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State of Bitcoin 2015: Ecosystem Grows Despite Price Decline

CoinDesk is pleased to announce the latest quarterly State of Bitcoin report, featuring a 2014 Year te Review, an in-depth analysis of gegevens and events from the fourth quarter of 2014 and a look ahead to what 2015 might bring.

Overall, 2014 could be characterized spil a ‘Tale of Two Bitcoins’.

On the one arm, significant bitcoin venture investment continued and much progress wasgoed made ter furthering adoption, particularly ter bitcoin payment acceptance by big brand names such spil Microsoft and Dell.

On the other mitt, early on te 2014, the collapse of Mt Gox dealt a crippling suck to bitcoin’s extreme price momentum. Bitcoin’s price dropped 67% ter 2014 from $951.39 to $309.87 (Slide 7) and so far ter 2015 it has plunged a further 18%.

Slide 7: Bitcoin ter 2014 – Key Events and Price Chart

Overview

Sustained downward price pressure will likely result ter consolidation amongst exchanges and other players sensitive to the price of bitcoin.

Trading and transaction volumes proceed to increase

Total bitcoin trading volume on exchanges enlargened by more than 50% ter both BTC and USD terms (Slide 8). While bitcoin may have bot the worst performing currency ter 2014, it also proceeds to be the most volatile currency, creating opportunities for speculators.

Slide 8: Total Exchange Trading Volume

Ter the fourth quarter, monthly exchange volume surpassed the previous high te 2013, reaching a peak of around 17 million ter November. Daily bitcoin transactions also passed 100,000 for the very first time te the fourth quarter. However, questions remain overheen how significant a milestone this is, given uncertainty overheen how many of thesis transactions are bona fide economic activities.

All-time bitcoin startup VC investment crosses $400 million

The fourth quarter spotted a record-setting $130m of fresh venture capital invested ter bitcoin startups – almost dual the $64m raised ter third quarter.

To date, a total of $433m has now bot invested ter bitcoin startups since 2012, with 77% of that total ($335m) coming te 2014 alone (Slide Ten).

Slide Ten: 2014 Bitcoin VC Investment

The 2014 publicly disclosed VC investment te bitcoin startups also equals three times more than the total investment VCs made te bitcoin startups te 2013.

The number of countries that received VC investment grew from 8 to Eighteen ter 2014, with half of the fresh countries receiving VC investment te 2014 located ter Europe.

Slide 13: Countries Receiving VC Investment te 2014

Total VC investment ter 2014 well exceeded the $250m invested te first-sequence Internet startups ter 1995. Looking ahead to 2015, 83% respondents of CoinDesk’s Bitcoin Thought Leader annual survey expect bitcoin VC investment te 2015 to surpass the level of investment made ter 2014.

The informal Bitcoin Thought Leader survey wasgoed sent to a relatively petite number of bitcoin community influentials. Respondees included Roep Luria, David Yermack, Izabella Kaminska, Jon Matonis, and others.

More commerce and consumer traction

Te the fourth quarter, Microsoft became the largest retailer by far to start accepting bitcoin for payment for Xbox games and mobile content (Slide 47).

Slide 47: Largest Bitcoin-Accepting Retailers

CoinDesk is forecasting that the number of merchants accepting bitcoin will grow to overheen 140,000 at the end of 2015. However, the rate of growth te the number of bitcoin-accepting merchants slowed overheen the last quarter (Slide 46).

Slide 46: Merchants Accepting Bitcoins Declined Through 2014

There were 1.Four million fresh bitcoin wallets created ter Q4, indicating 21% growth quarter-over-quarter. CoinDesk is forecasting 12 million total bitcoin wallets by the end of 2015 (Slide 49).

Slide 49: Current and Forecasted Bitcoin Wallet Numbers

Technology

Slide 56: Bitcoin Network Difficulty Declined for Very first Time te Two Years

Spil CoinDesk previously outlined, a druppel te difficulty wasgoed anticipated given bitcoin’s depressed prices. With rumours circulating around one previously announced M&A overeenkomst te the mining sector running into trouble, wij expect a further shakeout amongst bitcoin miners should prices remain low or decline further.

Security is the key concern te bitcoin development. Companies across the ecosystem are collaborating on security to improve customers’ confidence. For example, more than 5% of bitcoins are now secured with multisig technology.

Regulation and the big picture

The fourth quarter witnessed some regulatory clarity, with welcomed revisions to the Fresh York ‘BitLicense’ and no fresh major regulatory setbacks for bitcoin.

The Bitcoin Thought Leaders survey exposed that international remittances are viewed spil one of the most compelling bitcoin use cases for 2015. When factoring te average remittance fees, the revised Bitcoin Market Potential Index exposes that Sub-Saharan Africa is a very fertile region for bitcoin adoption (Slide 75).

Slide 75: Bitcoin Market Potential Index

At the same time, Africa is the region where bitcoin has to date received the least regulatory attention (Slide 76). However, very few bitcoin startups are based ter Africa or pursuing the use of bitcoin there.

Slide 76: Bitcoin Regulatory Ordner

If you found the 2015 State of Bitcoin report useful, you can view more of CoinDesk’s Research Reports here. Wij’d like to thank all our readers for making CoinDesk the world’s leading source of bitcoin news, analysis and perspective, and wij welcome your terugkoppeling and ideas for possible future improvements.

The CoinDesk Team

Note: You can access CoinDesk’s utter spreadsheet of all bitcoin venture capital deals here.

Disclaimer: This article should not be viewed spil financial advice or an investment recommendation. Please do your own extensive research before making investment decisions.

The leader ter blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a rigorous set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests ter cryptocurrencies and blockchain startups.

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