The number of active Bitcoin users worldwide will reach 4.7 million by the end of 2013, up from just over 1.3 million last year, new research shows.
This new report from Juniper Research, called ‘The Future of Cryptocurrency: Bitcoin & Altcoin Impact & Opportunities 2015-2019’ shows the number of active Bitcoin users will quadruple by 2019, but argues that the usage will continue to be dominated by exchange trading.
Retail adoption will largely be restricted to relatively niche demographics.
According to the report, 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 per cent 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 Dr Windsor Holden, author of the report.
The report says the introduction of licensed, regulated exchanges could lead to a stabilisation in currency values, which could increase the retail adoption.
The report cited a number of factors which it claimed would continue to inhibit growth, most notably the difficulty in communicating the concept of cryptocurrency payments to end users. It also argued 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.
Meanwhile, the report observed that 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.