Bitcoin study reveals false beliefs on ease of use and privacy

January 25, 2016 by Todd B. Bates
Bitcoin study reveals false beliefs on ease of use and privacy
Bitcoin is a popular digital currency that was introduced in 2009

People who have used Bitcoin, and those who don't have any experience with it, have something in common: Both groups share misconceptions about how the controversial digital currency actually works.

People who have never used Bitcoin – an internet-based form of money – don't think they ever could. Even Bitcoin users are not well-versed in how it works and overestimate, for example, the privacy of transactions, according to a study by Janne Lindqvist, assistant professor of electrical and computer engineering and member of Rutgers' WINLAB (Wireless Information Network Laboratory), and two graduate students, Xianyi Gao and Gradeigh D. Clark.

Still, study participants overall viewed Bitcoin as an ideal payment system.

The peer-reviewed study – the first-of-its-kind – will be formally published in May at the annual Association for Computing Machinery's Conference on Human Factors in Computing Systems, more commonly known as CHI 2016, in San Jose, California. CHI is the premier international conference on human-computer interaction.

Bitcoin is a new type of money that relies on a decentralized peer-to-peer network with a public ledger that tracks transactions. Two people can make transactions, with degrees of anonymity, across continents, at any denomination, and without any transaction fees going to a third party, according to the Rutgers study. The study's results illustrate Bitcoin's tradeoffs, uses and barriers to entry.

According to, the Bitcoin market totaled about $6 billion as of January 22, 2016.

On January 14, Mike Hearn, a high-profile Bitcoin developer who worked on it for more than five years, declared that Bitcoin had failed because it was controlled by a handful of people and was "on the brink of technical collapse." In an internet post headlined "The resolution of the Bitcoin experiment," Hearn wrote that he will no longer participate in its development and had sold all of his Bitcoin "coins."

Lindqvist said the Rutgers interviews for the study were done a year before Hearn's announcement and there has "always been some turmoil with Bitcoin." Though one developer feels that Bitcoin has failed, "there's obviously still a lot of people who disagree with this," Lindqvist said.

In their study, Rutgers researchers interviewed 10 Bitcoin users and 10 nonusers (including some recruited on the Rutgers campus) about how they perceive the virtual currency.

The researchers found that:

  • People who had no experience with Bitcoin thought that it would be too hard or "too scary to use," according to Lindqvist.
  • People who actively use Bitcoin are not necessarily well-versed in how it works.
  • Bitcoin users also had misconceptions about Bitcoin's ability to protect their anonymity because transactions are recorded in a public ledger and are traceable with some effort, Lindqvist said. The users in the study trust the security and privacy mechanisms of Bitcoin more than they actually should.
  • Bitcoin users want government insurance of Bitcoin deposits, despite being largely anti-government and anti-regulation.
  • Study participants' ideas of an ideal payment system generally matched features that Bitcoin already provides.

Lindqvist said Rutgers researchers are doing follow-up studies to measure changes in perceptions in the wake of the current Bitcoin controversy.

He speculated that even if Bitcoin failed, many different stakeholders are interested in using digital currencies. He believes that with the advent of Bitcoin, "we'll get more cryptocurrencies (secured digital currencies) or more use of Bitcoin or various currencies."

In the future, it's possible that we'll eventually have a cash-free society, he said. But he doesn't know if people would be willing to let go of cash.

Cash has many good features and is "quite convenient for a lot of purposes," he said. "What I personally like is the anonymity. You can't track at all what I'm buying from the supermarket if I don't use a loyalty card with my purchases when I pay in cash."

Explore further: Dutch hold 10 for Bitcoin money laundering

Related Stories

Dutch hold 10 for Bitcoin money laundering

January 20, 2016

Dutch police have arrested 10 people in the Netherlands as part of an international probe into money-laundering through sales of the shadowy virtual currency Bitcoin, prosecutors said Wednesday.

Vietnam says bitcoin transactions are illegal

February 28, 2014

(AP)—Vietnam's communist government said trading in bitcoin and other electronic currencies is illegal, and warned its citizens not to use or invest in them.

Bitcoin 'mining pool' promises to stay small

July 17, 2014

The largest group of bitcoin miners, which maintains and processes transactions in the digital currency, is promising to avoid majority control of the currency as a temporary measure to maintain the payment system's credibility.

Recommended for you

Microsoft aims at Apple with high-end PCs, 3D software

October 26, 2016

Microsoft launched a new consumer offensive Wednesday, unveiling a high-end computer that challenges the Apple iMac along with an updated Windows operating system that showcases three-dimensional content and "mixed reality."

Making it easier to collaborate on code

October 26, 2016

Git is an open-source system with a polarizing reputation among programmers. It's a powerful tool to help developers track changes to code, but many view it as prohibitively difficult to use.

Dutch unveil giant vacuum to clean outside air

October 25, 2016

Dutch inventors Tuesday unveiled what they called the world's first giant outside air vacuum cleaner—a large purifying system intended to filter out toxic tiny particles from the atmosphere surrounding the machine.


Adjust slider to filter visible comments by rank

Display comments: newest first

not rated yet Jan 25, 2016
This book contains some chapters enlightening a (controvesial) vision to relfect on: in how far privacy is what we want: https://www.googl...88,d.d24
not rated yet Jan 25, 2016
Btw: it's free downloadable.
Jan 25, 2016
This comment has been removed by a moderator.
not rated yet Jan 25, 2016
If the IRS wants to tax Bitcoins as a financial asset, then the government needs to Insure it.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.