Strategic Complementarities in a Dynamic Model of Technology Adoption: P2P Digital Payments

Álvarez, Fernando; Argente, David; Lippi, Francesco; Méndez, Esteban; Patten, Diana Van

doi:10.3386/w31280

Cited by 8 publications

(1 citation statement)

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“…For some technologies, the benefit of adopting increases as more people adopt ( 65 ). Arguably, such complementarities, also called network externalities, are an inherent feature of digital payment methods and give a potential role for policy to improve allocations ( 66 ).…”

Section: Resultsmentioning

confidence: 99%

Are cryptocurrencies currencies? Bitcoin as legal tender in El Salvador

Alvarez,

Argente,

Van Patten

2023

Science

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A currency’s essential feature is to be a medium of exchange. This study explores the potential of cryptocurrencies to be used in daily transactions in El Salvador, the first country to make bitcoin legal tender. The government’s “big push” introduced “Chivo Wallet,” a digital wallet sharing features with Central Bank Digital Currencies (CBDCs), with perks to use it for trading bitcoins and US dollars. Through a nationally representative, face-to-face survey of 1800 households and blockchain data encompassing all Chivo Wallet transactions, we document a pattern of low and decreasing usage of digital payments and bitcoin. Privacy and security concerns are key adoption barriers, which speaks to a policy debate on crypto and CBDCs with anonymity at its core. Additionally, we estimate Chivo Wallet’s adoption cost and complementarities among adopters.

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Section: Resultsmentioning

confidence: 99%