Technologists, financiers and ideologues predicted that 2014 would be bitcoin's
coming-out party, but the digital currency slipped more than 70 percent
from the previous year's high. Still, some are claiming victory and
predicting even more success for the future.
Bitcoin—a digital currency started in 2009—has
consistently captured headlines since its meteoric rise from a few
dollars to more than $1,150 in 2013, but experts say that the focus on
its slide to the $300 range misses the point. Instead, they point to
growing merchant adoption and consumer awareness as the year's high
points.
As for the future, bitcoin-related business owners
said they are looking forward to stabilization and legitimacy from
impending government regulation.
"Regardless of the price, it was a huge year for
bitcoin," said Sonny Singh, chief commercial officer at BitPay. "A year
ago people didn't know if bitcoin was a fad, but today it's for sure
that it's going to stay for a long time."
Value as currency
One of the major criticism's of bitcoin is that it can never
operate as a currency because its price is too volatile, but Singh said
the latter part of 2014 saw the beginning of digital asset's maturation
into stability.
This stabilization, he said, featured bitcoin trading at $290 in October, breaking above $425 in November and then settling around $310 at the end of December. Singh pointed to the recent announcement that Microsoft would begin accepting bitcoins as the prime example of a less volatile trading ecosystem.
"If we had made that Microsoft announcement at the beginning of the year, [bitcoin] would have gone up 50 percent," Singh said. "Microsoft is the biggest thing to happen to bitcoin, and it barely touched the price."
Read More3 reasons Wall Street can't stay away from bitcoin
Volatility aside, bitcoin saw a major price slide in 2014. Just why that has occurred, however, has proven a matter of debate.
One factor potentially weighing on the price was the February filing for bankruptcy protection by Tokyo-based bitcoin exchange Mt.Gox, which saw nearly all of the exchange's 850,000 bitcoins disappear, according to Brendan O'Connor, managing director for trading at SecondMarket.
This stabilization, he said, featured bitcoin trading at $290 in October, breaking above $425 in November and then settling around $310 at the end of December. Singh pointed to the recent announcement that Microsoft would begin accepting bitcoins as the prime example of a less volatile trading ecosystem.
"If we had made that Microsoft announcement at the beginning of the year, [bitcoin] would have gone up 50 percent," Singh said. "Microsoft is the biggest thing to happen to bitcoin, and it barely touched the price."
Read More3 reasons Wall Street can't stay away from bitcoin
Volatility aside, bitcoin saw a major price slide in 2014. Just why that has occurred, however, has proven a matter of debate.
One factor potentially weighing on the price was the February filing for bankruptcy protection by Tokyo-based bitcoin exchange Mt.Gox, which saw nearly all of the exchange's 850,000 bitcoins disappear, according to Brendan O'Connor, managing director for trading at SecondMarket.
Another potential reason for 2014's slide in price, some
skeptics said, could be that bitcoin simply does not possess an adequate
consumer use-case.
"The reality is that btcoin is possibly not safer, possibly not cheaper, possibly not faster than other means of distributing money from point A to point B," said Mark Williams, risk management professor at Boston University, adding that "bitcoin is seven times riskier than gold, eight times riskier than the S&P and 15 times riskier than the U.S. dollar."
Read MoreCNBC Explains: How to mine bitcoins on your own
Williams had predicted in December 2013 that the bitcoin bubble could burst and drop in value by more than 90 percent. For 2015, he took a more positive outlook, telling CNBC that the cryptocurrency could experience a boost if it successfully attains regulatory legitimacy.
"The reality is that btcoin is possibly not safer, possibly not cheaper, possibly not faster than other means of distributing money from point A to point B," said Mark Williams, risk management professor at Boston University, adding that "bitcoin is seven times riskier than gold, eight times riskier than the S&P and 15 times riskier than the U.S. dollar."
Read MoreCNBC Explains: How to mine bitcoins on your own
Williams had predicted in December 2013 that the bitcoin bubble could burst and drop in value by more than 90 percent. For 2015, he took a more positive outlook, telling CNBC that the cryptocurrency could experience a boost if it successfully attains regulatory legitimacy.
Consumer adoption
Beyond bitcoin's fortunes as a traded asset, the cryptocurrency saw a string of positive announcements for consumer adoption.
In addition to Microsoft, many big-name companies—including Dish, Expedia and Overstock.com—began accepting bitcoin for sales during 2014. By giving consumers more ways to use bitcoins, enthusiasts said, the currency has begun to move away from its roots as a tool for illegal activities and speculation.
Those firms did not dip their toe into the bitcoin ecosystem without help: Companies such as Coinbase and BitPay act as payment processors that will instantly convert bitcoin transactions into local currency.
Read MoreBitcoin needs more consumer protection
"The merchant interest was a huge change that happened in 2014," said Coinbase CEO Brian Armstrong. " If you go back to Jan. 1 in 2014, there were zero large companies in the U.S. that accepted bitcoin."
The cryptocurrency is also entering the consumer sphere in other ways, as so-called bitcoin ATMs popped up around the globe. The concept is to introduce bitcoins to the average person, whose interest might be piqued by a way to physically interact with the digital currency.
ZenBox, a Santa Monica, California-based company that provides such kiosks, has expanded its business to 18 locations. Using the kiosk, consumers can instantly buy and sell the currency with cash in hand.
In addition to Microsoft, many big-name companies—including Dish, Expedia and Overstock.com—began accepting bitcoin for sales during 2014. By giving consumers more ways to use bitcoins, enthusiasts said, the currency has begun to move away from its roots as a tool for illegal activities and speculation.
Those firms did not dip their toe into the bitcoin ecosystem without help: Companies such as Coinbase and BitPay act as payment processors that will instantly convert bitcoin transactions into local currency.
Read MoreBitcoin needs more consumer protection
"The merchant interest was a huge change that happened in 2014," said Coinbase CEO Brian Armstrong. " If you go back to Jan. 1 in 2014, there were zero large companies in the U.S. that accepted bitcoin."
The cryptocurrency is also entering the consumer sphere in other ways, as so-called bitcoin ATMs popped up around the globe. The concept is to introduce bitcoins to the average person, whose interest might be piqued by a way to physically interact with the digital currency.
ZenBox, a Santa Monica, California-based company that provides such kiosks, has expanded its business to 18 locations. Using the kiosk, consumers can instantly buy and sell the currency with cash in hand.
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