State of Bitcoin 2015: Ecosystem Grows Despite Price Decline

CoinDesk's latest State of Bitcoin report features an analysis of the key data and events of last year, and a look ahead to what 2015 might bring.

AccessTimeIconJan 7, 2015 at 3:18 p.m. UTC
Updated Sep 14, 2021 at 2:03 p.m. UTC

CoinDesk is pleased to announce the latest quarterly State of Bitcoin report, featuring a 2014 Year in Review, an in-depth analysis of data and events from the fourth quarter of 2014 and a look ahead to what 2015 might bring. 

Overall, 2014 could be characterized as a ‘Tale of Two Bitcoins’.

On the one hand, significant bitcoin venture investment continued and much progress was made in furthering adoption, particularly in bitcoin payment acceptance by big brand names such as Microsoft and Dell.

On the other hand, early on in 2014, the collapse of Mt Gox dealt a crippling blow to bitcoin’s extraordinary price momentum. Bitcoin’s price dropped 67% in 2014 from $951.39 to $309.87 (Slide 7) and so far in 2015 it has plunged a further 18%.

 Slide 7: Bitcoin in 2014 – Key Events and Price Chart
Slide 7: Bitcoin in 2014 – Key Events and Price Chart


Sustained downward price pressure will likely result in consolidation amongst exchanges and other players sensitive to the price of bitcoin.

Trading and transaction volumes continue to increase

Total bitcoin trading volume on exchanges increased by more than 50% in both BTC and USD terms (Slide 8). While bitcoin may have been the worst performing currency in 2014, it also continues to be the most volatile currency, creating opportunities for speculators.

 Slide 8: Total Exchange Trading Volume
Slide 8: Total Exchange Trading Volume

In the fourth quarter, monthly exchange volume surpassed the previous high in 2013, reaching a peak of around 17 million in November. Daily bitcoin transactions also passed 100,000 for the first time in the fourth quarter. However, questions linger over how significant a milestone this is, given uncertainty over how many of these transactions are bona fide economic activities.

All-time bitcoin startup VC investment crosses $400 million

The fourth quarter saw a record-setting $130m of new venture capital invested in bitcoin startups – nearly double the $64m raised in third quarter.

To date, a total of $433m has now been invested in bitcoin startups since 2012, with 77% of that total ($335m) coming in 2014 alone (Slide 10).

 Slide 10: 2014 Bitcoin VC Investment
Slide 10: 2014 Bitcoin VC Investment

The 2014 publicly disclosed VC investment in bitcoin startups also equals three times more than the total investment VCs made in bitcoin startups in 2013.

The number of countries that received VC investment grew from 8 to 18 in 2014, with half of the new countries receiving VC investment in 2014 located in Europe.

 Slide 13: Countries Receiving VC Investment in 2014
Slide 13: Countries Receiving VC Investment in 2014

Total VC investment in 2014 well exceeded the $250m invested in first-sequence Internet startups in 1995. Looking ahead to 2015, 83% respondents of CoinDesk's Bitcoin Thought Leader annual survey expect bitcoin VC investment in 2015 to surpass the level of investment made in 2014.

The informal Bitcoin Thought Leader survey was sent to a relatively small number of bitcoin community influentials. Respondees included Gil Luria, David Yermack, Izabella Kaminska, Jon Matonis, and others.

More commerce and consumer traction

In the fourth quarter, Microsoft became the largest retailer by far to begin accepting bitcoin for payment for Xbox games and mobile content (Slide 47).

 Slide 47: Largest Bitcoin-Accepting Retailers
Slide 47: Largest Bitcoin-Accepting Retailers

CoinDesk is forecasting that the number of merchants accepting bitcoin will grow to over 140,000 at the end of 2015. However, the rate of growth in the number of bitcoin-accepting merchants slowed over the last quarter (Slide 46).

 Slide 46: Merchants Accepting Bitcoins Declined Through 2014
Slide 46: Merchants Accepting Bitcoins Declined Through 2014

There were 1.4 million new bitcoin wallets created in Q4, representing 21% growth quarter-over-quarter. CoinDesk is forecasting 12 million total bitcoin wallets by the end of 2015 (Slide 49).



In the fourth quarter, bitcoin network difficulty declined for first time in two years (Slide 56).


As CoinDesk previously outlined, a drop in difficulty was anticipated given bitcoin’s depressed prices. With rumours circulating around one previously announced M&A deal in the mining sector running into trouble, we expect a further shakeout amongst bitcoin miners should prices remain low or decline further.

Security is the key concern in bitcoin development. Companies across the ecosystem are collaborating on security to improve customers’ confidence. For example, more than 5% of bitcoins are now secured with multisig technology.

Regulation and the big picture

The fourth quarter saw some regulatory clarity, with welcomed revisions to the New York 'BitLicense' and no new major regulatory setbacks for bitcoin.

The Bitcoin Thought Leaders survey revealed that international remittances are viewed as one of the most compelling bitcoin use cases for 2015. When factoring in average remittance fees, the revised Bitcoin Market Potential Index reveals that Sub-Saharan Africa is a very fertile region for bitcoin adoption (Slide 75).

 Slide 75: Bitcoin Market Potential Index
Slide 75: Bitcoin Market Potential Index

At the same time, Africa is the region where bitcoin has to date received the least regulatory attention (Slide 76). However, very few bitcoin startups are based in Africa or pursuing the use of bitcoin there.

 Slide 76: Bitcoin Regulatory Map
Slide 76: Bitcoin Regulatory Map

If you found the 2015 State of Bitcoin report useful, you can view more of CoinDesk's Research Reports here. We'd like to thank all our readers for making CoinDesk the world’s leading source of bitcoin news, analysis and perspective, and we welcome your feedback and ideas for possible future improvements.


The CoinDesk Team

Note: You can access CoinDesk’s full spreadsheet of all bitcoin venture capital deals here. 

Disclaimer: This article should not be viewed as financial advice or an investment recommendation. Please do your own extensive research before making investment decisions.


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