According to a report from UK-based Juniper Research, that specialises in identifying and appraising new high growth market sectors within the mobile ecosystem, bitcoin and altcoin transactions will plunge this year, falling to a total value of less than half of last year’s volume. The company estimated that the value of digital currency transactions would decline to $30 billion in 2015 from over $71 billion last year.
Looking back, bitcoin was named one of the worst investment of 2014. As predicted however, 2015 has seen the continued fall in value of the world’s most popular virtual currency that was supposed to fuel the digital age. The price of Bitcoin dropped in January, 2015, sliding to its lowest level since early 2013, suggesting that confidence in the contentious cryptocurrency may be shrinking.
The Future of Cryptocurrency: Bitcoin & Altcoin Impact & Opportunities 2015-2019 report states that the slump is caused by the “combined impact of exchange collapses, bitcoin theft and regulatory concerns around cryptocurrency’s role in funding dark web purchases.”
“The collapse in dollar value of both bitcoins and altcoins will clearly have a marked impact on the overall value of their transactions, particularly given the scale of their current dependence upon the exchange market. In 2014, the total value of cryptocurrency transactions was $71.8 billion,” writes author Dr. Windsor Holden. “Given the difficulties across the cryptocurrency space, we believe that overall transaction values will fall by 58% this year to just over $30 billion.”
Holden considers that customer confidence in an unregulated marketplace has been destroyed by the collapse of the Mt. Gox exchange in February 2014, and more recently, the theft of nearly 19,000 bitcoins from BitStamp hot wallets.
However, the report does say that the opening of licensed, regulated exchanges could lead to a stabilization in currency value and with it to an increase in retail transaction adoption.
“It is likely that we will see the technologies behind cryptocurrency deployed in areas such as real-time transactional settlement,” writes Dr Windsor Holden. “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.”
The report argues that bitcoin will have a job countering a technically competent libertarian demographic, even though PayPal now allows US customers to make purchases with it:
“Despite the fact that PayPal has now begun to allow U.S. consumers to purchase digital goods via bitcoin, 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. “
“We predict that volatility will stabilize as more high-quality exchanges become established and more users come online,” said Adam Tepper, CEO of Australian bitcoin exchange Independent Reserve, in a note last week.