Bitcoin and payment systems

Abstract

We study the relationship between Bitcoin and traditional payment systems and the financial sector. The payment systems we will do the study with are Visa, MasterCard, Western Union, American Express and PayPal. We study whether Bitcoin returns, Bitcoin transaction volume, unique Bitcoin addresses and Bitcoin google searches have any relationship with the returns of the traditional payment companies. In addition we also study whether the same variables have any explanatory relationship with the financial sector. We find that the relationship between Bitcoin and payment systems is very weak, which indicates that investors that typically invest in these companies doesn’t see Bitcoin as a serious competitor. However, number of unique Bitcoin addresses has a negative relationship with the abnormal returns of most of the payment companies.