Study Bullish on Bitcoin, but Predicts Limited Retail Usage

The number of active Bitcoin users worldwide will reach 4.7m by the end of 2019, up from just over 1.3m last year, a report from the UK firm Juniper Research predicts.

However, the report, entitled ‘The Future of Cryptocurrency: Bitcoin & Altcoin Impact & Opportunities 2015-2019’ argues that usage will be continue to be dominated by exchange trading, with retail adoption largely restricted to relatively niche demographics.

It notes that while a number of high profile retailers are enabling Bitcoin payment, activity levels from both online and offline deployments are extremely low.

“While average daily transaction volumes have increased by around 50% since March 2014, the indications are that much of this growth results from higher transaction levels by established users rather from any substantial uplift in consumer adoption,” says report author Dr Windsor Holden.

The report cites several factors, which it claims will continue to inhibit growth – most notably the difficulty in communicating the concept of cryptocurrency payments to end users. It adds that Bitcoin’s historical association with – and continued use by – criminals for illegal purchases and money laundering was likely to act as a further deterrent to mass adoption.

Additionally, with many Bitcoins being hoarded by early speculators, currency supply could be further restricted with Bitcoin mining profitability threatened by a combination of the cryptocurrency’s volatility, lower Bitcoin yields and rising electricity costs.

Other findings from the report include:

  • The introduction of licensed, regulated exchanges could lead to a stabilisation in currency values and with it an increase in retail transaction adoption.
  • The protocols behind cryptocurrency could be deployed in areas such as real-time transactional settlement.
  • The altcoin market continues to be plagued by “pump and dump” currencies created solely as short-term investment vehicles.

The whitepaper, ‘Will Bitcoins Bite Back?’, is available to download from the Juniper website together with further details of the full research and the Interactive Forecast Excel (IFxl).

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