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Bitcoin: What happened in 2014 and what lies ahead

by , 28 January 2015

In its short life, 2014 was by far the worst year for Bitcoin. The digital currency shed a massive 67%. That means it earns the worst performing ‘currency' award of last year.

So far, 2015 isn't looking much better for Bitcoin. Two weeks ago it plummeted another 47% to $170. Now it's back around $265.

Let's take a closer look at what's going on and what may lie ahead…

What happened to the price of Bitcoin?

Back in November 2013, just one Bitcoin would have set you back the cost of an ounce of gold. In other words, $1,240.

In a few short weeks, the price soared over 1,000%. Bitcoin was set to take over the world.

But the truth was very few people were using Bitcoin. It became a speculative asset, Dominic Frisby in Money Morning UK explains.

Now there is potential for Bitcoin, or its technology, to become the way forward for online transactions.

But that stage is still very much in the future. The price of Bitcoin back in 2013 made it look like this development was around the corner.

What’s happening with Bitcoin is similar to what happened when the dotcom bubble burst.

In 2000, only 5% of the population used the Internet with dial-up connections. Now around half of the world’s population uses the Internet, many with much faster computers and connections.

Yet, the NASDAQ (the US tech index) still trades around 10% less than it did then. In 2000, the NASDAQ was right about the potential of internet stocks, but the prices were inflated. On a smaller scale, this is what’s happened with Bitcoin.

The use of Bitcoin is growing

Over the course of last year, the number of Bitcoin wallets more than doubled to 8 million. Coindesk believes that number will rise to 12 million by the end of this year.

Looking at actual users, with many having more than one wallet, there’s probably about 5 million users globally.

The number of merchants accepting Bitcoin is also on the rise. This also more than doubled last year to 82,000. And forecasts put this at 140,000 by the end of 2015. Massive corporations like Microsoft and Dell now accept Bitcoin, even though it’s probably on a tiny scale.

If you look at the number of Bitcoin ATMs, they’ve also risen to over 340 from just four at the beginning of last year.

Bottom line: The price of Bitcoin should rise. It’s just going to take time for the use and acceptance of the technology to gain traction. Just think how integral the Internet is in your life now.

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Bitcoin: What happened in 2014 and what lies ahead
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