Business

How far has Bitcoin come in the past year? This report tells all

Image Credit: Zach Copley/Flickr

In a single year, the price of Bitcoin grew by a factor of 56. Imagine that happening to $100 in your checking account — you’d get $5,600.

It’s a neat stat that we at VentureBeat didn’t come up with on our own. It’s one of the many nifty bits of information tucked inside a 91-page report that Bitcoin news outlet CoinDesk issued today.

The report does a great job of stepping back from the incremental news of the digital currency and displaying its bigger trends. It also picks out many of the winners in the Bitcoin game. Here we deliver a few of the most fascinating findings from the report, along with some notes of our own.

For starters, Bitcoin’s “market cap” at the end of 2013 was $9.2 billion, according to the report. CoinDesk performs that calculation by multiplying the price of Bitcoin by the number of Bitcoins outstanding. It’s more a representation of the currency’s value than the market cap of a public company, which is determined by multiplying current share price by number of shares outstanding. Still, the Bitcoin “market cap” number hints at the financial heft that was hardly at the beginning of 2013.

More than $200 million has been spent on Bitcoin mining equipment, the report states.

Venture capitalists poured more than $98 million into cryptocurrency startups, according to the report. Around 70 percent of that investing took place in the United States. Beneficiaries of this funding include BitPay, Circle, Coinbase, itBit, and OpenCoin.

Payment processors have received $36.7 million, which is more venture funding than other kinds of startups in the Bitcoin ecosystem, like exchanges and mining-hardware makers.

It’s also interesting to note that CoinDesk’s $98 million venture capital figure is out of sync with the latest total from Venture Scanner, $83.7 million. It points to how fast the Bitcoin ecosystem is advancing.

The report notes that early on, people viewed Bitcoin as an asset that one invests in, like gold. It has since evolved into something businesses want in on and consumers want to pay with. All the while, there’s been a correlation between Bitcoin’s price fluctuation and the number of times that the media mentions it.

CoinDesk wagers that later this year, Bitcoin will get out in front of more consumers as merchants continue to adopt it and more Bitcoin conferences will be held. But the company also expects that digital currencies other than Bitcoin, like Litecoin and Peercoin, will garner more interest. That’s not hard to believe, with Bitcoin’s price on a general decline since the beginning of this year, and with key exchange Mt. Gox shutting down transactions — a fact not mentioned in the report.

Even so, CoinDesk sees more funding and acquisition activity in store for Bitcoin startups this year. Perhaps such deals will involve the top Bitcoin wallet companies, which are Blockchain, Coinbase, Bitcoin Wallet, and Mycelium.

If you’re interested in a detailed list of Bitcoin startups that have received investments, an overview of challenges and opportunities facing Bitcoin, and other information, check out the full report here:

And to learn even more about Bitcoin, read our introductory guide to the digital currency.

More information:

Coinbase makes it easy for the average person and business to use the digital currency Bitcoin. Coinbase lets any consumer to create a Bitcoin wallet and start buying/selling Bitcoin instantly by connecting their bank account. In add... read more »

CoinDesk is the world leader in news, prices and information on bitcoin and other digital currencies. We cover news and analysis on the trends, price movements, technologies, companies and people in the bitcoin and digital currency ... read more »

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