Cryptocurrency Consumer Buying Behaviour: Motivations and Risks

This report provides a detailed analysis of consumer buying behavior in the cryptocurrency market, examining the multifaceted nature of consumer behavior with reference to economic theory, identifying and discussing the risks involved in cryptocurrency investments, and suggesting mitigation strategies for cryptocurrency buyers. It further explores consumer motivations, cultures, and perceptions related to cryptocurrency use, outlines the consumer decision-making process with support from consumer decision-making theories, and provides recommendations to the Financial Conduct Authority (FCA) to positively influence cryptocurrency consumer behavior. This student-contributed assignment is available on Desklib, a platform offering a wide range of study tools and resources for students.

Consumer Buying Behaviour of Cryptocurrency
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Table of content
Table of Contents
Introduction......................................................................................................................................3
Part 1................................................................................................................................................3
With reference to a specific theory, explain the multi faceted nature of consumer buying
behaviour of cryptocurrencies users............................................................................................3
Identify and discuss the risks involved in cryptocurrencies........................................................4
Discuss the ways in which cryptocurrency buyers could mitigate risks in consumer buying
processes. ...................................................................................................................................4
Part 2................................................................................................................................................6
Consumer Motivations, cultures and perceptions in relation to cryptocurrencies use................6
Cryptocurrency consumer decision making process with support of consumer decision
making theories. .........................................................................................................................6
Recommendations to FCA to positively influence cryptocurrency consumer behaviour...........7
Conclusion.......................................................................................................................................8
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Introduction
Consumer buying behaviour is referred to the study which focuses upon groups,
individuals as well as organisations along with the processes that are used in order to choose,
secure and further utilise as well as disposal of the products, services as well as ideas. It is
helpful in providing satisfaction to the needs along with analysis of the impact that these process
have upon the society as well as consumer. The success or failure of an organisation in terms of
marketing tends to be dependent upon the consumers upon the target customers and the
reactions of the groups that is expressed in form of buying trends (Arli and et.al., 2020).
Part 1
With reference to a specific theory, explain the multi faceted nature of consumer buying
behaviour of cryptocurrencies users.
The consumer buying behaviour has micro as well as macro dimensions in aspect of the
cryptocurrencies. The micro dimensions of the consumer behaviour include customers,
Suppliers, competitors, general public and Resellers. Customers are the base that is attracted by
the organisations in order to enhance the purchase of the product. The customers in case of
cryptocurrency can be the middlemen (which can be eliminated in the process), banking services,
etc. Suppliers of the funds are also likely to have an impact upon the cryptocurrencies.
Competitors are the parties that sell similar products. In case of cryptocurrencies. Bitcoins can be
considered as the competitor for cryptocurrencies (Auer and Tercero-Lucas, 2021).
The macro dimensions of consumer behaviour in aspect of cryptocurrencies can be
financial market condition, cryptocurrency related fundamentals and technological aspects and
cryptocurrency market sentiment. The financial market conditions will include interest rates
whereas as cryptocurrency related fundamentals include trading volume as well as volatility.
Analysis of consumer behaviour theory has been done with the economic theory of
Income and Savings theory. Consumer behaviour theory is referred to the study of the ways in
which the people make decisions. Economic theory of Income and Savings has been discussed as
a part of consumer behaviour theory that further helps in analysing consumer behaviour in terms
of Cryptocurrencies. Income tends to influence the buying behaviour of a particular person as,
the person with high purchasing power as well as high disposable income is likely to invest more
on the cryptocurrencies.
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Identify and discuss the risks involved in cryptocurrencies
The concept of consumer risk is basically a potential risk that is present in the various
customer oriented products. The risk takes place when the product is not able to meet the quality
standards remain undetected in the quality control system and further enters in the consumer
market place (Castellanos, Coll-Mayor and Notholt, 2017).
There are various models and theories of risk. The risk management is basically a
systematic process which involves identification of the risk, analysing the risk and further
responding to the risk. There are basically five steps for the five stage model of the risk
management. The stages include identify risks, Qualitative risk analysis, Quantitative risk
assessment, Risk response planning as well monitoring and control of risk.
There is a lot of risk involved in the cryptocurrencies such as a risk of frauds as well as
regulatory compliance along with the fluctuations in the cryptocurrencies. Hence, it is important
for the investors to identify the various risks that is involved in the cryptocurrencies investment.
After identification of the risk, the analysis of qualitative and quantitative risk is done. Further,
the response is planned in respective of risk in crypto investments. The monitoring and control of
risk involved in the cryptocurrencies is also essential (Hemantha, 2021).
Discuss the ways in which cryptocurrency buyers could mitigate risks in consumer buying
processes.
Consumer buying process is a process that is basically referred as the model that is
applicable in the retail as well as e commerce in order to come upon a decision of adding an item
to the basket. The consumer buying behaviour of cryptocurrencies also comprises of various
steps. The various steps involved in the buying behaviour of customers in aspect of
cryptocurrencies include, problem recognition, information gathering, evaluation of the
solutions, the phase or process of purchase and the last one is post purchase phase. The problem
recognition stands for identification of the problem or situation that can be sorted out with a
product and in this case the product is cryptocurrency. Accordingly the rest of the stages are
followed in deriving upon a decision of investing in the cryptocurrencies (Mataruna-dos-Santos
and Wanick, 2018).
Risk mitigation is a process that involves development of the plans in context of
mitigation that further help in management, elimination as well as reduction of risk at an
acceptable level. When a plan gets implemented, it required continuous monitoring in order to
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assess the efficacy in order to revise the course of action. Risk mitigation is important in the
consumer buying process in order to make contingency plans and further helps in minimising the
risk.
It is very important to identify the strategies of consumer reducing risk in the consumer
buying behaviour. Until and unless the strategies are identified, the risk can not be controlled or
mitigated. Several strategies have been discussed in context of the consumer reducing risk n the
consumer buying behaviours of the cryptocurrency below.
The strategy of leverage quantitative data can be used. The strategy involves supporting
proposals. It requires maintaining and developing the internal documentation with the help of
assessments as well as case studies. They can be further combined with the external sources of
validation. In order to leverage quantitative data, relevant reports, studies and articles can be
shared.
Ensuring transparency is another strategy that can be used in aspect of highlighting
information regarding the cryptocurrencies where the customers are free enough to voice their
opinions and issues regarding the product. The financial stability as well as customer service can
be easily left uncovered in order to depict transparency regarding cryptocurrency.
Management of expectation can also be used as a strategy to mitigate the risk regarding
cryptocurrencies. It is very important to have clear objectives, budgets as well as scope of work
in order to build trust. The management of expectation can help in eliminating the fear,
uncertainty and doubt regarding cryptocurrencies can prove helpful in mitigating the perception
of risk.
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Part 2
Consumer Motivations, cultures and perceptions in relation to cryptocurrencies use.
(Covered in PPT)
Cryptocurrency consumer decision making process with support of consumer decision making
theories.
(Covered in PPT)
Recommendations to FCA to positively influence cryptocurrency consumer behaviour.
(Covered in PPT)
Conclusion
It can be concluded from the study that the consumer buying behaviour is an important
aspect for a product or service. The report has highlighted upon the concept along with the
application of tech buying process in aspect of cryptocurrencies. The report has highlighted risk
mitigation concept along with the strategies and the consumer buying processes. Further, the
concept of consumer risk has been discussed along with the model and theory of analysing risk.
Also, the report has highlighted the consumer buying behaviour while considering the micro and
macro dimensions of consumer behaviour while analysing the consumer behaviour.
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References
Books and Journals
Arli, D. and et.al., 2020. Do consumers really trust cryptocurrencies?. Marketing Intelligence &
Planning.
Auer, R. and Tercero-Lucas, D., 2021. Distrust or speculation? The socioeconomic drivers of US
cryptocurrency investments.
Castellanos, J.A.F., Coll-Mayor, D. and Notholt, J.A., 2017, August. Cryptocurrency as
guarantees of origin: Simulating a green certificate market with the Ethereum
Blockchain. In 2017 IEEE International Conference on Smart Energy Grid Engineering
(SEGE) (pp. 367-372). IEEE.
Hemantha, R., 2021. Factors Influencing Cryptocurrency Adoption Among Individuals: A
Systematic Literature Review (Doctoral dissertation, Auckland University of
Technology).
Mataruna-dos-Santos, L.J. and Wanick, V., 2018. Cryptocurrencies in the ludic economies: the
case of contemporary game cultures. Blockchain and Cryptocurrencies, p.55.
Mazambani, L. and Mutambara, E., 2019. Predicting FinTech innovation adoption in South
Africa: the case of cryptocurrency. African Journal of Economic and Management
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Mendoza-Tello, J.C. And et.al., 2019. Disruptive innovation of cryptocurrencies in consumer
acceptance and trust. Information Systems and e-Business Management, 17(2), pp.195-
222.
Rice, B. and Williams, B., 2019. Cryptoassets consumer research points to ignorance and risky
behaviour. Journal of Investment Compliance.
Werle, N. and Lehtonen, L., 2018. Hedging Your Bets: The Prospects of Cryptocurrency Use in
Online Gambling: A Mixed-Methods Study.
Wu, Y., Li, J. and Gao, J., 2021. Real-Time Bidding Model of Cryptocurrency Energy Trading
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Online
Financial Conduct Authority, 2021. [Online] Available through:
<https://www.fca.org.uk/publications/research/research-note-cryptoasset-consumer-research-
2021>
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