Trust in Bitcoin as a Store of Value

Okko Jaakko Juhana Mäkijärvi & Daniel Anton Lassooy

Student thesis: Master thesis


Blockchain based cryptocurrencies have the potential to disrupt a number of industries and create significant economic surplus. During the past few years different cryptocurrencies have accumulated significant market values and have become a daily topic in business media. One of the fundamentals behind cryptocurrencies is the technology that is said to enable trust between users using technologies such as hash functions, blocks and digital signatures. This work studies the biggest cryptocurrency Bitcoin and trust in this technology. Bitcoin is still a new innovation and people are divided on whether this cryptocurrency can disrupt the financial industry. Some experts have said Bitcoin is going to become a superior store of value in the future and change how the payment infrastructure works. For any of this to happen people need to first trust this new innovation. Trust is one of the most essential factors that affect the adoption of a new technology like Bitcoin. This paper will study Bitcoin in the framework of trust. Bitcoin has been often compared to gold because it shares lot of same characteristics as this precious metal. Gold is often used as a store of value by investors and sovereign countries because of its independence from any centralized authority. In this paper we research trust in Bitcoin by studying its potential as a store of value. Goal is to research how much Bitcoin is trusted as store of value and compare this to gold. This work starts with a literature review of the essential technology behind Bitcoin infrastructure. Then it moves on to defining store of value and studying how gold and Bitcoin share some of the same characteristics. After this the main theories of trust are presented. The primary data was collected from eight interviews with finance and Bitcoin experts. The information from the interviews and the literature is combined together in the discussion chapter where we conclude how much trust Bitcoin establishes as a store of value. Results show us that Bitcoin’s core technology establishes robust trust. The reputation of Bitcoin and regulation of the third parties that facilitate the Bitcoin market place are considered insufficient. Bitcoin already has some use as a store of value although it is still a long way from having as much trust as gold. Bitcoin would become more trusted as a store of value if it would be regulated, trusted third parties with high reputation would enter the marketplace and some technical limitations would be solved.

EducationsMSc in Business Administration and Information Systems, (Graduate Programme) Final Thesis
Publication date2018
Number of pages105