2018 was by all means a difficult year for cryptocurrencies, but the last two months have been even more challenging for the leading digital currency, Bitcoin. In November, Bitcoin traded at less than $4000, the lowest it has reached since October 2017. This price drop sent waves of panic across the market even as the prices of other cryptocurrencies plunged in a trend that lasted several weeks.
The price of Bitcoin tumbled despite the fact that Bloomberg reported in a research by the Cambridge Center for Alternative Finance that in the initial three quarters of 2018, the number of verified digital currency users almost doubled.
According to the research, the number of cryptocurrency users hit the 35 million mark in 2018, up from 18 million in 2017, and 5 million in 2016. The number of cryptocurrency accounts also increased significantly to reach 139 million in 2018, up from 85 million in 2017.
While the increasing number of virtual currency users could mean that, eventually, the cryptocurrency market will recover fully, questions still abound on what factors could have triggered the price drop experienced towards the end of 2018. One of the major contributors of Bitcoin's price drop is its slow adoption by the masses, according to BlockCommerce CEO, Bill Papacharalampous.
He says, "To put it simply, two main things are responsible for the drop in cryptocurrency prices. First, we must take into account the overall lack of mass adoption to date. Secondly, the fact that most cryptocurrencies and tokens are based solely on speculation and forecasts with no real-world application is equally contributive. Without mass adoption among mainstream consumers, cryptocurrencies will never reach the proper market saturation needed to establish a less volatile ecosystem."
These reasons are consistent with research findings shared by the Cambridge Center for Alternative Finance, which found that most cryptocurrency users are either speculators or investors with long-term interests. These participants hold on what they accumulate because selling their digital assets under the current conditions would mean heavy losses.
By the close of 2018, Bitcoin was still trading below the $4,000 mark and though some predict its rise from the ashes sooner than later, there are those who remain apprehensive about this. Speaking to CNBC on December 26, Anthony Pompliano, founder of Morgan Creek Digital Assets, predicted that Bitcoin's price could fall below the $3000 mark.
For Papacharalampous, cryptocurrencies will gain value once they can add value to the masses and his company, BlockCommerce is aimed at making this happen.
"This is why we created BlockCommerce, we believe that cryptocurrencies need to add real value to the masses and to the everyday consumer if they want to not only survive but also to contribute to a more stable global economy. An industry that I strongly believe can be that 'vehicle' for bringing cryptocurrency adoption to the masses is eCommerce. This is because commerce in general is not only where millions and millions of transactions happen daily, but where the people are and a great opportunity for adoption on a global scale," he adds.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.