Bitcoin's user base will continue to grow, but its mainstream adoption faces significant headwinds, according to a new report.
Although several big-name retailers have begun accepting the fledgling digital currency, its user base and transaction volume will only see modest gains, a report released Tuesday by market insight firm Juniper Research predicted. Because of relatively slow consumer adoption, the report, The Future of Cryptocurrency: Bitcoin & Altcoin Impact & Opportunities 2015-2019, advised retailers to not bother with the technology.
"To my mind there are far more pressing needs for the retailers, there are so many other payment options emerging," Windsor Holden, head of forecasting and consultancy at Juniper, told CNBC. "It's not a key differentiator for a retailer that you offer bitcoin-it's not going to be a unique selling point."
Holden, who authored the new study, predicted that bitcoin's active user base will rise to about 4.7 million by 2019 from about 1.3 million in 2014.
That growth, however, will not directly translate to an increase in the value of bitcoin transactions. In fact, the Juniper report predicts a major drop in the total sum of transaction values for 2015, followed by a gradual increase through 2019. The paper attributes this fall in part to temporary trader concerns over the cryptocurrency's future.
And there are several major impediments for bitcoin and other cryptocurrencies' (generally known as altcoins) ascension to the mainstream, Holden said. He pointed to three things keeping the technology within a relatively narrow world: The prices of these digital assets have gone through significant volatility since their inception, exchanges have suffered thefts and mysteriously missing funds, and becoming an active consumer or retail user requires some tech know-how.
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"These all make it exceedingly difficult to bring bitcoin, to bring altcoin, into the mass market," he said, adding that technologies like Apple Pay should be the focus of most retailers.
Still, the volatility issue will likely decline, Holden said.
Juniper's analysis expected that some kind of regulation would occur on cryptocurrency exchanges in the short to medium term, which should calm the price movement somewhat, he said.