The value of all cryptocurrency transactions will fall sharply this year to just over $30 billion, compared with over $71 billion in 2014. The surge in altcoin transactions in 2014 was overwhelmingly attributable to brief spikes in activity during the first quarter in Dogecoin, Litecoin and Auroracoin.
A new report from UK-based Juniper Research claimed 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.
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
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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