While even people in the technology space might not entirely understand crypto-currency Bitcoin, you can’t ignore its rapid growth. It’s not about to slow down either. Right now there are around 1.3-million Bitcoin users around the globe and, according to Juniper Research, that number is set to grow to 5-million by the end of 2019.
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Even with that kind of growth though, the research company argues that Bitcoin usage will be dominated by exchange trading, with retail adoption largely restricted to relatively niche demographics.
Despite the fact that a number of retailers now accept Bitcoin and startups are looking to combine it with mobile payments, Juniper says that adoption rates have remained relatively low. The same is true for activity levels from both online and offline deployments.
“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.
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The report cites a number of factors which it claims will continue to inhibit growth, most notably the difficulty in communicating the concept of cryptocurrency payments to end users. It also argues that Bitcoin’s historical association with — and continued use by — criminals for illegal purchases and money laundering are likely to act as a further deterrent to mass adoption.
Supply and demand
Another inhibiting factor to Bitcoin adoption, Juniper says, is the fact that much of the early supply of Bitcoin was hoarded by early speculators. A combination of the cryptocurrency’s volatility, lower Bitcoin yields and rising electricity costs means that they’re a lot less likely to let go of their hoards. With Bitcoin in short supply, mainstream adoption becomes more difficult.
That said, Juniper Research believes 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 also reckons the protocols behind cryptocurrency could be deployed in areas such as real-time transactional settlement but warns that the altcoin market continues to be plagued by “pump and dump” currencies created solely as short-term investment vehicles.
