Consumer Behaviour in Cryptocurrency Trading: Theory, Risk and Mitigation

Consumer Behaviour

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
One specific theory for explaining multi-faceted nature of consumer buying behavior of
cryptocurrencies users............................................................................................................3
Risk involved in cryptocurrencies use....................................................................................3
Ways to mitigate the risk in consumer buying process..........................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
The report highlights about the consumer behaviour while trading in Cryptocurrency in
which one specific theory for explaining multi-faced nature of consumer buying behavior of
Cryptocurrency users is explained including the risk involved and ways to mitigate the risk is
determined. It is a type of digital token which is designed to work as a medium of exchange by
using decentralized technology that make secure payment and store money without going
through bank (Valdeolmillos and et. al., 2019).
PART A
One specific theory for explaining multi-faceted nature of consumer buying behavior of
cryptocurrencies users
The theory which is implemented for explaining multi-faceted nature of consumer buying
behavior of cryptocurrencies users is theory of reasoned action. The theory was developed by
Martin Fishbein and Icek Ajzen by focusing on analysing pre-existing attitudes in decision
making process. The theory explains that consumer act on behavior based on their intention to
receive or create results. It determines that customers are rational actors who focus on choosing
to act in their best interest. As per the theory, specificity is critical in decision making process.
Consumers generally take specific action when they expect any positive results. Cryptocurrency
has attracted substantial investment from consumers, businesses and the media. One of the
attractive features of Cryptocurrency is security and control over their money which influence
the consumer buying behaviour of Cryptocurrency users (Sharma and et. al., 2020). The
transaction of Cryptocurrency is protected with by military grade encryption due to which no one
can charge or make payment on behalf of customers without their permission. The
Cryptocurrency users might face heavy risk while trading but still they are ready to invest and
use widely.
Risk involved in cryptocurrencies use
The risk which is involved while trading Cryptocurrency is related to its volatility. It is
important for consumers to understand the risk while trading as it is of high risk and speculative.
The Cryptocurrency trading is volatile as if there are unexpected changes in market sentiment
can leads to sudden and sharp moves in price (Nagpal, 2017). The value of cryptocurrencies also
gets dropped by hundreds and thousands of dollars quickly if any unexpected changes occur. The