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Report by Juniper Research

Bitcoin and Altcoin Transactions Will Shrink by More Than Half in 2015

Bitcoin & Altcoin Transactions Shrink to $30bn This Year as Industry Pins Hopes on Regulated Exchanges
Photo: BTC Keychain / CC-BY-SA-2.0, Flickr
  • The decline was attributable to the combined impact of exchange collapses, Bitcoin theft and regulatory concerns
  • The report by Juniper Research argued that the introduction of licensed, regulated exchanges could lead to a stabilization in currency values and with it an increase in retail transaction adoption
  • Consumer confidence had been 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
By Funds Society, Miami

A new report from Juniper Research has found that the value of all cryptocurrency transactions will fall sharply this year to just over $30 billion, compared with over $71 billion in 2014.

The report, 'The Future of Cryptocurrency: Bitcoin & Altcoin Impact & Opportunities 2015-2019' claimed that the decline was attributable to the combined impact of exchange collapses, Bitcoin theft and regulatory concerns around cryptocurrency’s role in funding dark web purchases.

According to the report, 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.

Regulated Exchanges 'Could Stabilize' Bitcoin Values

However, the report argued that the introduction of licensed, regulated exchanges could lead to a stabilization in currency values and with it an increase in retail transaction adoption. It pointed out that in an unregulated marketplace, consumer confidence had been 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.

Real Time Transaction Settlement Opportunity

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."

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