Bitcoins and other crypto-currencies aren’t going away anytime soon, and a new study suggests they will become even more common over the next four years. In fact, as many as 5 million people could be using bitcoins by 2019, according to the study.
What are bitcoins being used for?
Juniper Research conducted the study and reports that the number of people using bitcoin was a little over 1.3 million at the end of last year. The firm estimates that 4.7 million people could be using the digital currency by the end of 2019.
So if bitcoin usage is going to explode, it’s worth asking what people will be using it for. More and more retailers are deciding to accept the crypto-currency as a form of payment, but apparently that doesn’t mean people will actually be using it to buy things. The report from Juniper Research suggests that bitcoin usage will still be mainly restricted to exchange trading. Usage for purchases is expected to be restricted to “relatively niche demographics,” according to researchers.
Bitcoins still not accepted everywhere
While the list of retailers accepting bitcoin as payment is growing, the firm found that activity levels within retail remain very low. Researchers said the volume of average daily transactions has climbed by about 50% since last March. However, they add that most of that growth is due to a higher number of transactions by already-established bitcoin users rather than from any “substantial uplift in consumer adoption.”
Researchers said one of the barriers to bitcoin’s growth is in understanding how the digital currency works. Trying to communicate the concept of using a crypto-currency to end users has proven to be a problem. Juniper Research also suggests that bitcoin’s history of and continued use by criminals for purchases of illegal goods and money laundering will likely keep the average consumer away from using it.
Low bitcoin supply
Another issue that will block mass adoption of bitcoin is supply, particularly because researchers say “early speculators” like the Winklevoss twins are hoarding the digital currency, thus limiting the supply. Another potential hindrance to supply is a decline in profitability for bitcoin mining when combined with the volatility of the digital currency’s value, low bitcoin yields and rising energy costs.
Researchers suggest that if bitcoin exchanges become licensed and regulated, the value of the crypto-currency could stabilize, thus resulting in a broader adoption for retail purchases.
Additionally, they suggest that the protocols used for bitcoin and other crypto-currencies could be used in other areas like real-time transactional settlements.