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Cait Lamberton: Yeah, it seems to us
that the dominant crypto currencies are those that people
anchor on the most. So they're
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going to key in on what's going
on with Bitcoin. They're going to key in on what's going on
with Ethereum. Those are, you
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know— they're— they're the
loudest in the market. That doesn't mean that others don't
matter. But I— as we track
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cryptocurrency confidence, we
see a fairly strong association with those prices.
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Welcome to <i>The Ripple Effect</i>,
the podcast that takes you on a
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journey through the minds of
Wharton faculty. I'm your host, Dan Loney, and in each episode,
we'll be diving deep into the
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inspiration behind the
groundbreaking research that Wharton professors have
conducted and exploring how
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their findings resonate with the
world today. So how do consumers feel about cryptocurrency right
now? There is promise seen by
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many, but cautiousness from
others. Pleasure to be joined by Cait Lamberton, who is Professor
of Marketing and Co-Editor of
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<i>The Journal of Warketing</i> here at
the Wharton School. Cait, great
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to talk to you again. How are
you? I'm doing great. How are you? I'm good. You know, I think
it's interesting because there's
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so much exuberance around
cryptocurrency, but it's still, you know, an interesting process
that a lot of people are trying
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to learn what cryptocurrency is
and what it will be able to do. So probably the attitudes of a
lot of consumers are— are kind
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of all over the map. Yeah, it's very confusing. And
it's interesting because it's
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called cryptocurrency, so we
think it's going to act like a currency. And so if you come at
it from a finance perspective,
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you assume that what that means
is there's some stable underlying thing about which
people can agree, and there's an
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underlying asset, and we can at
least, given good data, figure out what it's worth. But the
reason we're interested in this
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from a marketing perspective is
because it acts more like marketing things do, in the sense
that it's very subjective and
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it's very malleable, and it's
very heterogeneous as a result, both within and across people,
and within a moment and across
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time. And so when you say people
are trying to learn about it, we can understand why it's so hard
to learn about. The data changes
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constantly. And you ask one
person or another person, not only are their perceptions
different, but the data they're
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using to form their perceptions
are different. So learning it is a tricky task, and you can't
blame anyone who sort of throws
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their hands up in the air and
says it's a moving target. Well, and realistically, it
doesn't help it that we've had
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instances pop up over the last
few years of negative actions. FTX being one of them. You know,
from a marketing perspective,
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the old line— and I'm sure
you've used it from time to time— "Any press is good press."
This is not the case when you
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have something like FTX pop up. It's only good in the sense that
it makes people pay attention
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and perhaps be more careful.
We've also seen a lot of high profile cases where people were
taking advice from individuals
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whose understanding of
cryptocurrency was perhaps also not founded in the best data
available, or who perhaps had
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faith in cryptocurrency that was
rooted in information given by sources that were drawing
information from another source
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that was less or more reliable,
but again— so— so we can say all press is not good press, but I
think to the extent that it
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provides more information to us
about how this works, it's useful for us, at least as a—
you know, as either a cautionary
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tale or an informative option
for us. And to that extent, although these things are negative
in the short term, I think they
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do provide some illumination about the way it can unfold
in the market. So you and your colleagues here at
Wharton have come up with the
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Consumer Cryptocurrency
Confidence Index. Tell us a little bit about it and why you
think it will be important
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moving forward. Yeah. So given that— that
cryptocurrency is such a socially valued phenomenon, we
were really interested in how
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that value was emerging. It
seemed to us that in the world of really most blockchain
assets, the value is driven by
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basically what people think of
it. And in fact, one of my collaborators on this index,
Martin Paul Fritze and I had
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also written a paper on the way
that people valued NFTs, which are another blockchain-
associated asset. And what we
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found there is that the value is
completely driven by social currency. It's not about even
scarcity, which, in classical
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economic terms should matter.
But scarcity, if anything, had a negative effect. So we thought,
okay, if this is all about
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social value, then what matters
is just how people feel about it. And so shifting that over to
cryptocurrency seemed a natural
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step. And the nice thing about
confidence is that— is that people can tell you how
confident they are. That's a
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completely subjective
perception, and it's easy for people to self report. And so we
simply started asking people.
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You know, how— how— how well do you think
this is going to go? How likely is it that you're going to be
able to use this at more places
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in the next six months? How
likely do you think this is going to be widely accepted?
How— how likely do you think
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it's going to be that it has
more as opposed to less value in the future? People can make
those predictions, and perhaps
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those predictions are all that
really matters in determining how much they're willing to pay
for it in the present.
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How much does the fact that
there are several crypto currencies out there— does that
impact the mindset of the
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consumer yet? Or is that still
somewhat to be determined? Because, again, this is still
relatively new.
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Yeah, it seems to us that the
dominant crypto currencies are those that people anchor on the
most. So they're going to key in
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on what's going on with Bitcoin.
They're going to key in on what's going on with Ethereum.
Those are— you know, they're—
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they're the loudest in the
market. That doesn't mean that others don't matter. But I— as we
track cryptocurrency confidence,
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we see a fairly strong
association with the— those prices. Some of the others that
are more short-lived possibly
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track momentarily with the more
dominant cryptocurrencies. But you know, to be honest, we
haven't looked at what happens
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when there might be a flood of
smaller cryptocurrencies that enter the market and leave. It's
likely that those are going to
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be noticed by a smaller segment
of the population. We're trying to capture the confidence that's
a list that is expressed by
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general population. So we're
capturing samples that are not only people who already own
crypto, who are already
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following crypto, but people,
perhaps, who have a less direct connection to crypto on a daily
basis.
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So what are they telling you, then, about cryptocurrency, their understanding, their potential
use? I mean, there's certainly,
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obviously a lot of questions
that could be asked right now. Yeah. So an interesting thing is that
since we started collecting this
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data in early 2023, it has
steadily increased, which you would expect with any new
technology, any new product. As
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it becomes more familiar, even
if people don't really know a lot more about it, just by
virtue of becoming more
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familiar, people feel like, "Oh,
it's probably more okay," by virtue of sticking around. But
there's some really interesting
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asymmetries in it. So for
example, people are far more willing to pay in cryptocurrency
than they are willing to be paid
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in cryptocurrency. Which is kind
of a funny thing, because it really doesn't make any
difference. You're— you know,
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it's just money going in and out
of your bank account. But they're still not quite okay
with you paying them. So— so
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that's kind of— that tells you
that there's still some wobbliness in there, even if
they say they're very confident
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in it. I think that when we get
to the point where consumers say, "Okay, it's okay for me to
receive my wages in
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cryptocurrency," then we're
seeing really strong level of confidence that this is a
legitimate way to exchange
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value. People still do recognize
that it's extremely volatile. They absolutely recognize that,
but some of them find that
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exciting. And I would say that
is probably, you know, the core finding. If we were to step back
from our data as a whole, we
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would say there's massive
heterogeneity in people's perceptions. Some people see
that as an investment. And if
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that's the case, then we would
say, "Okay, we should think about this as an investment. Perhaps
that's how it should be
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discussed." Some people, however,
do see it as a currency. Okay, that's a completely different
class of material. So that's a
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different language and a
different category. So depending on how people categorize it, we
might need to use a different
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language for it. So I think one
of the things that we're trying to understand is how people
categorize this, what drives
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them to categorize it one way or
another, and therefore how they handle it. You know, what kinds
of risks they're willing to
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take, what they're not willing
to take, whether they're willing to give it to charities, whether
they're willing to accept it,
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et cetera. Well, I guess it's interesting
then. The more— or, you know, the frequency we see of companies
deciding to accept
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cryptocurrency for payment, then
we have more of an opportunity to see its potential growth as
we move forward. I remember a
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story a couple years ago, the
Oakland A's baseball team was trying out accepting
cryptocurrency for tickets for
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people who wanted to, you know,
to come to the games. It didn't— didn't help them a lot. But
still, you know it, I guess
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there is this feeling out
process of seeing how you can use it.
- Yeah, and we're just starting to study
that. We are looking right now
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at what we're calling crypto
creep— which sounds bad, but we don't mean it in that way. So
we're just starting to look at
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the proliferation of
cryptocurrency ATMs geographically, to try to
understand the relationship
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between, for example, localized
levels of crypto confidence. So we can understand, at least to
some extent, from tax records,
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the geographic areas in which
cryptocurrency ownership is the highest. And then we can
start to look at the areas in
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which acceptance by businesses
and access via ATMs is higher. We can look at how those things
are unfolding over time. Is it
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the case that the businesses are
leading, in the sense that they're saying, we're going to
accept this? And then more
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people in that geographic area
decide that it's— it makes sense for them to own cryptocurrency.
Or is it the case that the
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private individuals decide to
own cryptocurrency and then the businesses follow? We're hoping
that over time, if we can watch
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this, we can see who's leading
and who's following. Because that's a really interesting
demonstration of how a
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technology diffuses with a
really specifically socially- driven kind of technology.
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Is it safe to assume that if
you're somebody who is kind of in the crypto world right now,
that at least you're aware of
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and thinking more about the
potential of regulatory in this space than, say, more so the
public in general who just
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hears the word cryptocurrency
and they're not sure about what is all entailed?
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Yeah, you know, I don't know. I
think— I think none of us know what will happen with
regulation. Again, it takes us
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back to the question of what
exactly this is. Whether it's an investment or a currency, or
whether it's a blend of both, or
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whether it's something different
entirely. What I can tell you is that we— we've come to understand
that there's a psychological
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factor that underlies people's
acceptance of cryptocurrency that is quite independent of
political partisanship. There's
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a correlation, but we can't make
some kind of causal claim. And the psychological construct is
distributed trust. So people who
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tend to believe that the world
is safer when centralized institutions are running the
system tend to be less
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comfortable with cryptocurrency,
because cryptocurrency is based on the idea that trust should be
democratized, right? And so you
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would— you would expect that
people who believe in centralized institutions are
going to be more pro regulation,
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and they're going to say, "Okay,
maybe this stuff can be out in the market, but we need a
centralized institution to make
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sure that it's managed in a way
that's safe." Those people might also choose not to own
cryptocurrency because they're
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not— they're not particularly
comfortable with this level of democratized trust that exists
in cryptocurrency to begin with.
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Cryptocurrency owners like this
idea that the world is safer when everybody has a little bit
of control as exists on the
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blockchain. For those people,
regulation doesn't make the world— worlds— feel any safer. And
so they're gonna have a very
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different attitude toward that
kind of process. So I think we're gonna— we're gonna see
different psychological
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processes unfold that will
affect both the way people interact with cryptocurrency
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and the way that they
think about regulation. Where do you think the research takes you guys next,
in terms of trying to
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better understand what's
going on? Well, I think the causality
behind the confidence itself and
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the prices of the cryptocurrency
is something that we're still trying to understand. There are
so many factors that affect
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people's confidence in something
like cryptocurrency, and there's so many chicken and egg
problems. You know, we'd like to
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be able to say we understand
what raises confidence in this. We'd like to be able to say that
it's confidence purely that is
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changing the price. It's likely
that, in some cases, people's innate confidence pushes the
price. It's possible, however,
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that the price changes and then
people's confidence changes. So we want to keep trying to
understand that. We have some
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ideas at present, and we have
some preliminary analysis, but it's a very hard thing to
untangle. And as we see more,
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you know, external shocks,
becomes even noisier. So we want to keep trying to understand
that. And beyond that, I think
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we're going to continue to
understand how cryptocurrency changes in its use in the
marketplace. It's going to keep
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evolving. I think when crypto
first start— first came in the market, there were people who
said, "This is a blip." You know,
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this— "This thing is going to
come and go." At this point, I think that's a very tough case
to make, whether people like it
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or they hate it. It's shown that
it has some staying power, and that is probably because it's
learning how to evolve. It's
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learning how to find places
where it can become truly useful to people. So it'll be really
interesting to see how it
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continues to find pockets of
indispensability so that it—it— it becomes a stable part of our
market.
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Cait, great to talk to you
again. Thanks very much for your time and your insight.
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Nice talking with you too. You got it. Cait Lamberton, Marketing
Professor and Co-Editor of <i>The</i>
00:14:55
<i>Journal of Marketing</i> here at the
Wharton School. Thank you for listening to
<i>The Ripple Effect</i>.
00:15:00
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