Background

Cryptocurrencies have gained increasing media attention and seen higher trading volume and prices, and applications as accepted currencies in main stream business. In contrast to official currencies, however, the value or exchange rates of cryptocurrencies are not managed by centralized institutions (e.g., the Federal Reserve), and in contrast to stocks, cryptocurrencies do not have intrinsic value (e.g., price-to-earnings ratio of stocks). Rather, the value of cryptocurrencies is necessarily intersubjective.

As such, their value is necessarily closely tied to the level of confidence that consumers feel are appropriate for cryptocurrencies.

In order to investigate consumers' perceptions and opinions about cryptocurrencies, we aim to develop a Consumer Crypto Confidence Index (c3i) over time, a consumer-driven evaluation of crypto’s role, reliability, and signal value in the economy. We use this index to better understand the macro and microeconomic factors that drive consumers’ confidence in cryptocurrency, as well as the role of consumer confidence as a leading or lagging indicator of the realized value of cryptocurrencies in the market.

In so doing, we follow the pattern of many broad indicators of consumer sentiment, such as Michigan’s Consumer Confidence Index, which, while similarly subjective, constitute leading indicators of economic performance.