The value of all cryptocurrency transactions will more than half this year, falling from $71 billion in 2014 to just over $30 billion. The decline was attributable to the combined impact of exchange collapses, Bitcoin theft and regulatory concerns around cryptocurrency’s role in funding dark web purchases.

That’s the conclusion of a new report from Juniper Research, The Future of Cryptocurrency: Bitcoin & Altcoin Impact & Opportunities 2015-2019. The surge in cryptocurrency transactions in 2014 was “overwhelmingly attributable to brief spikes in activity during the first quarter in Dogecoin, Litecoin and Auroracoin”, the report concludes. By the end of the year, daily dollar values of these transactions were at less than 5% of their earlier peak.

However, the report argues that the introduction of licensed, regulated exchanges could lead to a stabilisation in currency values and with it an increase in retail transaction adoption. It points out that in an unregulated marketplace consumer confidence had been eroded by the demise of the Mt Gox exchange in February 2014 and the recent theft of nearly 19,000 Bitcoins from BitStamp hot wallets.

It also identifies a longer term role for cryptocurrency protocols in the wider payment space. “It is likely that we will see the technologies behind cryptocurrency deployed in areas such as real-time transactional settlement,” said report author Windsor Holden (right). “Ripple Labs is already focusing overwhelmingly on that approach and in the medium term we may see a role evolution to this end amongst other cryptocurrency players.”

Nevertheless, despite the fact that PayPal has now begun to allow US consumers to purchase digital goods via Bitcoin, the report argues that the scale of the challenges facing Bitcoin is so great that it will struggle to gain traction beyond a tech-savvy and/or libertarian demographic.

A whitepaper, Will Bitcoins Bite Back?, is available to download from the Juniper website together with further details of the full report.