The Risk of Cryptocurrency Payment Adoption and the Role of Social Media: Evidence From Online Travel Agencies

The swift advancement of social technologies has created unprecedented opportunities for companies to embrace new business models or bolster their existing ones. However, the adoption of controversial technologies with social characteristics can also expose firms to risks, as these technologies may not be entirely under their operational control. In this study, our objective is to analyze the impact of the adoption of a controversial technology (i.e., cryptocurrency payment) on users’ perception of a firm and firm performance and examine how social media influences this impact. We leverage a unique research context where an online travel agency cooperates with Travala.com for cryptocurrency payment. Using conventional and synthetic difference-in-differences and randomized experiments, we compare the general perceptions of customers towards the online travel agency before and after the cooperation and gain three main findings. First, the adoption of cryptocurrency payment generally leads to a significant decrease in revenue because of the negative associations concerning cryptocurrency. Second, the popularity of cryptocurrency payment on social media mitigates this negative effect. Third, when cryptocurrency prices rise and public opinions on cryptocurrency turn positive, the mitigation effect is more salient. Further analysis reveals that our results are robust after controlling for the seasonality effect and the nature of the collaboration and using different lags for the outcome variable. This study is among the first to empirically examine how cryptocurrency payment adoption affects firm performance, and provide important theoretical and practical implications regarding the adoption of controversial technologies and the externalities of social media.