Bitcoin Outlook: The network is growing despite falling prices

CoinDesk has published a new quarterly report on Bitcoin’s development in 2014 and an outlook for 2015. The report includes an in-depth analysis of 2014 and gives insight into what we can expect in the new year.

The year 2014 can be characterized as the „story of Bitcoin profit“

On the one hand, there have been massive investments in the Bitcoin profit industry and a lot of work on the acceptance of the digital currency. In addition, the Bitcoin profit industry has been able to attract many new companies. Among them were Microsoft and Dell.

On the other hand, the Bitcoin price has suffered greatly, not least as a result of the Mt Gox bankruptcy. The Bitcoin price fell in 2014 from an initial high of 951, 39 USD by 67% to 309.87 USD. In 2015 alone, the price fell by a further 18%.

The trading volume increased by more than 57% from 2013 to 2014. In 2014, Bitcoin was not only the currency that suffered the greatest depreciation, but also the currency with the greatest volatility, which opened up new opportunities for speculators.

In the fourth quarter, the monthly trading volume exceeded the previous high in 2013. The 17 million mark was broken in November 2014. The daily trading volume also reached a new high of 100.00 BTC per day. However, the question arises as to what proportion of bona fide transactions contributed to this success.

Invested Bitcoin profit risk capital exceeds the 400 million US dollar mark

In the fourth quarter, more than 130 million US dollars were invested in Bitcoin profit companies. This is almost a doubling compared to the third quarter with 64 million US dollars. Since 2012, a total of USD 433 million has been invested in Bitcoin start-ups like this 77% of the investments were made in 2014. At USD 130 million, the investment in the fourth quarter almost doubled compared to the third quarter (USD 64 million) and tripled compared to 2013.

2014 Bitcoin VC Investment
Also the number of countries investing in Bitcoin companies has increased from 8 to 18 in 2014, half of the investments went to European countries.

Countries that received an investment in 2014
The risk capital invested in Bitcoin start-ups in 2014 thus significantly exceeded the investment in the Internet in 1995 (USD 250 million). In a CoinDesk survey addressed to various companies and Bitcoin personalities, 83% of the respondents assumed that the new year would also exceed the investment from 2014.

More trading transactions

Microsoft became by far the largest Bitcoin accepting company in the fourth quarter. The company accepts Bitcoin for Xbox games and other digital media.

Largest Bitcoin Accepting Companies
CoinDesk forecasts that by the end of the year more than 140,000 companies will accept Bitcoin as a means of payment. The following chart gives an overview of the growth to date:

The number of Bitcoin accepting companies decreased in the course of 2014
More than 1.4 million new wallets were created in the fourth quarter, representing growth of 21% per quarter. CoinDesk forecasts 12 million Bitcoin wallets by the end of 2015.

Forecast: Number of Bitcoin Wallets
In the quarter, the mining difficulty decreased for the first time in Bitcoin’s history.

Bitcoin Mining Difficulty
According to CoinDesk, the low Bitcoin price was responsible for the decrease in difficulty.

In the fourth quarter, there were some regulatory developments, particularly with regard to the notorious New York Bit License. In addition, there were no major regulatory setbacks.

A CoinDesk survey showed that the low transaction fees in particular could ensure rapid growth for the Bitcoin industry. Especially in sub-Saharan Africa, Bitcoin seems to be becoming a fertile ground for acceptance.