Bitcoin has struggled over the last 12 months, as both the bitcoin price and development stalls, with a so-called crypto winter gripping the sector, stifling investment and interest from the traditional financial industry.
Many had expected the 2017 explosion of bitcoin and cryptocurrency prices to mean adoption and usage of digital tokens soared, but a new survey from the Bank of International Settlements (BIS) has warned take-up of cryptocurrencies remains “trivial.”
In another blow to bitcoin and cryptocurrencies, BIS warned investors and traders that they could lose money on privately minted cryptocurrencies like bitcoin.
BIS, which serves as a lender to country’s central banks, found most countries regard bitcoin and cryptocurrencies as a niche technology and not the future of money that many crypto enthusiasts believe it to be.
“No central banks reported any significant or wider public use of cryptocurrencies for either domestic or cross-border payments in their jurisdictions,” the BIS report, out last week, found. “Usage of cryptocurrencies is assessed to be either minimal (‘trivial/no use’) or concentrated in niche groups.”
The survey revealed that most BIS member central banks think cryptocurrency use “will remain minor” due to “low retail acceptance, compliance issues, better public understanding by the general public of the risks involved and, for some jurisdictions, outright bans.”
Many people think that the use of bitcoin and cryptocurrencies by the general population will trigger the next bitcoin bull run, though the number of retailers accepting digital tokens in both developed and developing economies remains low.
Last month the chief executive of major global bitcoin and cryptocurrency exchange Binance, Changpeng Zhao, has said he expects Jeff Bezo’s online retail giant Amazon to be the catalyst for the next bitcoin price leap.
The BIS survey, which included 63 central banks around the world, also found most have no plans to issue a digital version of their currency, known as central bank-backed digital currencies (CBDCs).
“At this stage, most central banks appear to have clarified the challenges of launching a CBDC but they are not yet convinced that the benefits will outweigh the costs,” the BIS report said.
Bitcoin’s epic 2017 bull run, which saw the price explode from under $1,000 at the beginning of the year to an eye-watering almost $20,000 in fewer than 12 months, has been put down to the expectation institutional investors were gearing up to step into the space.
As 2018 rolled on and that investment from the established financial industry failed to materialize, many bitcoin and cryptocurrency holders bailed out of their positions, nervous the looming threat of increased regulation and shadows of doubt swirling around general adoption and usage of bitcoin and cryptocurrencies could mean the bottom was about to fall out of the market.
Bitcoin and cryptocurrency adoption has been a major criticism of the sector in recent months after many expected the surging price to mean a raft of retailers would begin accepting bitcoin.
There have, however, been signals that increased adoption and use of bitcoin could be just around the corner.
“Bitcoin’s blockchain is heating up rapidly,” said Mati Greenspan, senior market analyst at broker eToro. “The [bitcoin] transaction rate hitting its highest level in almost a year.”
“Of course, more transactions on the blockchain is neither bullish nor bearish. The comforting thing is that last time the transaction rate was this high, we saw a distinct clog in the network.
“Last January, the bitcoin blockchain was so congested that transaction times were significantly slower and the cost to send bitcoin was through the roof.
“During the bear market, however, developers have had more time to upgrade their systems. Specifically, we now see the adoption of SegWit, which reduces the size of transactions on the blockchain, is now about 40%.”