Cash & Liquidity ManagementPaymentsReport Predicts Sharp Decline for Bitcoin in 2015

Report Predicts Sharp Decline for Bitcoin in 2015

The popularity of Bitcoin and other cryptocurrencies may have peaked in 2014, according to Juniper Research.

The UK research and analytical services group expects the value of all cryptocurrency transactions to fall sharply this year to just over US$30bn, compared with over US$71bn in 2014.

The report, entitled
‘The Future of Cryptocurrency: Bitcoin & Altcoin Impact & Opportunities 2015-2019’
suggests that the decline can be attributed to the combined impact of exchange collapses, Bitcoin theft and regulatory concerns around cryptocurrency’s role in funding dark web purchases.

It finds that the surge in altcoin transactions in 2014 was overwhelmingly attributable to brief spikes in activity during the first quarter in Dogecoin, Litecoin and Auroracoin. By the end of the year, daily dollar values of these transactions were at less than 5% of their earlier peak.

However, the report also argues that the introduction of licensed, regulated exchanges could lead to a stabilisation in currency values and with it an increase in retail transaction adoption. It notes that in an unregulated marketplace, consumer confidence was eroded by the
demise of the Mt Gox exchange
in February 2014 and the recent theft of nearly 19,000 Bitcoins from BitStamp hot wallets.

Nevertheless, despite the fact that PayPal has now begun to allow US consumers to purchase digital goods via Bitcoin, the report argues that the scale of the challenges facing Bitcoin is so great that it will struggle to gain traction beyond a tech-savvy and/or libertarian demographic. Instead, it identifies a longer term role for cryptocurrency protocols in the wider payment space.

According to report author Dr Windsor Holden: “It is likely that we will see the technologies behind cryptocurrency deployed in areas such as real-time transactional settlement. Ripple Labs is already focusing overwhelming on that approach and in the medium term we may see a role evolution to this end amongst other cryptocurrency players.”

A whitepaper,
‘Will Bitcoins Bite Back?’
, is available to download from the
Juniper website
together with further details of the full report.

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