i

HOW BITCOIN FITS INTO MOBILE PAYMENT AS AN ALTERNATIVE PAYMENT FORM

A study submitted in partial fulfilment of the requirements for the degree of

MSc Information Systems

at

THE UNIVERSITY OF SHEFFIELD

by

ZIJIA SUN

September 2016

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ABSTRACT Background: In the last decade, virtual currencies emerged as a very important financial

power in the existing global currency market, and mobile payment has been a convenient,

fast and safety alternative payment method. With more user requirements on mobile

finance services, there is a potential motivation to integrate the Bitcoin with mobile

payment.

Aims: The research aims to investigate and discuss the perspectives on Bitcoin mobile

payments and to analyse the feasibilities of implementing Bitcoins payment on mobile

devices, as an alternative mobile payment form. And identify the existing challenges and

solutions, and the practical significance of it.

Methods: The study is an inductive approach research, and adopts a mixed methods

approach. The and qualitative data was collected from questionnaires and interviews. The

quantitative data qualitative was analysed by statistical software programs, and

quantitative data analysis adopts the thematic analysis method. The research is low risk,

and has been ethically approved by the Information School’s ethics review procedure.

Results: Mobile payment has been an important payment form in people’s daily life,

usually for making payment and transferring money through third party mobile payment

applications. Security, trust and privacy are the three most important factors for a mobile

payment system, and the users who have higher education degree, or have experience on

virtual currency are easier to accept Bitcoin mobile payment. Most users have hesitant

attitude to bitcoin payment, while half of participants indicate that they trust integrated

application of Bitcoin and mobile payments. The current mobile payment applications still

provide limited service to international payment. The Bitcoin payment has broad market

and is gradually accepted by people although it has potential risks. The integration of

Bitcoin and other mobile payment application or mobile social media is the best

development way for Bitcoin to fit into mobile payment system.

Conclusions: At the present stage, the Bitcoin mobile payment should focus on the

international payment function in order to exploit international payment market. In the

appreciable future, the integration of Bitcoin and current mobile applications would be a

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more appropriate development mode to seek opportunities for broad participations in

current payment.

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TABLE OF CONTENTS

1. INTRODUCTION AND CONTEXT ·························································· 1

1.1 BACKGROUND ··················································································· 1

1.2 AIMS AND OBJECTIVES ········································································· 2

1.2.1 Aim ························································································································ 2

1.2.2 Objectives ·············································································································· 2

1.3 OVERVIEW OF RESEARCH ······································································ 3

2. LITERATURE REVIEW ······································································· 3

2.1 INTRODUCTION ·················································································· 3

2.2 BITCOIN AND VIRTUAL CURRENCIES ························································· 3

2.3 A CIRCULATING GLOBAL CURRENCY ························································ 4

2.4 BITCOIN AND DIGITAL CURRENCY PAYMENT ··············································· 5

2.5 FEASIBILITIES OF BITCOIN PAYMENT ························································· 6

2.6 RISKS AND LIMITATIONS OF BITCOIN PAYMENT ············································ 7

2.7 VIRTUAL CURRENCY ON MOBILE PAYMENT ················································· 9

2.8 IMPLEMENTATION OF BITCOIN MOBILE PAYMENTS ······································ 11

2.9 CONCLUSION ·················································································· 12

3. METHODOLOGY ·············································································· 12

3.1 RESEARCH PHILOSOPHY ······································································ 12

3.1.1 Inductive and Deductive Methods ······································································· 13

3.1.2 Quantitative and Qualitative Methods ································································ 13

3.2 DATA COLLECTION ··········································································· 14

3.2.1 Sampling ············································································································· 14

3.2.2 Obtaining Permissions ························································································ 15

3.2.3 Collecting Information ························································································ 16

3.2.4 Recording Data ··································································································· 17

3.3 DATA ANALYSIS ·············································································· 17

3.3.1 Preparing Data ··································································································· 17

3.3.2 Exploring Data ···································································································· 17

3.3.3 Analysing Data ···································································································· 18

3.3.4 Representing Analysis ························································································· 18

3.3.5 Interpreting Results ····························································································· 19

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3.4 ETHICAL ISSUES ··············································································· 19

3.5 LIMITATIONS ·················································································· 20

4. FINDINGS AND RESULTS ·································································· 20

4.1 INTRODUCTION ················································································ 20

4.2 QUESTIONNAIRES ············································································· 21

4.2.1 Basic statistics on respondents ··········································································· 21

4.2.2 Respondent Payment Habits Analysis ································································· 21

4.2.3 Attitudes of Respondents to Bitcoin and Its Mobile Payment System ················· 25

4.2.4 Summary ············································································································· 28

4.3 INTERVIEWS ··················································································· 29

4.3.1 Mobile Payment and Bitcoin Payment Implementation ······································ 29

4.3.2 Integration of Bitcoin and Mobile Payment Systems ·········································· 31

4.3.3 Future Strategy Prospective of Bitcoin Mobile Payments ·································· 33

4.3.4 Summary ············································································································· 35

5. DISCUSSION ···················································································· 35

5.1 BITCOIN AND MOBILE PAYMENT ···························································· 35

5.2 BITCOIN MOBILE PAYMENTS ································································ 36

5.3 SECURITY AND PRIVACY OF BITCOIN MOBILE PAYMENT: ······························· 36

5.4 ACCEPTABILITY OF AND TRUST IN BITCOIN MOBILE PAYMENTS ······················· 37

5.5 BITCOIN MOBILE PAYMENT AND INTERNATIONAL PAYMENTS ·························· 39

5.6 RISKS AND LIMITATIONS ····································································· 40

5.7 INTEGRATION OF BITCOIN AND MOBILE APPLICATION ··································· 41

6. CONCLUSION ·················································································· 43

6.1 CONCLUSIONS ················································································· 43

6.2 RECOMMENDATIONS ·········································································· 45

6.3 LIMITATIONS ·················································································· 45

6.4 REFLECTIONS ·················································································· 46

6.5 FUTURE RESEARCH OPPORTUNITIES ························································ 46

REFERENCE ······················································································· 47

APPENDIXES ······················································································ 53

APPENDIX A: INITIAL CODING SCHEME ························································ 53

APPENDIX B: PARTICIPANT INFORMATION SHEET ············································· 55

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APPENDIX C: CONSENT FORM ··································································· 58

APPENDIX D: QUESTIONNAIRE DESIGN ························································· 59

APPENDIX E: INTERVIEW DESIGN ······························································· 63

APPENDIX F: APPROVED ETHICS APPLICATION ················································ 64

APPENDIX G: APPROVAL LETTER ······························································· 69

APPENDIX H: ACCESS TO DISSERTATION FORM ··············································· 70

APPENDIX I: CONFIRMATION OF ADDRESS FORM ············································· 72

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LIST OF TABLES

TABLE 3.1 THE STAGES OF THE THEMATIC ANALYSIS ········································· 18

TABLE 4.1 PARTICIPANT STATISTICS FOR FREQUENCY OF DIFFERENT PAYMENT FORMS PER

WEEK ································································································ 22

TABLE 4.2 ATTITUDES TO ACCEPTING BITCOIN MOBILE PAYMENTS AS AN ALTERNATIVE

FUTURE PAYMENT FORM, BY EDUCATIONAL LEVEL ··········································· 26

LIST OF FIGURES FIGURE 4.1 USER SELECTION STATISTICS OF EACH MOBILE PAYMENT APPLICATION ······ 23

FIGURE 4.2 PARTICIPANTS’ FREQUENCY OF MOBILE PAYMENT SERVICES EACH MONTH ·· 24

FIGURE 4.3 PARTICIPANTS’ ATTITUDE TO DIFFERENT FACTORS OF MOBILE PAYMENT

SYSTEMS ···························································································· 25

FIGURE 4.4 PARTICIPANTS’ ATTITUDES TO E-COMMERCE PLATFORMS ACCEPTING A

BITCOIN PAYMENT SYSTEM ······································································ 27

FIGURE 4.5 PARTICIPANTS’ ATTITUDES TO TRYING BITCOIN AS A MOBILE PAYMENT FORM

IN THE FUTURE ····················································································· 28

FIGURE 4.6 CONCEPT MAP OF QUALITATIVE ANALYSIS FINDINGS ··························· 33

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ACKNOWLEDGEMENT My sincere appreciation and gratitude goes to my supervisor, Mr Christopher Foster, who

gave his full support to me, as well as guided and motivated me through this research. I am

very thankful to every friend who supported me, and every participant who took part in my

questionnaires and interviews. It is an unforgettable experience for me, and I learned a lot

from the process of the research. I want to thank everyone who gave me selfless help

during the research.

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1. INTRODUCTION AND CONTEXT

1.1 Background

The research involves an investigation of the Bitcoin mobile payment system in contrasts

to traditional currency payment, as well as discussing how Bitcoin fits into mobile

payments as a potential alternative payment form.

In the last five years, a variety of virtual currencies have emerged as an important financial

component in the existing global financial market like Bitcoin (Egorova & Torzhevskiy,

2016). The current total value of all Bitcoins in existence being over 10 billion US dollars

as of June 2016, the Bitcoin market is more valuable than Twitter (Reese, 2016). Bitcoin

does not have physical entity and can significantly reduce transaction costs and compared

to traditional currency, it is a new payment form in current society. Bitcoin is an open

source virtual currency, and the Bitcoins transactions are recorded via the Internet (Ciaian,

Rajcaniova & Kancs, 2016). Bitcoin plays an important role in payment areas which has a

bright future to be an alternative payment form.

Moreover, the mobile payment has been widely applied to people’s daily payment, as a

safety and immediate payment method. Bitcoin as a crypto-currency which applies

cryptography to ensure secure transactions. Bitcoins as a virtual currency that can be stored

in mobile e-accounts on mobile devices, and are able to be used in mobile virtual currency

wallets (Loreti, 2015). Many mainstream mobile payment applications like Apple Pay,

PayPal and AliPay, people can scan a barcode that generated on consumer's mobile

devices, and then charge that consumer's Bitcoin account (Camhi, 2013). Nowadays, more

and more companies accept Bitcoins as their normal payments method, and customers may

purchase their products and services all over the world. The Bitcoin service is anonymous

and transparent, meaning that anyone can follow the transaction chain (Ciaian, Rajcaniova

& Kancs, 2016). This is a good news in terms of protecting customers’ personal privacy.

The virtual currency and mobile payments could make a perfect combination and would

also lead to wider virtual currency adoption, and Bitcoin would provide a new payment

solution for people and become an ideal electronic medium of exchange (Camhi, 2013).

However, compared to traditional currency mobile payment, Bitcoin only occupies a small

part of markets in relation to mobile payments, and it is a great challenge to achieve a

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worldwide Bitcoin mobile payment system. Bitcoin mobile payments meet strong business

competition from traditional currencies and other payment forms, along with people’s

traditional attitudes and the low acceptability of a new payment form, existing security and

privacy, government interventions and rigorous restrictive policies. Nevertheless, despite

all this, the development of Bitcoin mobile payments is still meeting a rigorous application

environment effectively.

1.2 Aims and objectives

1.2.1 Aim

The research aims to investigate and discuss the perspectives on Bitcoin mobile payments

and to analyse the feasibilities of implementing Bitcoins payment on mobile devices, as an

alternative mobile payment form. It aims to identify the existing challenges and solutions,

and the practical significance of it. Through investigations and analysis of the collected

data and information, it will ultimately draw a conclusion about the prospects of Bitcoin as

a mobile payment form.

1.2.2 Objectives

1. To design and execute a questionnaire to investigate users’ views on Bitcoin and mobile

payments, as well as the Bitcoin mobile payment system;

2. To carry out a literature review on Bitcoin payment behaviour;

3. To identify the practicalities of blockchain technology and mobile payment technology

to realize the payment system;

4. To examine the virtual currency mobile payment functionalities and features;

5. To carry out a survey of the prospect of employing the Bitcoin payment system on

mobile devices;

6. To analyse the results gathered, with references and compare them to other currency

payment forms;

7. To identify the key issues, risks and limitations involved in applying the Bitcoin mobile

payment system; and

8. To propose solutions to relevant limitations and risks, and make suggestions regarding

further research.

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1.3 Overview of Research

This dissertation is divided into six main chapters. The first chapter is the background

introduction to the research; the second chapter carries out a literature review on Bitcoin

mobile payments, which covers different viewpoints of literatures in Bitcoin and mobile

payment areas. It states the existing risks; the feasibilities of Bitcoin payments on mobile

payment platforms; and its implementations. The third chapter discusses the research

methodology and explains the research philosophy, data collection and analysis methods of

the research. The forth chapter identifies the findings and analysis results of qualitative and

quantitative data, and presented in figures and tables. The firth part explains the findings

and results in the last chapter and refers to the literature review, then discusses the current

and how Bitcoin mobile payments can fit into existing mobile payment methods. The last

chapter summarizes the conclusions of the research, including an integral overview.

2. LITERATURE REVIEW

2.1 Introduction

The literature review includes professional explanations and different viewpoints from

different authors or academics that based on previous investigations and experiments,

which provides an efficiently professional context for readers. This literature review starts

with the explanations of virtual currencies and Bitcoin, and states different views about

Bitcoin as a global currency, as well as the mobile payment technologies, feasibilities and

risks of Bitcoin mobile payments, and the implementations of Bitcoin on mobile payment

platforms.

2.2 Bitcoin and Virtual Currencies

Bitcoin, the most successful and the first worldwide peer-to-peer virtual currency, was

launched in January 2009. Its unique generative mechanisms and protocols guarantee a

steady growth rate for Bitcoin, to reach a maximum in 2140 (Burns, 2014). The virtual

currency payment system is different from traditional payment systems, as it the does not

rely on third party intermediaries to verify its transactions such as banks and credit card

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institutions (Burns, 2014); Madise gives a similar opinion in his article (Madise, 2015).

The Bitcoin payment system uses mining technology and applies private-public key

technology in its online transactions, which is a low cost and secure virtual currency

electronic transaction payment platform (Burns, 2014). Grinberg considers that the

Bitcoin could be an ideal currency for mainstream consumers and merchants because of its

properties (Grinberg, 2012).

2.3 A Circulating Global Currency

The Bitcoin would be a global currency and should have the same basic money functions

and characteristics as standard currencies and act as a store of value, a unit of account and

medium of exchange (Bjerg, 2015). Ali and his team hold the same viewpoint as well (Ali,

Barrdear, Clews, & Southgate, 2014b). Bitcoin is not a legal tender and the use of Bitcoin

relies on customers’ voluntary adoption when it as a medium of exchange (Ciaian,

Rajcaniova & Kancs, 2016).

Bitcoin owns infinite divisibility and price volatility, as well as presenting the relevant

economic prices of goods and services which is the same as standard currencies as a unit of

account and a valuable asset (Ciaian, Rajcaniova & Kancs, 2016). Kubat holds a similar

viewpoint, and agrees with the statement that Bitcoin, as an innovative payment, is a new

currency (Kubát, 2015). In Eriksson’s viewpoint (Eriksson, Aberg & Berglund, 2016),

Bitcoin can be a form of payment for micro-transactions, and as a tool either for shopping

or investment.

However, Scott Burns considers that Bitcoin has no obvious non-monetary value compared

to commodity money and is not responsible to any banks or organizations and is not

directly redeemable, either for fiat money or for commodity directly (Burns, 2014). In his

theory, Bitcoin means a conundrum for the regression theorem, as it is surely a speculative

bubble. Because it has no fixed value, like gold or a gold-backed currency, the value of

Bitcoin would inevitably converge to zero (Burns, 2014).

Ole Bjerg considers that Bitcoin mainly provides a digital form and there is no precious

metal underlying it, but the currency is still a finite resource, relying on a kind of virtual

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gold standard, and Bitcoin is gold money without gold (Bjerg, 2015). Kubat analyses the

historical volatility of many currencies and the Bitcoin, and draws a conclusion that the

volatility of Bitcoin is obviously higher, which means that the Bitcoin is riskier in the

system (Kubát, 2015).

Users in Bitcoin community are voluntary, while in traditional flat money systems, a state

controls the supply and demand of the currency, but the demand for the currency is

generalized, even in peer-to-peer transactions in the economy (Bjerg, 2015). Madise

indicated that the greater number of people and businesses who can accept Bitcoin via

mobile payments, the greater mobile money mimics the qualities of fiat money (Madise,

2015). In contrast, Bitcoin works as flat money without a state (Bjerg, 2015).

2.4 Bitcoin and Digital Currency Payment

In Scott Burns’ article (Burns, 2014), he considers that the Bitcoin is easy for users to pay,

receive and undertake other transactions. Users only need to download a digital wallet onto

their mobile devices, which has a public and private key to ensure the account security.

Maidise believes that cryptography ensures the security of the digital currency payment

(Madise, 2015).

Robleh Ali and his team stated (Ali, Barrdear, Clews, & Southgate, 2014a), as with the

deposits and remittance in banks, that most financial assets and transactions now exist as

digital records, which has provided more transformational possibilities for distributed

ledgers to transform the financial system. They divided the payment technologies into four

categories. Category I: Wrappers, which obviously improves the user interface and makes

the existing payment systems’ architecture more accessible, like Google Wallet and Apple

Pay. Category II: Mobile money, the national currencies store as credits on a smart card

that users may access financial services with a mobile phone. Category III: Credits and

local currencies which rely on users trusting a new currency as a unit of account and

medium of exchange. Category IV: Digital currencies which are a new decentralised

payment system, like virtual currency.

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Ali’s team believe that there are three key driving factors for people to adopt digital

currency payments: ideology, financial return and lower transaction fees. The digital

currency may avoid any centralised control and minimise the degree of people’s trust (Ali,

Barrdear, Clews, & Southgate, 2014a). The Bitcoin allows users, who are attracted by its

anonymity, can make payments outside of the existing currency system. People are having

optimistic expectations about its future growth.

Doran considers that the confidentiality, integrity, non-repudiation and authentication of

Bitcoin make it as an attractive alternative payment form to mainstream currency (Doran,

2014). Decker and Wattenhofer hold the same opinion as well (Decker & Wattenhofer,

2015).

2.5 Feasibilities of Bitcoin Payment

Traditional centralized payment systems exist credit risk and liquidity risk, the banks may

become insolvent and owe much liabilities, or lack of enough capacity to process payments

in time at a particular moment. Bitcoin is a decentralized payment system, which removes

the credit and liquidity risks. While the loss of a private key and broken hard drive would

cause some irreversible results (Ali, Barrdear, Clews, & Southgate, 2014a). However,

Madise believes that retailers and vendors are willing to adopt Bitcoin payment because of

its irreversible which ensures them to get their money and avoid the risk to be defrauded

(Madise, 2015). Ali and his team considers that Bitcoin can serve as Circulating currency

for anybody with computer or mobile device. The Bitcoin as a medium of exchange and

possesses long-term store of value, there were several thousand retailers are willing to

receive payment in Bitcoins, which indicates that the Bitcoin can be large-scale carried out

as a medium of exchange for payment (Ali, Barrdear, Clews, & Southgate, 2014b).

Bitcoin has the potential to be used as an alternative currency, and thus may be useful for

remittances. Theoretically, Bitcoin could bypass state banks to be an alternative remittance

channel and has potential to facilitate international commerce (Scott, 2016).

People would choose to use digital currencies as a payment way because of its low

transaction fees, the Bitcoin payments system requires much lower transaction fees than

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international transfers and retail electronic payments in paying by traditional currencies

(Ali, Barrdear, Clews, & Southgate, 2014b). Bitcoin has comparative advantage in

transaction costs compare to traditional currencies payment and its lower transaction fees.

Average transaction fees for one Bitcoin transaction are almost between 0 and 1 %, the

transaction fees of the Bitcoin payment are on average about 0.0005 BTC (Egorova &

Torzhevskiy, 2016), while the charge fees of traditional online payment systems would be

2% to 5 % or more (Ciaian, Rajcaniova & Kancs, 2016).

As well as Bitcoin payment needs much shorter transaction and confirmation time

compared to credit card payments (Kounelis, 2015), the time for transfers processing is

only approximately 10 to 60 mins (Ciaian, Rajcaniova & Kancs, 2016). Kubat called

Bitcoin payment is a revolution in remittance (Kubát, 2015).

Lower transaction and maintenance costs and faster execution speed would attract more

customers as well. Bitcoin payment system is anonymous and transparent. People do not

need to identify personal information, which would protect costumer privacy. The

anonymity and transparency of Bitcoin for participants and transactions may promote the

progress of Bitcoin to be an acceptable payment form (Ciaian, Rajcaniova & Kancs, 2016).

In user’s standpoint, Bitcoins are quite easy to send and receive. Users may download a

digital wallet on their mobile device or computer quickly and easily (Burns, 2014). Doran

said that it provides users a freedom, security and low fees payment form, and fewer risks

for merchants (Doran, 2014). Bitcoin payment has potential to revolutionize the global

remittance market and helpful to ease global poverty by providing cheap access to reliable

financial services (Burns, 2014).

2.6 Risks and Limitations of Bitcoin Payment

Ciaian and his team consider the Bitcoin payment and transactions to have some risks

attached to them because the payment is irreversible, as well as not having reliable

protocols between the two transactions sides and a lack of enough regulatory protections.

The Bitcoin itself has price volatility and the frequent Bitcoin price changes would cause

extra costs for companies and customers (Ciaian, Rajcaniova & Kancs, 2016). Ali points

out that a potential risk to the Bitcoin and other virtual currencies is that Bitcoin payment

8

has to solve the increasing marginal costs with more miners and customers using it as an

alternative payment pattern (Ali, Barrdear, Clews, & Southgate, 2014b).

Bitcoins payments are carried out on virtual wallets in computer or on mobile device

accounts, and Ciaian worries about the security of Bitcoin mobile wallets and it has been a

prominent problem (Ciaian, Rajcaniova & Kancs, 2016). While Burns states the potential

risk due to the anonymous feature of Bitcoin transaction, it makes them popular for illegal

transactions such as smuggle and the drug trade on deep web (Burns, 2014).

As a virtual currency based on internet, Bitcoin requires some knowledge of mobile

devices and the internet to set up a digital wallet and conduct trades. It could create some

problems for unskilled customers and would cause property loss, but he thinks that this

hurdle is solvable (Burns, 2014). Yang and others put forward the potential implementation

limitations of Bitcoin mobile payments as well. Most elderly people, non-computer-literate

people and those with no mobile experience would not use Bitcoin or other mobile

payments, and would prefer to use traditional payment methods. Yang and their team state

that the mobile payment objects should exclude this population, although they consider it is

not a serious limitation (Yang, Lu, Gupta, Cao, & Zhang, 2012). Moreover, Weber thinks

that Bitcoin transactions have political and legal risks for its anonymity (Weber, 2016).

Voellmy thinks that Bitcoin in its pure form is not human-friendly (Voellmy, 2015), like its

long random character address. It is an obstacle for Bitcoin applications as well. Decker

proposed that the synchronization mechanism, the blockchain and network processing rate

are the limitations to bitcoin payment scale (Decker & Wattenhofer, 2015).

According to Ali team’s statistics, as of July 2014, the Bitcoin blockchain contained

around 41 million addresses while only 1.6 million owning more than 0.001 Bitcoins.

While most Bitcoin users prefer to simply hold their Bitcoins rather than use them for

transactions, which causes a sluggish liquidity in the Bitcoin market (Ali, Barrdear, Clews,

& Southgate, 2014b). In their theory, digital currencies like Bitcoin currently do not bring

a material risk to national financial stability, but the risks cannot be ruled out with future

further increases of Bitcoin; Kubat, though, declares that the Bitcoin may seriously

threaten financial infrastructures, but it is cannot cause a future financial crisis, due to the

fact that it cannot be simply created any more (Kubát, 2015). Eriksson supports the view

9

that Bitcoin is not big enough to make larger impacts on countrywide economy (Eriksson,

Aberg & Berglund, 2016).

2.7 Virtual Currency on Mobile Payment

With the growing demands of financial services in the digital technology society, the

FinTech is an emerging global industry which integrates of finance and technology, and

defines a new financial business mode. Philippon considers that FinTech is a digital

innovation in the financial industry based on technology that disrupts current the financial

industry structures and boundaries. In his theory, the blockchain technology improves the

efficiency of the market, and the digital currency and mobile payments have profoundly

influenced the market transactions and payment system (Philippon, 2016). Kalmykova and

Ryabova indicate that the Bitcoin and mobile payments, as part of the FinTech ecosystem,

have become direct competitors for native currency payments and could be a substitute for

cash, these more effective and cheap services encouraging traditional financial market to

switch to new technologies (Kalmykova & Ryabova, 2016).

The rapid development of mobile technology and the advances in portable devices, as well

as the increasing high speed Internet access and wireless revolution, means people can now

use such devices and execute e-commerce transactions anywhere, at any time (Tellez Isaac

& Sherali, 2014), Kounelis agrees that, mobile commerce has been a key component of e-

commerce (Kounelis, 2015). The proliferation of mobile devices has stimulated an increase

in virtual currencies. According to Bergius’ s report (Bergius, 2014), it is estimated that

global mobile payments will be over $721.4 billion by 2017.

Consumers are tending to move their daily activities to mobile channels (McKee, 2013),

which have made the mobile devices a critical part of the new digital economy (Tellez

Isaac & Sherali, 2014). In Bergius’s viewpoint, mobile payments may offer apparent

benefits, providing an innovative opportunity and bringing new revenue sources, and a

convenient consumer experience for financial institutions, mobile network operators and

retailers (Bergius, 2014). McKee has refined some conclusions from a Yankee Group

survey of 2000 participants (McKee, 2013), and is interested in the fact that these mobile

device owners are willing to use virtual currencies on apps, and app-based coins and

tokens.

10

Tao Zhou considers that mobile payments take two types, remote payments and proximity

payments. Mobile banking and mobile internet payment services belongs to remote

payments, while proximity payments apply to RFID and NFC technologies (Zhou, 2013).

Many security mechanisms are adopted by mobile phone operators or manufacturers such

as biometric technologies and Multi-factor authentication, to their mobile payment,

Samsung and Apple allow users to use fingerprints to authorize a payment (Wang, Hahn &

Sutrave, 2016). The mobile payment technologies can be applied to Bitcoin payments, and

would greatly promote the security of Bitcoin mobile payment.

McKee considers that mobile payments and location-based functions promote virtual

currencies to be an essential value-added tool in stimulating retailers and consumer

adoption (McKee, 2013). Kounelis holds the same opinion that mobile commerce systems

enable the exchange of mobile commerce between different objects, like merchants,

customers and retailers (Kounelis, 2015).

Visa Europe states the current problems and risks of mobile payment (Visa Europe, 2014),

mobile phones are easier to steal and or lose, and limits customers’ input capabilities,

which affect user experience. Malware on mobile phones and malicious users causes

potential risks for most customers. In addition, Kounelis considers that the Bitcoin

payment system has some legal problems that are stills in a non-defined legal state, and

most of governments have not decided how to defined a Bitcoin payment system, which

causes uncertainty and hesitations for users (Kounelis, 2015). Comparing with other

currencies, Bitcoin payment system does not have centralized authority and have no main

server, so it is more resilient to large-scale attacks (Kounelis, 2015).

Kounelis says that virtual currencies, as facilitators of payment transactions, are a hybrid

security solution for the enhancement of the personal wallet (Kounelis, 2015). He puts

forward the theory that the final type of m-commerce object is virtual currency, which will

solve cryptographic problems. He thinks virtual currencies like Bitcoin have financial

value that can be exchange for real money and can be used to purchase products and

services (Kounelis, 2015). Many websites like Apple have allowed virtual money to be

used for in app store purchases. Virtual currencies are a new way to handle payment which

increase the payment security of users, the steady increase of Bitcoin worldwide makes it

more powerful for exchange, while it becomes more difficulty for new Bitcoins mining

with more miners take part in, as well as affects the price of Bitcoins (Kounelis, 2015).

11

Hurlburt and Bojanova consider that Bitcoin greatly suit to worldwide mobile exchange,

and they came up with a concept about Bitcoin wallet. They think Bitcoins can transfer to

users’ wallets by using both private and public key cryptology, which keep the security and

privacy. The Bitcoin payments and transaction include unique digital signature and

protected by a private key. Bitcoin receivers provide public key as their address, which

ensures the exchange via their Bitcoin wallet, and the private keys ensure the integrity and

anonymity of the payments or transactions (Hurlburt & Bojanova, 2014). They suggest that

some mediated tools can process the cash and Bitcoin transformation and thus ease Bitcoin

exchange and promote employments of Bitcoin mobile payments (Hurlburt & Bojanova,

2014).

2.8 Implementation of Bitcoin Mobile Payments

In Mitskavets’s analysis report (Mitskavets, 2015), with the increasing popularity of digital

donations, Bitcoin payments would provide donors with a chance to make charitable

donations. The global charity Save the Children made a statement that it had started

accepting Bitcoin donations by building a partner relationship with payment processor

BitPay and the BitGive Foundation in 2014 (Mitskavets, 2015). Recently, The Walmart

planned promote their own mobile payment solution and the integration of Bitcoin could

be beneficial to customers shopping at Walmart (Buntinx, 2016). Buntinx also presented an

interesting view that Bitcoin mobile payments would promote and improve mobile gaming

micro-payments, and influence customers’ spending behaviours in the mobile games

industry, in emerging markets, Bitcoin acceptance could mean that it and mobile

commerce becoming a golden combination (Buntinx, 2016).

The argument about whether virtual currency and mobile payments could make a perfect

combination and lead to wider virtual currency adoption. In Luther’s view (Luther, n.d.),

Bitcoin is going to be a big player in the future of the exchange of goods and services.

Compared to other virtual crypto-currencies, Bitcoin has a substantial first mover

advantage. Eriksson considers that plenty of people own a smartphone but most people do

not even know about Bitcoin, however, it will change in the future (Eriksson, Aberg &

Berglund, 2016). With the widespread applications of smartphone and other intelligent

12

mobile devices, as well as different kinds of powerful card readers and processors, every

business and company has the capacity to accept Bitcoin electronic payments on mobile

devices (Luther, n.d.). Some applications on smartphones like Venmo and Cash, which

allow users to apply digital payments are also relatively successful for Bitcoin mobile

payments (Luther, n.d.). In Luther’s interesting suggestion, it will be an easier and better to

make digital payments to replace existing vending machines, parking meters and card

readers with tap-to-pay-enabled devices.

The Bitcoin mobile payment is likely to be gradually accepted by people and integrated

into the existing economic transactions payment system. Bitcoin is going to be a creative,

efficient, low cost, democratic, and finally as a stable system of money (Bjerg, 2015).

Vandezande summarized that the success of the Bitcoin mobile payment services

development, and the future growth of the Bitcoin mobile payment services market, will be

decided by whether customers are willing to abandon traditional physical currency and

credit cards and support electronic platforms (Vandezande, 2014). This is still a long road,

which is full of challenges.

2.9 Conclusion

The literature review gathers different views on Bitcoin and it mobile payment system.

Bitcoin can be a circulating global currency, and the encryption technologies and

anonymity ensure the security of Bitcoin payment system. Although Bitcoin payment

system has risks and limitations, it has high feasibility to fit into mobile payment system,

especially in international commerce.

3. METHODOLOGY

3.1 Research Philosophy

“Research is a logical and systematic investigation and looks for useful information on a

particular topic”. Rajasekar defined the concept of research (Rajasekar, Philominathan, &

Chinnathambi, 2013).

13

3.1.1 Inductive and Deductive Methods

At the beginning of the research and before the researcher determines the theory and

questions, it is necessary to consider the research approaches (Saunders, Lewis, &

Thornhill, 2012). This may be either inductive or deductive. The inductive analysis

approach is concerned with the data and the new theory generated from the data, while a

theoretically analytical framework guides the deductive analysis. The deductive approach

aims to test a theory by collecting data (Schadewitz & Jachna, 2007). In the deductive

approach, the conclusion is deduced by hypothesis, the conclusion is true when premises

are true (Ketokivi & Mantere, 2010), while in an inductive approach, the conclusion is

supported by the observations (Saunders, Lewis, & Thornhill, 2012). This research starts

by collecting data in order to generate a theory, so the research adopts an inductive

approach.

3.1.2 Quantitative and Qualitative Methods

Tashakkori and Creswell defined the mixed methods (Tashakkori & Creswell, 2007), as

research where the researchers use an integration of qualitative and quantitative approaches

for data collection and data analysis, integrating findings and raising new theories.

Creswell and Plano Clark put forward a similar view in 2011, considering that the

qualitative data provided a detailed understanding of a problem which focuses on

individuals and deeply explores their perspectives, while quantitative data provides a more

general understanding. From their viewpoint, mixed methods avoid the limitations of each

method, and may provide a better understanding of the research problem (Creswell &

Plano Clark, 2011).

This research adopts a mixed methods approach and is conducted in two phases, beginning

with a quantitative stage, and the second phase being qualitative. The study emphasizes

quantitative methods prior to the qualitative methods. Creswell and Plano Clark provide

four choices for how to mix the quantitative and qualitative strands: Mixing during

interpretation; Mixing during data analysis; Mixing during data collection and Mixing at

the level of design (Creswell & Plano Clark, 2011). In this research, the quantitative and

qualitative strands are mixed during interpretation phase, after the data collection and data

analysis. The quantitative and qualitative strands are independently implemented and this

is the only point where mixing occurs in the research. The quantitative data and qualitative

14

data are separately collected and independently analysed, and the analysis results are

discussed with a mixed method in the discussion chapter.

According to the Creswell and Plano Clark’s guidance (Creswell & Plano Clark, 2011),

mixed methods are divided into four steps. The first is to design and deploy the

quantitative strand by formulating quantitative research questions, selecting a quantitative

approach and identifying appropriate quantitative samples, then using statistics tools to

analyse the quantitative data, and draws the inferences. The second step is to refine the

quantitative results and determine which need to be explained then using the quantitative

result to design appropriate questions for qualitative data collection. The third step is to

design and deploy the qualitative strand by forming qualitative research questions and

selecting qualitative samples, as well as collecting and analysing the qualitative data. The

last step is to interpret all results and conclusions, summarizing both quantitative and

qualitative results.

3.2 Data Collection

The data collection in this research is to gather useful and basic data to address the research

questions in the study. In Creswell and Plano Clark’s view (Creswell & Plano Clark,

2011), data collection for mixed methods research is not only simply about collecting data,

but also consists of five key components: Sampling; Obtaining permissions; Collecting

data; Recording data and Administering the data collection, as well as addressing

qualitative and quantitative strands, in the case of this study.

3.2.1 Sampling

The conduct sites of quantitative data collection were in Sheffield, UK, and qualitative data

collection in this research was implemented in the UK and China. The potential

participants in quantitative data collection should possess sufficient mobile device using

experience and frequently use mobile payment in their daily lives such as PayPal and

AliPay. The age of the ordinary participants should be over 18-year-old, in different

occupations or in different classes, and they perhaps of different nationalities and come

from different regions or countries. The participants must have the capacity for

independent thinking and the full capacity for act. The research would not involve any

15

adults who lacked the capacity to consent; they must be willing and able to take part in the

questionnaire to provide a real data resource for the research.

The sample size of the quantitative data collection is between 100 and 150, involving every

age bracket. A sufficient sample size and the multiformity of participants ensures that it

provides sufficient data for quantitative data collection.

According to Biggam’s definition (Biggam, 2015), “Stratified sampling is where you break

down your target population into identifiable groups and then take samples from each of

your groups”. Participants are chosen with a random selection procedure using stratified

sampling for different industries and different age brackets, then the participants were

randomly selected from each group. In practical data collection, because of potential

resource, time and travel limitations, the research data collection will follow more loosely

a stratified sampling approach by considering variations in sampling, but without using the

strict probabilistic approaches of stratified sampling. All of the recruitment participants

must be voluntary, and they should know they would not get any reward from the

questionnaire.

The potential participants for qualitative data collection should not only possess sufficient

mobile devices using their experience and frequently used mobile payments in their daily

lives, but also have enough knowledge about virtual currency and Bitcoin, whatever their

age and occupation. The sample size of the qualitative data collection is between 3 to 6,

and the participants were selected in advance. They might be the staff in Bitcoin company,

experienced mobile payment users, Bitcoin enthusiasts or senior professors. These

participants were highly educated and provided an original view on Bitcoin mobile

payment. The qualitative data collection was in an interview form and were recorded.

3.2.2 Obtaining Permissions

The researcher required permission to collect data from the participants or interviewees

both for quantitative and qualitative data collection, and obtained this with a participant

information sheet and the consent form. The participant information sheet explains the

reasons for being invited to take part in the research, the purpose of the research, the

explanation why them have been chosen, the possible risks and benefits, and the guarantee

16

of their privacy and confidentiality. All participants had to read the participant information

sheet and approve the consent form before taking part in study.

3.2.3 Collecting Information

The type of data to be collected is quantifiable records. The data in both quantitative and

qualitative data collections is in text form. The conduct pattern for quantitative data

collection is questionnaires, and for qualitative data collection it is interviews.

Questionnaire

According to the guidance of Bittam (Biggam, 2015) and Oakshott (Oakshott, 2012),

quantitative data collection should be carried out with questionnaires. The group of people

will be surveyed in this research are ordinary mobile phone users who regularly use mobile

payment functions. The intended recipients had to be easy to access, and they are able to

provide authentic data. The questionnaire consists of 10 to 15 questions, including single

choice questions and multiple choice questions. All of the questions were related to the

research topic (See Appendix IV), which involves the participants’ habits in relation to

mobile payments, viewpoints on virtual currencies and Bitcoin payment, attitudes to

Bitcoin mobile payments and prospective Bitcoin mobile payments. The questions were

straightforward, and the questionnaire was expected to take about 10 minutes to complete.

The research questionnaire was electronic, generated by GoogleForm, which are

distributed by E-mail or social medias to randomly intended recipients.

Interview

Interviews are the most common qualitative research method (Mason, 2002), which is a

one-to-one method of data collection that involves discussing a specific topic in depth with

an interviewee who can be described as talking with an obvious purpose (Hennink, Hutter,

& Bailey, 2011). In this research, the purpose of the researcher was to ask questions and

gain the interviewee’s detailed perspectives on Bitcoin and its mobile payment system, and

to record their responses. The research interview is a semi-structured interview, and asks

questions in an open way. The target interviewees were the managers and staffs working in

Bitcoin or blockchain company, the experts who had full knowledge of Bitcoin and mobile

payments, Bitcoin enthusiasts, and Bitcoin mobile payment users. The interview structure

consisted of 5 to 10 questions, and the estimated duration was 20 minutes. The interview

would require the interviewees to express their viewpoints about the feasibilities of

17

universally implementing Bitcoin payment on mobile devices, the security of Bitcoin

mobile payments, what factors would affect this implementation, and their personal

opinion of the future of Bitcoin as a mobile payment method around the world. The

interviewees’ voice was record by digital devices, and their permissions to do this gained

before the interview.

3.2.4 Recording Data

For qualitative data collection in this research, the researcher recorded the interviews by

digital voice recorder, and later transcribed usable parts of the interviewee’s words. The

interview protocol was used as a backup system for recording information, which includes

the questions to be asked during the qualitative interviews and space for recording the

essential data of the interviewees. In quantifiable data collection, it is not necessary to

apply extra instruments or devices.

3.3 Data Analysis

As Creswell and Plano Clark said, there is several steps for either quantitative or

qualitative data analysis: Preparing the data for analysis; Exploring the data; Analysing the

data; Representing the analysis; Interpreting the analysis and Validating the data and

interpretations (Creswell & Plano Clark, 2011).

3.3.1 Preparing Data

In quantitative data analysis, the first step is to prepare the raw and cleaning data, as well

as creating a form and relevant statistical computer programs for data analysis. In

qualitative data analysis, the researcher has to prepare the interview document or visual

data for review, and the transcribed text from the interview, and refine the useful

information, as well as relevant statistical tools.

3.3.2 Exploring Data

In the quantitative data analysis, exploring data involves examining data and implementing

a descriptive analysis. It is necessary to determine what data should be chosen for analysis.

In the qualitative data analysis, the researcher has to review all of the data from the

18

interview, and generate a general understanding and initial thoughts, as well as making

memos in case of omissions (Creswell & Plano Clark, 2011).

3.3.3 Analysing Data

Analysing data includes addressing the research questions and making hypotheses, and the

chosen statistical data is based on the Bitcoin and mobile payments. In quantitative data

analysis, the data is processed from descriptive analysis to inferential analysis, a great

refined analysis is built by the inferential analysis (Creswell & Plano Clark, 2011). The

research analyses all the questionnaire data to answer the research questions and

hypotheses by using statistical software programs like Microsoft Excel for quantitative

data analysis. In qualitative data analysis, it is necessary to divide the interview transcripts

into several units, and retrieve appropriate textual information. The qualitative analysis

adopts the thematic analysis method, which is an approach for identifying, analysing and

reporting themes within data (Flick, 2014). The steps are shown in Table 3.1, modified

from Braun and Clarke (Braun & Clarke, 2006).

Table 3.1 The stages of the thematic analysis

Steps Description Familiarization with research data

Reviewing the research data and familiarizing the collected data.

Generating initial codes Drawing up a code scheme from the interview transcripts.

Identifying themes Identifying potential themes and gathering relevant data related to the themes.

Reviewing and defining concept maps

Reviewing the potential themes and generating the concept maps from the analysis.

Reporting findings Final analysis of selected quotes; relating results back to the research question and literature and presenting findings.

3.3.4 Representing Analysis

After analysing the data, the researcher has to represent the analysis results in tables,

pictures, figures, statements or forms. These tools summarize the quantitative or qualitative

statistical results, and visually present different views or opinions from the participants.

19

3.3.5 Interpreting Results

After presenting the results, it is necessary to make an interpretation of the meaning of the

results. The researcher has to review the results and findings, and compare the results with

the initial research questions and considers how the questions should be answered.

(Creswell & Plano Clark, 2011). In this research, the researcher would compare the

quantitative and qualitative results with previous explanations from past researches and

theories, and address how the questions is answered in the study, and providing reasonable

explanations and personal assessments of the findings.

3.4 Ethical Issues

The research is a low risk, mixed methods study of the Bitcoin and its mobile payment

applications. The topic is not controversial, and the process and content do not involve

sensitive and contentious areas, such as political commentaries, territorial sovereignty,

regional conflicts, military fields, or religion and beliefs.

All of the participants that took part in the research were adults. The participants had the

capacity for independent thinking and the full capacity for act. This research did not

involve any potentially vulnerable participants. There was no likelihood of physical or

mental risk or harm to the participants, and if any participant felt unhappy or distressed,

they could stop taking part immediately. There was no risk to personal safety or. If any of

the questions gave the participants incorrect guidance or hints, they were removed prior to

the data collection period and replaced with the correct terminology. Participation is

voluntary and participants were free to withdraw or drop out at any time without giving

any reason, their rights and interests were not affected and no negative consequence would

occur if they did.

All of the collected information during the research was kept strictly confidential. The

private information or data could not be able to be identified or identifiable in any articles

or publications. Their habits or opinions were not identified either. Any collected data

about the participants was stored in the specialized student data store and storage drive of

the University of Sheffield, which is protected by passwords and relevant security systems

and technologies. These anonymized data did not allow any individuals or organizations to

20

retrieve, except the researcher. If the participant wanted to delete their personal

information, all of their relevant information and data would be removed. When this

research was finished, all of the participants’ data will be deleted from data store or iCloud.

The research is impartial and independent. This project has been ethically approved by the

Information School’s ethics review procedure. The University of Sheffield’s Research

Ethics Committee monitors the application and delivery of the University’s Ethics Review

Procedure across the University.

3.5 Limitations

Mixed methods require a longer implementation time than using a single method either

quantitative or qualitative method. In this research, the quantitative phase took up more

time and resource than the qualitative phase, so the accuracy of the qualitative result may

be lower, compared to the quantitative results. Due to the district and resource limitations,

the research did not involve many participants or large-scale sampling and thus may have

involved some biases. After the qualitative interview, much transcription was carried out,

which is a difficult and time-consuming task. In this research, there was one individual

researcher to determine what needed to be refined and strengthened.

4. FINDINGS AND RESULTS

4.1 Introduction

This section aims to analyse the collected data and information, and present the survey and

interview results in words, forms and graphs. The data analysis of the 125 questionnaires

and four interviews are presented in this section in order to respond to the research

objectives and questions, and evaluate what viewpoints do different ordinary mobile users

hold on mobile payments and Bitcoin. This also involved a wider discussion about Bitcoin

mobile payments with several Bitcoin payment observers. The first part of the section is

the survey findings on respondents, and presents the statistics and analysis of the

questionnaires. The second part is the analysis of the interviews, including the professional

21

views and opinions of four interviewees, and discussions regarding how they treat different

payment systems and their personal standpoints on how Bitcoins fits into mobile payment.

The research involves deep data mining, as well as comparing the comments of different

mobile user groups, and summarizing the perspectives from both questionnaire and

interview participants. The analysis and explanation of the researcher is presented in this

section.

4.2 Questionnaires

4.2.1 Basic statistics on respondents

The research survey includes 131 participants, all recruited by the ‘myAnnounce’ system

of the University of Sheffield, WeChat, Facebook and other social media, as well as

through random sampling in Sheffield, UK. 125 of the questionnaires were valid and

complete, 6 were removed due blank or incomplete answers. All of the participants had

read the participant information sheet and consent form, and given their permission.

The survey covers five age brackets, with 80 participants aged between 18 to 25 years old,

and 30 between 25 to 35 years old, which occupied 64% and 24% in the survey. 94.4% of

the respondents had used mobile phones or other mobile devices for more than 5 years,

with 11.2% stating that they had 15 to 20 years of mobile use experience.

4.2.2 Respondent Payment Habits Analysis

In the real world, people use different payment forms in their life. According to the annual

statistical publication of the Payment UK (Payments UK, 2016), cash is still the most

common and convenient currency for a quick purchase in the UK. However, the customers

are becoming increasingly reliant on non-cash payments, card payments and mobile

payments. As Table 4.1 shows, 91.2% of the participants used debit cards for daily

payments in their lives, while 59.2% never used credit payments. Visa contactless cards,

transport smartcards, work payment smartcards or other card payment forms have much

fewer users than mobile payment, debit and credit card users. 47.2% of the respondents

indicate that they never used mobile wallets or other mobile payment forms in their daily

life. 44.8% of the mobile wallet users were willing to use mobile wallets as their normal

22

payment form up to ten times in a week. Comparing the mobile payment data to card

payment data, the mobile payments were a widely used payment form, but it is the

frequency has not been as high as the credit and debit card payments. Obviously, the

mobile payments are a regular payment form and have been accepted by most participants.

Table 4.1 Participant statistics for frequency of different payment forms per week

Payment Form

1-5

Times(%)

5-10

Times(%)

10-15

Times(%)

15-20

Times(%)

Over 20

Times(%)

Never(%

)

Mobile Wallet 35.2 9.6 4 2.4 1.6 47.2 Debit Card 36 21.6 16.8 6.4 10.4 8.8 Credit Card 36.8 9.6 8 2.4 2.4 40.8

Contactless Cards 25.6 12 11.2 2.4 1.6 47.2 Transport

Smartcards 25.6 6.4 7.2 2.4 0.8 57.6

Work Payment Smartcards

24.8 8 2.4 1.6 0.8 62.4

According to Figure 4.1, the PayPal, WeChat Pay and Mobile Banking, such as Barclays’

mobile banking app, are the three most popular kinds of mobile payment application,

widely accepted by mobile device users. As the diagram shows, mobile banking

application users accounted for over 50% of the respondents, and PayPal and WeChat Pay

users accounted for over 40%. However, when we compare the users proportion for third

part mobile payment applications like PayPal and the original system mobile payment like

Apple Pay in iPhone, the result illustrate that the third mobile payment applications have a

much better customers base and more acceptability than the original system of mobile

payment applications like Google Wallet.

23

Figure 4.1 User selection statistics of each mobile payment application

The survey investigated the operating frequency of each mobile payment function for the

125 participants. Figure 4.2 indicates that most of participants were willing to use the

mobile payments for transferring accounts and making payments one to ten times each

month, while 52 participants said that they would use the mobile payment for international

payments only once or five times a month. This is not a frequent payment choice, while the

red packet function in Chinese mobile payment applications, like WeChat Pay and AliPay

mainly serves Chinese users because of their traditions. However, the red packet payment

choice has no essential difference to a transfer account function, and can be treated as

another form of transfer account. Based on the research survey, the transfer account

function and payment function were the most frequently payment choices for mobile users.

However, only a few mobile users were willing to use mobile payment applications for

international payment services because few mobile payment applications provide an

international payment service or support multiple currencies.

1

1

51

33

26

65

7

62

0 10 20 30 40 50 60 70

Other

Bitpay

WeChat Pay

AliPay

Apple Pay

Mobile Banking

Google Wallet

PayPal

Other Bitpay WeChat Pay AliPay Apple

PayMobile

BankingGoogle Wallet PayPal

Mobile Payment Applicaiton Users 1 1 51 33 26 65 7 62

24

Figure 4.2 Participants’ frequency of mobile payment services each month

The survey gathers the statistics for people’s attitude to the factors that would build up a

successful mobile payment system. As the Figure 4.3 shows, the most concerning factor

for the participants is the security factor, 100 respondents held a supporting view on this

factor and 64% of the participants strongly agreed with it. The other top three important

factors for a successful mobile payment application are the customers’ trust factor, the

convenience factor and the privacy factor. The research survey provides several important

findings that most of the mobile customers expect of a reliable mobile payment application

with high security yet being easy to use. Nevertheless, the acceptability, cost and technical

factors are considerable questions which need to be optimized as well. The users were

concerned about whether the national laws would generate any effects on mobile

payments, and the user experience of mobile payment applications was one of their

concerns.

0

10

20

30

40

50

60

70

80

1-5 Times 5-10 Times 10-15 Times 15-20 Times Over 20 Times Never

Transfer Accounts Make Payments International Payments Red Packet

25

Figure 4.3 Participants’ attitude to different factors of mobile payment systems

4.2.3 Attitudes of Respondents to Bitcoin and Its Mobile Payment System

The research survey investigated how much knowledge of Bitcoin payment system

ordinary mobile users had and what areas of Bitcoin payment they knew about. The

number of people that owns a smartphone are growing every day and most of those people

does not even know about Bitcoin. The survey indicates that 63.2% of mobile users did not

know how to use Bitcoin for payment, and few knew the basic characteristics of Bitcoin

payments, such as Bitcoin payments, which have a faster transaction speed and cheaper

trade fee than traditional currencies. However, 24.8% of the participants thought that the

Bitcoin payment had potential risks, and they do not completely trust such a fresh payment

form, although they knew of its advantages. According to the data analysis, the participants

with higher education degrees had more Bitcoin knowledge, and were more likely to

accept Bitcoin mobile payments as an alternative future payment form in their life.

01020304050607080

Security Factor

Trust Factor

Acceptability Factor

Technical Factor

Convenience Factor

Legal Factor

Exchangeable Factor

Cost Factor

Privacy Factor

User Experience Factor

Strongly Disagree

Disagree

Neither Agree nor Disagree

Agree

Strongly Agree

26

Table 4.2 Attitudes to accepting Bitcoin mobile payments as an alternative future payment

form, by educational level

Education Degree

Strongly Disagree

(%)

Tend to Disagree (%)

Hesitating(%)

Tend to Agree

(%)

Strongly Agree (%)

Undergraduate Education 9.0 21.2 30.3 33.3 6.0

Postgraduate Education 13.4 9.8 41.5 25.6 9.8

Doctor Education 0 0 0 100 0

According to the surveys, 83.2% of the users had not ever used Bitcoin payment or other

virtual currency payments before, while 21 respondents said that they had experience of

virtual currency payments, such as the Q coins of the Tencent company, credit card points,

airline points and other virtual currencies in games or on other platforms. The data

indicates that virtual currency is not a prevalent payment form at the current time, as most

users have not ever used Bitcoin or any other virtual currency for their payments. The

Bitcoin payment does not have too many fixed users, but it has a huge target user groups

and potential market in the future. According to the research data, those who had not used

a virtual currency (62.5%) had a hesitant attitude to Bitcoin payment, and only 18.2% trend

to support it. Overall, 57.7% participants indicated that they distrusted Bitcoin mobile

payments.

In allusion to the business application of Bitcoin payment, the research survey investigated

the attitudes of the participants to it and the Figure 4.4 show the results. 70 participants had

a neutral point of view on several online platforms supporting Bitcoin as one of their

payment methods, most people observed Bitcoin payment from the sidelines and treated

such a non-traditional currency equivocally. Only 7.2% of the respondents explicitly

disagree with it. It is a reasonable inference that most of the mobile users did not trust the

emerging payment form and did not have relevant use experience, making it difficult for

them to accept Bitcoin payment at present stage. However, most people did not directly

negate the online Bitcoin payment; they were open to observing the prospective trend,

which is not a bad condition for the development of Bitcoin payment.

27

Figure 4.4 Participants’ attitudes to e-commerce platforms accepting a Bitcoin payment

system

The research survey investigated mobile users projected levels of trust if their mobile

payment provider integrated Bitcoin payments into its functionalities, such as PayPal. It is

an interesting result that half the participants said that they would trust and accept such a

Bitcoin mobile payment method in their frequently used mobile applications, while half

participants declared that they distrust the integration of Bitcoin and mobile payment

applications. The percentage of the participants who trusted and distrusted the integrated

application were 49.6% and 50.4%.

37 participants indicated that they trended to use or intended to try Bitcoin as a mobile

payment form in the future, and 8% of them strongly desired to try it in their daily lives.

Most participants had a hesitant attitude to using Bitcoin mobile payment application (45),

which is fewer than those who had a neutral point of view on online platforms supporting

Bitcoin in e-commerce. In this population, 71% were hesitant about e-commerce platforms

accepting a Bitcoin payment system as well. However, for 21 participants that had virtual

currency experience, 19 trusted Bitcoin mobile payments, while 15 trend to agreed or

strongly agreed that Bitcoin payment should be included in business application. The result

7.20%9.60%

56%

18.40%

8.80%

Strongly Disagree

Tend to Disagree

Hesitating

Tend to Agree

Strongly Agree

28

indicates that the users who are gamers, credit card point users or other virtual currency

users accept Bitcoin mobile payments much more easily than those who are not.

Figure 4.5 Participants’ attitudes to trying Bitcoin as a mobile payment form in the future

According to the research data, not every participant had relevant knowledge about

Bitcoin, and most did not have any experience of virtual currency payments and did not

know how to use Bitcoin payment. This is a potential limitation for further implementation

of Bitcoin mobile payment, as discussed further in section 5. However, most of the

participants had a neutral point of view on Bitcoin payment on online platform, and half of

the mobile users trust the integrated application of Bitcoin and mobile payments, the

proportion of participants who were willing to accept Bitcoin mobile payments was higher

than the proportion who would not try. Considering all of the research data, it is obvious

that most of the respondents had an open and neutral attitude to such a new mobile

payment form, and they preferred to observe the following development trend of Bitcoin

mobile payments.

4.2.4 Summary

The questionnaire investigated users’ payment habits and attitude to bitcoin and its mobile

payment system. Mobile payment has been an important payment form in people’s daily

life, usually for making payment and transferring money through third party mobile

payment applications. Security, trust and privacy are the three most important factors for a

13%

13%

36%

30%

8%

Strongly Disagree Tend to Disagree Hesitating Tend to Agree Strongly Agree

29

mobile payment system, and the users who have higher education degree, or have

experience on virtual currency are easier to accept Bitcoin mobile payment. At present,

most users have hesitant attitude to bitcoin payment, while half of participants indicate that

they trust integrated application of Bitcoin and mobile payments.

4.3 Interviews

This section focuses on the facts and presents the views of interviewees on Bitcoin

payment implementation and Bitcoin mobile payments. The section analyses the data from

semi-structured interviews and explains the findings in thematic analysis approach. The

major themes derived from the interview data collection are: the current situation of the

implementation of mobile payment and the possibility of Bitcoin becoming a global

alternative payment form; the feasibility of the integration of Bitcoin and mobile payments;

and the future strategy prospective of Bitcoin mobile payment applications. The thematic

analysis result is shown in the concept map as Figure 4.6 shows.

4.3.1 Mobile Payment and Bitcoin Payment Implementation

The mobile payment has been a common payment form in modern society, especially in

the metropolis, as every smart mobile device user is able to use their mobile payment

applications for daily consumptions with each merchant who supports mobile payments.

The interviewees also confirmed that, “With the prevalently use mobile devices for online

shopping, renting cars, calling taxis and so on, most of the transactions need to link to a

mobile payment app or online banking in order to finish payments. Almost every young

person around the world, if he or she owns a smart phone, must know how to use mobile

payment apps. Mobile payment surely has become a regular payment form in the world”

(Mobile Payment Amateur).

“AliPay occupies around 72% Chinese mobile payment Market Scale in 2015, and the third part

mobile payment market size is over 9000 billion, as well as other strong and mature mobile payment

software like ‘CaiFuTong’, ‘JD Wallet’ and so on” (Staff Bitcoin China Company).

According to this quote, it emerges that the mobile payments are widely implemented in e-

commerce and online transactions. There is no doubt that the mobile payments have

changed people’s consumption habits and payment modes. Different mobile payment

applications are available in mobile stores, and mobile banking is supported by most

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banks, which have huge amount of users and cooperative businesses. The mobile payment

has formed an established payment ecosystem, as illustrated in Section 4.2.

“Really a lot of supermarkets like the ‘QuanJia’ retail chain which are 24-hour convenience stores

in Shanghai, they have accepted AliPay as its mobile payment form and everyone can use their

mobile phone, scan the QR Code and complete their payments. Sometimes you can use your phone

close to the payment machine if the machine applies NFC” (Staff Bitcoin China Company).

All of the interviewees agreed that the mobile payment was an indispensable payment form

for smart phones or mobile device users. These mobile payment methods apply new

technologies, such as QR code scanning and the NFC (Near Field Communication)

technology, which makes it is possible to realize the mobile payments in physical stores.

Bitcoin is still the most popular and secure virtual currency because of its advanced

technologies and characteristics. Bitcoin has better security than other electronic money, in

theory. The following interviewee commented on this:

“It is a one of the best financial currency and exchange media, and the Bitcoin applied the

blockchain technology, which is the newest and the most advance financial technology in the world.

The blockchain and encryption technologies ensure the high security of Bitcoin” (Staff Bitcoin China

Company).

The Bitcoin is a powerful payment form in the current market: the analysis of the data

indicates that the Bitcoin can be paid in the same way as traditional currency, and with

more retailers and customers are willing to accept it, it can be a widely used as a payment

currency:

“More and more retailers and online service providers are willing to accept Bitcoin. You are able to

pay for Bitcoin in order to obtain physical commodities and virtual service. You only need to transfer

your Bitcoin to the sellers, while not having another party join in. It’s a new thing in e-commerce”

(Bitcoin Enthusiast).

“As I know, more than 100 thousand retailers take Bitcoins payments, include WiKi, Microsoft,

JPMorgan and other companies. Bitcoin has become an international payment currency, and sure, I

think the Bitcoin is an alternative payment form in international markets” (University IT Lecturer).

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However, it should be envisaged that the Bitcoin still has risks in both payment systems, as

well as economic and legal issues, and other issues. The Bitcoin payment has sometimes

been treated as an unconventional payment form that would disturb financial order and

harm the current financial industry, and some countries and states have launched strict bills

to restrict Bitcoin payment. The university lecturer stated that:

“Bitcoin now still has some potential risks which need to be solved. You may know the Bitcoin system

is not absolute safety. And this currency has not obtained permissions in most countries, because it

would have enormous effects on current financial infrastructures, both benefits and harms”

(University IT Lecturer).

The next interesting view reflects that the Bitcoin can be a better alternative payment

currency, especially in international remittance and transactions. As illustrated in section

4.2, few mobile payment applications provide an international payment service and most

do not support multiple currencies, having limited the international payment service of

mobile payment applications. The Bitcoin would greatly improve the financial service,

because it is possible that it can function as a current international money unit, like gold,

and is compatible for mobile payment. International students would enjoy the benefits of

the Bitcoin international mobile payment, as this mobile payment amateur stated:

“If I can receive some Bitcoins from my family and transfer to pounds, it’s very fast, and I do not

have to wait a long time for the international remittance. It’s quite easy for me to get more pounds in

a short time. It’s very suitable for international students like me, or some international transactions”

(Mobile Payment Amateur).

The interviewees support the Bitcoin payment to implement in businesses and fitting into

online platforms, which has a good chance of becoming a great alternative payment

currency, although it still has potential risks.

4.3.2 Integration of Bitcoin and Mobile Payment Systems

It is clear that mobile payments are utilised extensively by a huge amount of merchants and

users, Bitcoin is seeking the opportunity to broaden participation in current payments.

However, the feasibility of integrating Bitcoin and mobile payments is a significant

question.

32

One interviewee offered the ‘FinTech’ theory, and indicated that the combination of digital

currencies and mobile payment are financial technology innovations.

“The concept of ‘FinTech’ is quiet popular, the combination of technology and finance is the most

efficient innovation of financial services in the world. No doubt, the Bitcoin and mobile payment is

such a combination” (Bitcoin Enthusiast).

In the twenty-first century global economy, financial technology has gradually become an

more important and effective development mode than traditional financial industries and

businesses, which deeply influence the global economy. This interviewee had a positive

attitude to the integration of Bitcoin and mobile payments.

In relation to the news that the PayPal had applied its Bitcoin payment system patent, all of

the four interviewees are optimistic to see the integration of Bitcoin and mobile payment

applications, although it has not been realized and launched. The interviewees stated their

comments and analysed the feasibilities.

“The Bitcoin will provide one more choice for the mobile users, it will be more possible to attract

more users to use Bitcoin mobile payments. Resources integration is a win and win strategy” (Staff

Bitcoin China Company).

“Every mobile payment software can use the Bitcoin’s API and integrate it into their own mobile

platforms, and enabling customers to use Bitcoin payments through their mobile wallets. The Bitcoin

can be an important part in mobile payments, even in mobile commerce” (University IT Lecturer).

These four individuals believed that Bitcoin can complete almost every function that

traditional currencies perform in terms of mobile payment, and that there are no technical

obstacles to integrating Bitcoin into mobile platforms. However, it still full of challenges in

realizing a large-scale implementation, and there are several factors which will affect the

implementation of Bitcoin mobile payment which the interviewees expressed concerns

about, especially in relation to security, acceptability, trust and government policies.

“The Bitcoin payment system is not absolutely safe, although the Bitcoin payment applies

digital signature technology and several cryptological techniques” (University IT

Lecturer). The interviewee considered that the potential security risks would directly result

in customer distrust and even rejection of the use of Bitcoin as a mobile payment, and he

33

thought that the Bitcoin mobile payment had less stability than other cashless payment

forms, such as debit cards, at the present stage. Other interviewees gave similar views.

“I am not sure that very middle-aged population and old-age population would accept

Bitcoin mobile payments, even mobile payments. Most are traditional and find it difficult

to accept a new currency like this” (Staff Bitcoin China Company). He said that the

Chinese government has issued some very strict policies on Bitcoin, as well as on mobile

payment applications, in order to protect the traditional banking industry. This is an

important factor, which will affect the development of biotin mobile payments.

Figure 4.6 Concept map of qualitative analysis findings

4.3.3 Future Strategy Prospective of Bitcoin Mobile Payments

On the premise that the integration of Bitcoin and mobile payment is feasible, how Bitcoin

can fit into the mobile payment system should be considered. The Bitcoin mobile payment

has two choices for its future development strategy: integration with an active popular

mobile application; or developing a potential independent Bitcoin payment application.

34

The four participants all considered that Bitcoin should be integrated with an active

popular mobile application, as the best way to develop and implement Bitcoin mobile

payments in the future.

The Bitcoin mobile payment has to seek an appropriate way to make it be accepted by

most mobile users; the interviewees identified that a successful mobile application would

provide the Bitcoin payment with a more effective and convenient way to expand its

market and user groups. Bitcoin may integrate and share current customers, markets,

payment channels and technologies and thus reduce competition.

The following interviewee considered that the integration of Bitcoin is also a great

development strategy for the mobile payment operators, which is also good for product

diversity, although the independent Bitcoin payment application may retain the

authenticity of the Bitcoin payment:

“The Bitcoin may enjoy a current and large scale of business chain from a successful mobile

application. They have a mature payment system, and Bitcoin can access in the system and share

their customers and resources” (Mobile Payment Amateur).

The university IT lecturer indicated a fresh idea in his interview, suggesting that the

Bitcoin may integrate with mobile wallet applications, as well as possibly with social

medias like Twitter. He pointed out that WeChat is a very successful example that

perfectly integrated social media and a payment system:

“They owns a quite enormous mobile users group. If Bitcoin can integrate with these successful

applications, no doubt there is a very good chance for Bitcoin to realize its mobile payment strategy”

(University IT Lecturer).

The other interviewees proposed feasible inferences and theories in their statements. All

agreed that it should seek to integrate into active popular mobile applications, such as

mobile payment applications, social media applications, reservation applications and other

payment applications. This is the best and most effective way for the Bitcoin to fit into

people’s daily mobile payments.

35

4.3.4 Summary

The interview is divided into three themes. The mobile payment has changed people’s

consumption pattern, and mobile payment technologies are mature. However, current

mobile payment applications still provide limited service to international payment. The

Bitcoin payment has broad market and is gradually accepted by people although it has

potential risks. The integration of Bitcoin and other mobile payment application or mobile

social media is the best development way for Bitcoin to fit into mobile payment system.

5. DISCUSSION This section mainly focuses on the discussion of the research theme, and refers to the

literature review in Chapter 2. In this chapter how Bitcoin fits into the mobile payments

and the potential of Bitcoin as an alternative mobile payment form are discussed.

5.1 Bitcoin and Mobile Payment

The Bitcoin is a reliable crypto-currency and the Bitcoin blockchain invention has brought

technological changes to the traditional finance industries. The encryption techniques and

rigorous design structure ensure that the Bitcoin owns enough security; and, as the

literature review has shown, the Bitcoin has a higher degree of security than physical

currency and traditional bank money. The Bitcoin has been successfully commercialized as

a de facto payment currency in the deep webs, which is in use for anonymous business

transactions and has been accepted by more and more merchants as their payment form as

well. The PEY company has announced that they will use Bitcoin payroll API to pay staff

salaries in their German businesses (Glaze, 2016); and the game platform STEAM has

accepted Bitcoin as more effective payment mode for their users (Higgins, 2016). The

Bitcoin has proved that it possesses the property of currency circulating in networks, and

that it has the potential capacity to be an alternative payment form in commercial

applications.

Mobile devices have become the daily tools for online shopping, mobile payments, mobile

money transfer and other financial services. The mobile financial services have been

available in a broad range, and have many more customers than in the past years. Mobile

36

commerce has been one of the most important developments in e-commerce as an online

ordering, bill payment and bank transfer method.

Mobile payment has been a common payment choice for users, with the rapid development

of the system and more user requirements on mobile finance services, there is a potential

motivation to integrate a more secure and effective payment currency that is different from

the current fiat currencies, and incorporates more advanced and safe technologies. The

Bitcoin is just such an appropriate currency, which can fit into mobile payment systems as

a payment form.

5.2 Bitcoin Mobile Payments

Bitcoin is a point-to-point virtual currency where users transfer the digital currency to

other users by a unique Bitcoin receiver address in their mobile wallets. The unique QR

code for each Bitcoin mobile account and the scanning technology, as well as the NFC

payment technology, ensure the technical feasibility of Bitcoin face-to-face payment.

Bitcoin mobile payment has offered the users a low cost and fast mobile solution to

exchanging money, which makes mobile payment easier.

The Bitcoin and its mobile payment has been a hot topic since 2009, and various Bitcoin

mobile payment applications are available to mobile users via mobile App store (Jones,

Gonnella & George, 2014), such as Circle, bitWallet and CoinPocket. However, these

Bitcoin mobile payment applications still have not been incorporated into people’s lives,

and only a few mobile users are willing to select the Bitcoin mobile payment application as

their payment form. A number of challenges and obstructions need to be solved before

realizing a widely used Bitcoin mobile payment ecosystem.

5.3 Security and Privacy of Bitcoin Mobile Payment:

According to Section 4, the security of mobile payment systems was the most important

factor that concerned them. It is the precondition for an eligible Bitcoin mobile payment

system to ensure an adequate security payment environment. Users’ Bitcoin mobile

payment wallets apply cryptography technologies to protect the order and integrity of the

37

blockchain, the private-public keys, digital signatures, two-factor authentication, and

security protocols, guaranteeing the Bitcoin mobile payment system’s security. The

rigorous algorithm structure of Bitcoin, as well as the fixed quantity and time of Bitcoin

mining, ensure a steady and safe bitcoin financial order. It would bring fewer negative

effects on a market economy, such as currency inflation.

The mobile payment is proving to be a safe payment form that applies both biometric

encryption technologies and cryptological technologies, such as fingerprint recognition,

voice and face recognition, password authentication and payee authentication. Multiple

authentications provide a great assurance to the security of mobile payments. However, the

mobile payment system is not absolutely secure. Users’ mobile devices can still be hacked,

and their privacy information is at risk of interception, while mobile phone malware or

phone viruses threaten the mobile payment system as well. The anonymity of the Bitcoin

and strong encryption would keep users’ privacy, as Section 2 confirms.

While the incorporation of Bitcoin and mobile payments would obviously enhance

payment security, it would not only rely on the security services of the mobile payment

application operators. The researcher considers that security and privacy would not be a

barrier to Bitcoin fitting into mobile payments. Comprehensive insurance solutions in both

hardware and software, and multi-signature authentication, can effectively protect the

mobile payment system from mobile malware and network attacks. Although security

remains to be increased, the Bitcoin mobile payment system may provide adequate security

and privacy for mobile users in the present stage.

5.4 Acceptability of and Trust in Bitcoin Mobile Payments

Whilst technical security has been a preoccupation of the Bitcoin community, the findings

suggest that issues such as trust are equally crucial. According to the research analysis in

Section 4, people have a low acceptance of fresh mobile payment methods and this sense

of distrust is the biggest hurdle for Bitcoin to fit into mobile payments as an alternative

mobile payment form. Most mobile users do not have any experience of virtual currency,

some know Bitcoin but do not dare to invest money in it, and few users have ever

contacted Bitcoin and its payment system. They have a weak knowledge of Bitcoin and

38

their subconscious distrust makes it hard for them to accept such a mobile payment system.

Some people are beginning to regard Bitcoin as an investment asset, and it is inevitable

that people will compare Bitcoin to gold and the US dollar (Wells, 2011). However, they

prefer to invest in traditional gold as a long-term stable store of value. In the payment

domain, mobile users have more trust in their fiat currency payment system. The recent

Brexit incident in June 2016 and the Bitfinex hack in August 2016, which lead to drastic

fluctuations of the Bitcoin, strengthened people’s distrust and led to suspicions of the

reliability of Bitcoin payment. On the other hand, some mobile users have a low

acceptance level on mobile payments and do not trust storing their property and personal

financial information in mobile or digital form. That makes the Bitcoin has lower

acceptability in current mobile financial payment platform. The acceptability and trust of

mobile users are the most fundamental factors that would affect the progress of Bitcoin to

fit into mobile payment. The biggest difference between fiat currency and Bitcoin is that

the fiat currency is backed by national governments. It is not practical for Bitcoin to

replace traditional fiat currency in mobile payment system.

How Bitcoin overcome the exposed acceptability and trust problems, firstly, the Bitcoin

need a clear position that it is an alternative mobile payment form rather than a substitute

payment system. It is much easier for mobile users to accept such a new mobile payment

form. Secondly, the Bitcoin mobile payment need a non-malignant regulation by financing

institutions and build up a favourable market order of mobile payment, that is conducive to

make Bitcoin mobile payment more trustworthy and facilitate the trust of mobile users.

Thirdly, the Bitcoin mobile payment should set appropriate target customers, and do more

market promotions. According to the chapter 4, the users who are have higher education

degree or have experience on virtual currency, such as gamers or airline memberships, are

easier to accept Bitcoin mobile payment, and they are suitable as the primary target

customers. It is necessary to make detailed statements to let more people know the

advantages and functions of Bitcoin mobile payment, as well as attracting more target

customers and mobile commerce merchants to join the Bitcoin mobile payment ecosystem.

It would accelerate the acceptability of mobile users.

It is a gradual process for the mobile users to adapt the new payment form and adopt the

Bitcoin mobile payment; any fresh thing has a delay in public recognition. The

acceptability and trust of Bitcoin mobile payment are the main obstacles for Bitcoin to fits

39

into mobile payment as an alternative mobile payment form. It needs enough patient to

wait for people’s acceptation.

5.5 Bitcoin Mobile Payment and International Payments

Gorale and many scholars have declared that the Bitcoin is dead (Gorale, 2016), in some

ways, they are right, the influence of the independent Bitcoin payment system has

dwindling during the past years. However, with the rapid development of the emerging

markets of financial technologies (FinTech), the Bitcoin and mobile payments have been

very active in the FinTech domain. The integration of Bitcoin and mobile payments is a

digital financial innovation involving a new mobile commerce mode. The relationship

between the FinTech payment mode and traditional bank industries are healthily

competitive and cooperating, and have complementary advantages to promoting digital

economy cooperation and providing better financial services. As the findings in Section 4.2

shows that half of the participants would not use mobile payments for international

payments, as few mobile payment applications provide an international payment service.

In addition, they do not support multiple currencies, which has limited the international

payment services of mobile payment application, whilst providing a potential board market

and less competition for Bitcoin mobile payments. At the present stage, the Bitcoin mobile

payment should focus on the international payment function in order to exploit the

international market and give full play to the advantages of bitcoin mobile payments.

The current international payment of traditional currency is a currency flow transaction

between the national central banks or financial institutions after exchange rate calculations.

It usually takes 3 to 4 working days to transfer the money, the faster transfer service for

ordinary users would take one day for banking transactions as well. The complicated

transfers between these financial institutions are inefficient, opaque and costly. The Bitcoin

mobile payment function makes up for the insufficiency of the traditional international

payment service. Traderman thinks that such a mobile payment form almost at the speed of

light like a wire transfer and without any paperwork and troubles compare to other transfer

forms (Traderman, 2016). The international payment of Bitcoin mobile payments does not

have currency category limitations, or geographic and time difference restrictions, it owns

a global mobile payment network, so their customers are able to enjoy a low cost,

40

anonymous, fast and accurate mobile financial service and finish their payment anytime

and everywhere. It deeply influences international payment industries, international

remittance and donation, international universities, and students and transnational trade

organizations could enjoy the benefits from it. The FinTech mobile payment can be applied

to the settlement of college tuition fees, transnational bills, charitable donations and other

international business.

The Bitcoin mobile payment does not have obvious competitive advantages compares to

the traditional banking and mobile payment applications that use a national currency in

daily payment. The Bitcoin mobile payment should focus on international payments; it is

the most likely area where Bitcoin can fit into the mobile payment system, as an alternative

mobile payment form in international payments, at this present stage.

5.6 Risks and Limitations

The Bitcoin mobile payment has potential risks and limitations as well. Unlike traditional

mobile payment applications and other non-cash payments, the Bitcoin mobile payment

amount does not have restrictions, and the payment is irreversible, which means once you

have sent your amount of money, it cannot be recovered. Bitcoin on mobile payment

platforms does not have absolute security, it still has the risk of being hacked and data

being stolen, or mobile devices being lost. Fraudsters and malicious applications can cause

serious problems as well. Leaky design or malicious developers of Bitcoin mobile payment

applications make the payment system vulnerable, and the Bitcoin mobile payment system

exposes users mobile account information. The vulnerabilities in mobile device hardware

design, SIM cards, mobile operators, networks or device operation systems threaten the

security of the Bitcoin mobile account. Another limitation is that the Bitcoin mobile

payment completely relies on the mobile network, so that mobile users are not able to

complete their Bitcoin payments without a mobile network signal, which restricts the

application in some special areas.

The Bitcoin mobile payment would meet more stringent government supervisions and

financial policies than traditional mobile payment applications and other payment forms in

case of serious financial crimes like money laundering (Wells, 2011), the Bitcoin mobile

41

payment must run under both currency policies and mobile payment constitutions. China

has suspended public Bitcoin transactions in Chinese market, and Iceland had strict capital

controls to Bitcoin (Jenssen, 2014).

The Bitcoin mobile payment provides a potential way and form for crimes, such as the Silk

Road, which was a dark web virtual community for illegal services and drugs. The sellers

or suppliers of these illegal products were located in more than 10 countries around the

world. These products and services provided more than 100,000 buyers (Finklea, 2015).

All of the transactions were by online Bitcoin payment and Bitcoin mobile payment. It is

possible to provide a channel for terrorism to raise funds. The anonymity and

decentralization of mobile platforms would make it hard to regulate. In order to overcome

the limitations from government, the Bitcoin mobile payment should be reliance to

government regulation on mobile platforms, and regularize user payment behaviours.

The amount of Bitcoin is steadily increasing through Bitcoin mining, but it is not sufficient

to satisfy the growing demands of the Bitcoin mobile payers that objectively limit Bitcoin

mobile payments, which can only function as an alternative mobile payment form, rather

than a mainstream mobile payment form; and this rigid restriction will limit its future

development, to some extent.

5.7 Integration of Bitcoin and Mobile Application

In the appreciable future, the integration of Bitcoin and current mobile applications, such

as PayPal and AliPay, would be a more appropriate development mode to seek an

opportunity for broad participation in current payment, rather than developing an

independent Bitcoin payment application. The PayPal declared that its merchants are able

to accept Bitcoin and announced a partnership with BitPay and CoinBase in 2014 (Maras,

2016), and applied the Bitcoin mobile payment patents in 2016. All of the signs show that

PayPal has the intention to launch the Bitcoin mobile payment function. The resources

integration of the Bitcoin payment system and a mature mobile payment application would

benefit both parts. The Bitcoin payment would share their current enormous customer

groups, good management market, mature payment channels and technologies, and reduce

unnecessary competition. An interesting online payment service provider is called

‘Bitwala’, which is able to send Bitcoins to PayPal accounts, and transfer into euros with

42

exchange rates. It is a successful practice in Europe to relate Bitcoin to a mobile payment

platform, as it allows users to use Bitcoins for traditional currency payments, and provide

users with more choices, not just binding with debit cards. The PayPal mobile wallet users

would directly receive fiat currencies from the Bitcoin payment of payers. It is a great

Bitcoin mobile payment example in the current mobile payment market. In the future, it

would be the best solution for Bitcoin mobile payments if the current mobile payment

applications like PayPal directly integrate Bitcoin in its mobile payment system.

The most important significance of the integration of Bitcoin and mobile payment

applications is that it would form a mini-global payment mechanism and mobile payment

ecosystem. Different mobile payment applications from different regions are

interconnected within an enormous payment network like a spider’s web. It is an

interesting phenomenon that mobile users are able to use mobile devices to transfer their

money between different mobile payment applications or in multiple currencies. A Chinese

AliPay mobile payment user can convert their Chinese RMB into Bitcoins, and transfer the

Bitcoins to their British PayPal mobile account in Pounds currency by the Bitcoin mobile

payment system. The Bitcoin is equivalent to the gold standard in the mobile network.

Every mobile payment application which uses a different fiat currency in different

countries is no longer an independent payment, but customers may use Bitcoin mobile

payments for global purchases and payments without complex and ineffective currency

settlements. It makes up for the deficiencies of traditional mobile payments and currency

payments, makes mobile payments more flexible and effective, and facilitates global

currency circulation.

With the development of mobile wearable devices, realizing the mobile payment via

wearable electronics is a feasible mobile payment solution for Bitcoin mobile payment,

which may apply the same technologies as phone payments, as well as simplifying the

mobile payment form. This contactless payment form is an appropriate mobile platform to

carry an NFC payment technology and any mobile payment applications. Apple Watch,

Microsoft Band and other wearable devices are compatible payment devices for Bitcoin

mobile payment applications.

The WeChat social and payment media provides an excellent demonstration of the

combination of mobile payments and social media, it is a strong mobile payment

43

integration mode, and greatly improves the user payment experience and strengthens

customer’s payment relationships via social media. According to section 4, social media

platforms accepting Bitcoin would greatly accelerate the progress of Bitcoin fits into

mobile payments. The Bitcoin mobile payment system is able to take references on the

successful experience of WeChat Pay and integrate social media into mobile applications,

such as Twitter, Facebook and Weibo. The potentially enormous user market and good

mobile payment environment provide great opportunities for Bitcoin to fit into a mobile

payment. The iPayYou Bitcoin payment platform launched such a service, which enabled

Twitter users' access to the Bitcoin payment system via a Twitter account, and sent and

received Bitcoin payments via Twitter. The 310 million active Twitter users are able to use

the anonymous virtual currency for exchange without leaking any personal private and

sensitive information. Such an integration mode provides a fast and low cost channel for

Bitcoin implementation. Bitwala and iPayYou do not have mobile payment applications,

and they are semi-independent payment systems; however, they have demonstrated a

feasible and creative development direction and future strategy of Bitcoin mobile

payments.

6. CONCLUSION The chapter summarizes the research, offers recommendations and reflections on the

research objectives, as well as discussing the limitations. Also, future research

opportunities will be provided at the end.

6.1 Conclusions

The research shows that, although cash and card payments are the mainstream payment

form, the mobile payments have become a popular payment form and accepted by most

mobile device holders for daily payment and transfer money. Mobile payment applications

have had extensive mobile user groups, like PayPal and AliPay, they as popular third party

traditional currency mobile payment platforms that provide mature mobile financial

services for users. Mobile payment has changed people’s consumption habits and payment

modes. The financial technology has gradually become a more important development

mode, deeply influencing the global economy. It has the potential motivation to integrate a

44

more secure and effective digital currency for an alternative payment currency on mobile

payment platforms.

Security, trust and privacy are the top three user factors for establishing a new mobile

payment system, which are the essential and most considerable factors for Bitcoin to fits

into mobile payment platforms. Bitcoin is technically feasible for integrating with mobile

devices. However, as most mobile users have no experience of virtual currencies and little

relevant knowledge, they hold a neutral point of view on Bitcoin e-commerce applications

and hesitate to try Bitcoin as a mobile payment form, even though nearly half of users

think it would be difficult to trust an integrated Bitcoin mobile payment system. They also

tend to believe it involves security risks and government policy restrictions. This affects

the progress of Bitcoin towards fitting into mobile payment. The study has proved that the

integration of biometric encryption and authentication technologies on mobile payments,

as well as blockchain and cryptography technologies on Bitcoin payment system guarantee

the Bitcoin mobile payment system’s security. The anonymity of the Bitcoin and strong

authentication mechanism prevents the users’ privacy being intercepted. In order to gain

users’ trust and acceptability, the researcher thinks that Bitcoin needs a clear position as an

alternative mobile payment form, rather than a substitute payment system. It should seek a

non-malignant regulation from financing institutions and build up a reliable market order

of mobile payment, as well as popularizing the relevant knowledge of Bitcoin and its

payment system to ordinary users, and seeking new markets from younger and more highly

educated users.

The research considers that the relationship between this FinTech payment mode and

traditional bank industries are healthily competitive and cooperative. At the present stage,

the Bitcoin mobile payment should focus on the international payment function in order to

exploit international payment market and give full play to the advantages of Bitcoin mobile

payment. It is the most likely domain for Bitcoin to fit into the mobile payment system as

an alternative mobile payment form in international payments. In the appreciable future,

the integration of Bitcoin and current mobile applications, such as PayPal and AliPay,

would be a more appropriate development mode to seek opportunities for broad

participations in current payment rather than developing an independent Bitcoin payment

application. The Bitcoin payment is currently able to share current enormous customer

groups, good market management, mature payment channels and technologies and to

45

reduce unnecessary competitions. Bitcoin mobile payment applications on mobile wearable

devices and mobile social media platforms would greatly accelerate the progress of Bitcoin

fitting into mobile payments. It is a feasible and creative development direction and future

strategy for Bitcoin mobile payment. The research considers that the most important

significant aspect of the integration of Bitcoin and mobile payment applications is that it

would form a mini-global payment mechanism and mobile payment ecosystem.

6.2 Recommendations

The research highlights the investigation and research on how Bitcoin fits into mobile

payments on smartphones, and the feasibility of an alternative payment form for mobile

phone users. With more and more users holding wearable devices, it is an interesting topic

worth further research in the future. Wearable devices are not just for connecting

smartphones or applying to fitness, they are an emerging contactless payment form.

Bitcoin are able to be an innovative digital payment solution to combine with wearable

devices based on mobile payment technologies and Bitcoin mobile wallet. The research

recommends that the future study might focus on the feasibility and solution for integrating

Bitcoin and wearable devices. An additional recommends is to research the influence of

blockchain technology to the traditional finance industry, as well as changes to current

financial payment services.

6.3 Limitations

Due to district and resource limitations, the research involved few participants and limited

sampling, so the collected data cannot be said to generate generalizable results. In the

processes of data collection and analysis, some contradictory data was found from the

information provided by participants. The researcher is not a professional expert and has

limited knowledge on the domain of Bitcoin and mobile payments. In terms of Bitcoin

mobile payment as an emerging payment form, there is little literature on the subject. All

of these limitations restricts the quality of the research.

46

6.4 Reflections

It is a challenging process to conduct the research and come to conclusions. The data

collection and literature review are the most difficult parts in the research. Due to the

limited amount of literature on the subject, it took much time to look for relevant material

and articles for the literature review. Questionnaires and interviews required much time,

thought and patience. Some people were not willing to spend their time completing the

questionnaires, and some directly ignored the request. It is a hard process to look for

appropriate interviewees, and many rejected the interviews or were not available to take

part in them. In the data analysis stage, it was difficult to analyse more than one hundred

questionnaires, and also to transcribe interviews. However, the research still completed all

of the objectives given in Section 1.2.

6.5 Future Research Opportunities

The research mainly focuses on investigating the feasibility of realizing a reliable Bitcoin

mobile payment and providing solutions to limitations and risks in order that Bitcoin fits

into mobile payment systems. In the future research, the study is able to be a reference to

develop Bitcoin payment systems on mobile platforms, and seeking an appropriate

integration method to accelerate the process. The research is significant for future

researches, as its conclusions of the study can be applied to future research.

47

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APPENDIXES

Appendix A: Initial Coding Scheme

Code Definition

Debit card Texts about a card payment form instead of cash

Credit card Texts about a card payment with overdraft function

Mobile payment Texts about a payment service via mobile devices

Bitcoin Texts about a digital asset and a payment system

Private and public key Texts about an encryption technology

Transaction address Texts about a destination for receiving bitcoin

51% attack Texts about a network attack pattern

Financial infrastructures

Text about a set of institutions that enable effective operation of financial intermediaries.

Virtual currency Text about a type of digital money

Q coins Text about a type of virtual money

Bitcoin payment Text about a type of payment form

Mobile payment operators

Text about a carrier of mobile payment

API Text describes an application programming interface

Mobile wallet Text about digital versions of wallets on mobile device

Mobile commerce Text about a service through wireless handheld devices

Digital signature schemes

Text about a mathematical scheme for verifying the authenticity of a digital documents.

Cashless payment Text about a payment form without cash

Social media Text about a social community for sharing pictures and words.

Retail chain Text describe a retail outlet that share a brand and central management,

QR Code Text about a machine-readable optical label

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Near field communication

Text about mobile communication protocols

AIB bank Text about a bank of Ireland

Block chain Text describes a sequential distributed database

Irreversible Text describes something not able to be reversed

Anonymous Text describes an activity without personal information

Bitcoin mining Text describes the process of exploiting bitcoins

Deep web Text about the hidden webs in Internet

FinTech Text describes the combination of technology and finance

55

Appendix B: Participant Information Sheet

The University of Sheffield Information School

How Bitcoin Fit into Mobile Payment as a New Alternative Payment Form

Zijia Sun Christopher Foster (Supervisor) Postgraduate of Information Systems Lecturer in ICT and Innovation Information School Information School University of Sheffield University of Sheffield zsun5@sheffield.ac.uk christopher.foster@sheffield.ac.uk

You are being invited to take part in this research project. Before you decide to do so, it is important you understand why the research is being done and what it will involve. Please take time to read the following information carefully and discuss it with others if you wish. Ask us if there is anything that is not clear or if you would like more information. Take time to decide whether or not you wish to take part. Thank you for reading this.

Bitcoin is the most important virtual currency which is different from traditional currencies as well as the mobile payment technologies have been more mature. The dissertation is aimed to investigate and discuss the feasibility about virtual currencies on mobile payment and how the Bitcoin fit into the mobile payment as a popularly alternative payment form. The combined of Bitcoin and mobile payment would be an important part of information infrastructure. The project would do a deep research about how Bitcoin fit into mobile payment and how it can be an alternative payment form in the future.

You have been chosen because you are a common person who frequently use mobile and has mobile payment experience such as Paypal, Alipay and so on, as well as you have heard of Bitcoin or has some knowledge about virtual currency. Your age is appropriate to take part in this questionnaire or interview, and your participation would provide a real data resource for our research.�

Researchers

Invitation

What is the project’s purpose?

Why have I been chosen?

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It is up to you to decide whether or not to take part. If you do decide to take parts you will be able to keep a copy of this information sheet and you should sign a consent form to show you agreed to take part. You can still withdraw at any time, without giving a reason.�

You will be asked to complete the questionnaire which we estimate will take you 15 minutes. You may also wish to agree to a follow-up interview to find out more about your approach.���

Please answer the questions in the questionnaire. There are no other commitments or lifestyle restrictions associated with participating.���

Participating in the research is not anticipated to cause you any disadvantages or discomfort. The potential physical and/or psychological harm or distress will be the same as any experienced in everyday life, and please do not try to deeply understand the deep web and its Bitcoin transaction.

Whilst there are no immediate benefits for those people participating in the project, it is hoped that this work will have a beneficial impact for you to know more about virtual currency on mobile payment.��

Should the research stop earlier than planned and you are affected in any way we will tell you and explain why.���

If you have any complaints about the project in the first instance you can contact me at one. If you feel your complaint has not been handled to your satisfaction you may call me at any time (see below).�

All the information that we collect about you during the course of the research will be kept strictly confidential. You will not be able to be identified or identifiable in any reports or publications. Your institution will also not be identified or identifiable. Any data collected about you in the online questionnaire will be stored online in a form protected by

Do I have to take part?

What will happen to me if I take part?

What do I have to do?

What are the possible disadvantages and risks of taking part?

What are the possible benefits of taking part?

What happens if the research study stops earlier than expected?

What if something goes wrong?

Will my taking part in this project be kept confidential?

57

passwords and other relevant security processes and technologies. These anonymized data will not allow any individuals or their institutions to be identified or identifiable.

You will not be recorded in any way other than your input to the questionnaire without separate permission being gained from you.���

The questionnaire will ask you about your opinions and current practices in relation to Bitcoin and mobile payment. Your views and experience are just what the project is interested in exploring.���

Results of the research will be published. You will not be identified in any report or publication. Your institution will not be identified in any report or publication. If you wish to be given a copy of any reports resulting from the research, please ask us to put you on our circulation list.��

This project has been ethically approved by the Information School’s ethics review procedure. The University of Sheffield’s Research Ethics Committee monitors the application and delivery of the University’s Ethics Review Procedure across the University.���

Mr Zijia Sun, Information School, Regent Court, University of Sheffield, UK. Tel: +44 (0)7548170637, email: zsun5@sheffield.ac.uk�

Will I be recorded, and how will the recorded media be used?

What type of information will be sought from me and why is the collection of this information relevant for achieving the research project’s objectives?

What will happen to the results of the research project?

Who has ethically reviewed the project?

Contacts for further information

58

Appendix C: Consent Form

• I confirm that I have read the participant information sheet for the above study. I have had the opportunity to consider the information, ask questions and have had these answered satisfactorily.

• I understand that my participation is voluntary and that I am free to withdraw at any time without giving any reason. My rights and interests will not be affected and do not generate any negative consequences.

• I understand that the data collection of the questionnaire would be used in student research for his master dissertation and would be viewed by his supervisor who worked at the university of Sheffield. I give permission for these individuals to have access to my records.

• I understand that the information collection about me will be used in other research in the future, and may not be shared with other researchers.

• I understand that my name will not be linked with the research materials, and I will not be identified or identifiable in the report or reports that result from the research.

• I give permission for the research team to re-use my data for future research as specified above.

• I agree to take part in the research project as described above.

Participant Name (Please print) Participant Signature ZIJIA SUN

ZIJIA SUN

Researcher Name (Please print) Researcher Signature Date

Note: If you have any difficulties with, or wish to voice concern about, any aspect of your participation in this study, please contact Dr Jo Bates, Research Ethics Coordinator, Information School, The University of Sheffield (ischool_ethics@sheffield.ac.uk), or the University Registrar and Secretary.

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Appendix D: Questionnaire Design

Questionnaire Design Tool: Google Form: https://www.google.co.uk/forms/about/

Questionnaire Analysis Tool: Microsoft Excel Spreadsheets

Questionnaire Content: I. Basic Data Collection In this section, you will be asked some basic information, but all of your data will be anonymous and keep confidential. 1. What is your age?

• 18 - 25 years’ old • 25 - 35 years’ old • 35 - 45 years’ old • 45 - 55 years’ old • Over 55 years’ old

2. Where are you from?

• United Kingdom • European Union • Outside the EU

3. What is your education degree?

• Primary Education • Secondary Education • Undergraduate Education • Postgraduate Education • Doctor Education • Never

4. What is your current occupation? ______________________________

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II. Experience in Mobile Payment In this section, you will be asked some questions about your experience in mobile payment, as well as your habits on mobile and mobile payment. 5. How long have you used mobile phones or other mobile devices?

• 0 - 5 Years • 5 - 10 Years • 10 - 15 Years • 15 - 20 Years • Over 20 Years

6. How often do you use the following non-cash payment forms each week?

Never 1 - 5 Times

5 - 10 Times

10 - 15 Times

15 - 20 Times

Over 20 Times

Mobile Wallet

Debit Cards Credit Cards

Visa Contactless Cards Transport SmartCards (e.g London Oyster Card)

Work payment SmartCards (e.g Sheffield Genius Card)

7. What mobile payment apps do you usually use in your daily life?

• PayPal • Google Wallet • Mobile Banking (e.g Barclays Mobile Banking) • Apple Pay • AliPay • WeChat Pay • Bitpay • Lemon Wallet • Venmo • None • Other: __________

8. How often do you use each mobile payment function every month? Never 1 - 5

Times 5 - 10 Times

10 - 15 Times

15 - 20 Times

Over 20 Times

Transfer Accounts

Make Payments

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International Payments

Red Packet 9. What do you think are the important factors for a successful mobile payment system? Strongly

Disagree Disagree Neither agree

nor disagree Agree Strongly

Agree Security Factor Trust Factor Acceptability Factor Technical Factor Convenience Factor Legal Factor (e.g Market access laws in different countries)

Exchangeable Factor (e.g Supporting different currencies)

Cost Factor Privacy Factor User Experience Factor

10. What are your opinions of current mobile payments systems (e.g PayPal, AliPay, Apple Pay): ___________________. III. Experience in Bitcoin Payment and Bitcoin Mobile Payment In this section, you will be asked some questions about your experience in Bitcoin payment, as well as your opinions about Bitcoin mobile payment. 11. If you have heard of Bitcoin, what do you know about using it in payments?

• Bitcoin can allow international payments more convenient • Bitcoin payment is cheaper than other mobile payments • Bitcoin payment is more rapid than traditional currency payment • Bitcoin payment has potential risks • I do not know how to use it • Bitcoin payment is a very steady payment form • Bitcoin can be an excellent alternative payment form on mobile device • Other: ____________

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12. Have you ever used Bitcoin payment or other virtual currency payment? • Yes • No

13. Do you agree that online platforms should support Bitcoin as one of their payment form such as STEAM game platform?

1 2 3 4 5 Strongly Disagree Strongly Agree

14. Would you trust Bitcoin if your mobile payment provider integrated Bitcoin payments into its functionality such as PayPal Bitcoin payment?

• Yes • No

15. Do you intend to try Bitcoin as a mobile payment form in the future?

Strongly Disagree

Tend to Disagree

Hesitating Tend to Agree

Strongly Agree

Attitude

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Appendix E: Interview Design

Interview Questions Example

1. What is your most commonly used payment form in your daily life? Debit card? Credit card? Cash or Mobile payment?

2. I know the AliPay, WeChat pay and other mobile payments are very popular in China, do you think the mobile payment can be a regular payment form for people in China even in the world?

3. As we all know, bitcoin is a very popular virtual currency in the world, what do you think about Bitcoin? Can you briefly describe bitcoin in your idea?

4. Many businesses such as STEAM game platform, has received bitcoin as one of its regular payment form, the players can pay for the games in bitcoins. What do you think about this news, and do you think bitcoin can be an alternative payment form in current international market?

5. Nowadays, people more and more frequently use mobile payment in their daily life, such as PayPal, Apple Pay and so on. Do you think the bitcoin can be one important part in mobile payment? What is your viewpoint?

6. What factors do you think affect the development of bitcoin on mobile payment? The security? or the acceptability? or other factors

7. Actually, there are many bitcoin mobile payment applications in mobile online stores, but it is special-interest and few people use it, while some popular mobile payment applications like PayPal is going to accept Bitcoin for a modular payment module. Which one is better for the future development of the bitcoin mobile payment? The integration with a successful popular mobile payment application? or develop a potential independent bitcoin payment application?

8. In your opinion, how does the bitcoin fit into mobile payment and let most mobile users accept the new payment form?

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Appendix F: Approved Ethics Application

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68

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Appendix G: Approval Letter

Downloaded: 28/08/2016

Approved: 21/06/2016

Zijia Sun

Registration number: 150113164

Information School

Programme: How Bitcoin Fit Into Mobile Payment As An New Alternative Payment Form

Dear Zijia

PROJECT TITLE: How Bitcoin Fit Into Mobile Payment As An New Alternative Payment Form

APPLICATION: Reference Number 009596

On behalf of the University ethics reviewers who reviewed your project, I am pleased to inform you that on

21/06/2016 the above-named project was approved on ethics grounds, on the basis that you will adhere to

the following documentation that you submitted for ethics review:

University research ethics application form 009596 (dated 15/06/2016).

Participant information sheet 1019405 version 1 (11/06/2016).

Participant consent form 1019406 version 1 (11/06/2016).

If during the course of the project you need to deviate significantly from the above-approved documentation

please inform me since written approval will be required.

Yours sincerely

Matt Jones

Ethics Administrator

Information School

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Appendix H: Access to Dissertation Form

71