindfulness , 2015, ICIS.

[63]  Peer C. Fiss,et al.  Embracing Causal Complexity , 2017 .

[64]  Sunil Mithas,et al.  Organized Complexity of Digital Business Strategy: A Configurational Perspective , 2020, MIS Q..

[65]  A. Lewis,et al.  Morals, money, ethical investing and economic psychology , 2000 .

[66]  John A. Haslem,et al.  Toward the Development of Client-Specified Valuation Models , 1974 .

[67]  H. Tikkanen,et al.  Interactions of Individuals' Company-Related Attitudes and Their Buying of Companies' Stocks and Products , 2008 .

[68]  Raghava Rao Mukkamala,et al.  Regulating Cryptocurrencies: A Supervised Machine Learning Approach to De-Anonymizing the Bitcoin Blockchain , 2019, J. Manag. Inf. Syst..

[69]  Paul A. Pavlou,et al.  Understanding and Predicting Electronic Commerce Adoption: An Extension of the Theory of Planned Behavior , 2006, MIS Q..

[70]  Alexander Muermann,et al.  The Impact of Regret on the Demand for Insurance , 2004 .

[71]  Azwadi Ali Predicting Individual Investors- Intention to Invest: An Experimental Analysis of Attitude as a Mediator , 2011 .

[72]  Elena Katok,et al.  Regret and Feedback Information in First-Price Sealed-Bid Auctions , 2008, Manag. Sci..

[73]  C. Fornell,et al.  Evaluating Structural Equation Models with Unobservable Variables and Measurement Error , 1981 .

[74]  T. Moore,et al.  Bitcoin: Economics, Technology, and Governance , 2014 .

[75]  Silvio Vismara Equity retention and social network theory in equity crowdfunding , 2016 .

[76]  Avanidhar Subrahmanyam,et al.  Brand Perceptions and the Market for Common Stock , 2001 .

[77]  G. Giudici,et al.  Why Do Businesses Go Crypto? An Empirical Analysis of Initial Coin Offerings , 2018, Journal of Economics and Business.

[78]  A. Lewis,et al.  Morals and Markets: The Case of Ethical Investing , 1999, Business Ethics Quarterly.

[79]  L. Stokes,et al.  Legislative Staff and Representation in Congress , 2018, American Political Science Review.

[80]  P. Philips,et al.  Why Do We Invest Ethically? , 2005 .

[81]  Omar El Sawy,et al.  Theorizing the Multiplicity of Digital Phenomena: The Ecology of Configurations, Causal Recipes, and Guidelines for Applying QCA , 2020, MIS Q..

[82]  Yan Chen,et al.  Blockchain Tokens and the Potential Democratization of Entrepreneurship and Innovation , 2017, Business Horizons.

[83]  Detmar W. Straub,et al.  Holistic Archetypes of IT Outsourcing Strategy: A Contingency Fit and Configurational Approach , 2019, MIS Q..

[84]  R. Sugden,et al.  Regret Theory: An alternative theory of rational choice under uncertainty Review of Economic Studies , 1982 .

[85]  Wilbur G. Lewellen,et al.  Individual Investor Risk Aversion and Investment Portfolio Composition , 1975 .

[86]  Morten T. Hansen,et al.  Faking It or Muddling Through? Understanding Decoupling in Response to Stakeholder Pressures , 2012 .

[87]  Lan Cao,et al.  Emotion in IT Investment Decision Making with A Real Options Perspective: The Intertwining of Cognition and Regret , 2016, J. Manag. Inf. Syst..

[88]  A. Parasuraman,et al.  When the Recipe Is More Important Than the Ingredients , 2014 .

[89]  Svetlana Abramova,et al.  Perceived Benefit and Risk as Multidimensional Determinants of Bitcoin Use: A Quantitative Exploratory Study , 2016, ICIS.

[90]  Juho Lindman,et al.  Opportunities and Risks of Blockchain Technologies (Dagstuhl Seminar 17132) , 2017, Dagstuhl Reports.

[91]  Ioana Popescu,et al.  Advance Selling When Consumers Regret , 2012, Manag. Sci..

[92]  Paul Slovic,et al.  Information processing, situation specificity, and the generality of risk-taking behavior , 1972 .

[93]  T. Berry,et al.  The Disposition Effect and Individual Investor Decisions: The Roles of Regret and Counterfactual Alternatives , 2006 .

[94]  Carsten Q. Schneider,et al.  Set-Theoretic Methods for the Social Sciences: Contents , 2012 .

[95]  A. Tversky,et al.  Prospect theory: analysis of decision under risk , 1979 .

[96]  Robert M. Davison,et al.  Research in Information Systems: Intra-Disciplinary and Inter-Disciplinary Approaches , 2018, J. Assoc. Inf. Syst..

[97]  Kim P. Huynh,et al.  Bitcoin Awareness and Usage in Canada: An Update , 2019, The Journal of Investing.

[98]  Mark P. Taylor,et al.  The Crisis in the Foreign Exchange Market , 2009, SSRN Electronic Journal.