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Cash in the Pocket, Cash in the Cloud: Cash Holdings of Bitcoin Owners

Daniela Balutel, Christopher Henry, Kim Huynh and Marcel Voia

Staff Working Papers from Bank of Canada

Abstract: We estimate the effect of Bitcoin ownership on the level of cash holdings of Canadian consumers. Bitcoin ownership positively correlates with cash holdings even after accounting for selection into ownership via a control function approach. On average, Bitcoin owners hold 83 percent (in 2018) to 95 percent (in 2017) more cash than non-owners. Focusing on the quantiles of cash holdings, we find that Bitcoin ownership has a highly nonlinear effect. For example, the difference in cash holdings between Bitcoin owners and non-owners in 2017 varies from 63 percent at the 25th quantile of cash to 176 percent at the 95th quantile of cash. Our results provide some evidence to reject the hypothesis that new digital currencies or technologies, such as Bitcoin, will lead to a decline in cash holdings.

Keywords: Bank notes; Digital currencies and fintech; Econometric and statistical methods (search for similar items in EconPapers)
Pages: 35 pages
Date: 2022-06
New Economics Papers: this item is included in nep-ban, nep-dem, nep-mon and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:22-26

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