‘What are cryptoassets?
There are thousands of different types of cryptoassets out there – or as you might know them, cryptocurrencies. You’ve probably heard of a few – Bitcoin, Ripple, Litecoin and Ethereum have all been mentioned in the news recently. But what exactly is it?
Well, let’s start by breaking down the word ‘cryptocurrency’. The first part of the word, ‘crypto’, means ‘hidden’ or ‘secret’ reflecting the secure technology used to record who owns what, and for making payments between users. The second part of the word, ‘currency,’ tells us the reason cryptocurrencies were designed in the first place: a type of electronic cash.’ Bank of England, 2024
Cryptocurrencies are based on Distributed Ledger Technologies (DLTs). The Bitcoin, and Blockchain which a type of DLT, were launched around 15 years ago. The global cryptocurrency market reached a value of $ 3Trillion in 2021, which was roughly the same as the value of goods and services produced in UK economy (Gross Domestic Product). Apart from cryproccurencies there is a wide range of crypto assets including Initial Coin Offerings (ICOs) and Non-Fungible Tokens (NFTs). Some of these products are marketed in sport events, with sponsorship from cryptoassets organizations is projected to reach $5 billion by 2026.
In a paper titled Fostering trust and overcoming psychological resistance towards cryptocurrencies and cryptoassets researchers at Coventry University studied the adoption of new technologies. More precisely, this publication examines how sport event sponsorships can be utilised to foster trust and reduce barriers to adopting cryptocurrencies and cryptoassets. The context is the 2022 FIFA World Cup, which can be considered as one, if not the most, popular event around the globe. The study focuses on the sponsorship of Crypto.com, one of the main sponsors of the 2022 FIFA World Cup and an important cryptocurrency exchange. Sport sponsorship is an effective method of marketing. Bason et al. (2023) identify 590 sponsorships of sports properties by blockchain firms, including major sports properties such as the Olympic Games, major UK football clubs, and the NFL. However, little is known regarding the success of these sponsorships and this study contributes to their better understanding.
The study utilises innovation resistance theory (IRT) and trust transfer theory (TTT) to investigate the extent to which a sponsorship can increase trust and reduce barriers in innovative technologies such as cryptoassets, while also filling a research gap concerning consumer resistance to innovations in digital financial products and services. IRT seeks to explain consumer opposition to new products and services, specifically identifying functional barriers (usage, value and risk) and psychological barriers (tradition and image) to innovation. TTT, suggests that trust can be transferred from one entity to another through a cognitive process. Integrating the theoretical viewpoints of IRT and TTT, this study enhances our understanding on how sponsorship generates interest and reduces barriers to adoption. A mixed-methods approach is used, combining qualitative and quantitative paradigms, including a quantitative survey (1081 respondents) and a 24 interviews respectively.
This study has two key findings. First, it demonstrates that a positive consumer image of the sponsorship leads to trust in the sponsor’s product. These results corroborate the findings of a great deal of the previous work in TTT that have established the need for trust in new and innovative technologies, including cryptoassets. The second finding, combining IRT and TTT, confirms that trust in the product can reduce consumers’ psychological barriers to innovative technologies such as blockchain and cryptoasset products. This is also in accordance with previous studies that have suggested that fostering trust as an attitude is crucial to overcoming psychological barriers to adoption. The qualitative data collection suggested that security and financial risks, as well as perceived use benefits, are the key barriers to purchasing cryptocurrencies.
Babu, M. M., Bason, T., Porreca, R., Petratos, P., & Akter, S. (2024). Fostering trust and overcoming psychological resistance towards cryptocurrencies and cryptoassets. Psychology & Marketing, 41(1), 45-68. https://onlinelibrary.wiley.com/doi/full/10.1002/mar.21889
Bank of England https://www.bankofengland.co.uk/explainers/what-are-cryptocurrencies
Bason, Tom, Pythagoras Petratos, Rocco Porreca, and Mujahid Mohiuddin Babu. “The Centre for Business in Society White Paper Series.” (2023). https://www.researchgate.net/profile/Rocco-Porreca/publication/370472936_Sport_and_Blockchain/links/64524c215762c95ac36e7ec9/Sport-and-Blockchain.pdf
Dr Pythagoras Petratos
Lecturer in Finance