Cryptocurrency transactions expected to break $1 trillion barrier this year – digital payments will exceed the $5 trillion mark by 2020

A new study from Juniper Research has found that the value of cryptocurrency transactions is expected to surpass $1 trillion in 2017, more than 15 times the level in 2016.

The new research, The Future of Blockchain: Key Vertical Opportunities & Deployment Strategies 2017-2022, stated that transaction values in H1 2017 surpassed $325 billion, driven by the dramatic increase in Ethereum’s price which saw it account for two-thirds of cryptocurrency transaction values in that time.

Cryptocurrency is now typically seeing daily trades well in excess of $2 billion. Meanwhile, the research found that Litecoin experienced a surge in volume and value; if current levels are maintained it should exceed $100 billion in transactions this year.

Bitcoin price continues upward trend

Bitcoin has continued its recent rise in value in the wake of the currency’s hard fork on 1st August, which resulted in the creation of a new currency, Bitcoin Cash. Indeed, since the start of 2017, Bitcoin prices have risen from around $1,000 to more than $4,000. However, the research cautioned that a second planned fork in November, when the SegWit2x scaling solution is due to be implemented, may prompt a split in the community, potentially leading to depreciation.

According to research author Dr Windsor Holden: “There is no resolution in sight to the continuing and fundamental disagreements between many Bitcoin miners and Bitcoin Core developers over the future of the cryptocurrency. This in turn could lead to uncertainty about Bitcoin’s future and downward pressure on its valuation.”

The research, which also focused on new use cases for blockchain, claimed that ultimately the brightest prospects in the sector came from deployments of private blockchain technologies for permissioned ledgers, rather than the public chains running cryptocurrencies.

Digital payments will exceed the $5 trillion by 2020

Juniper Research has also forecast that Visa and Mastercard’s distinct evolutionary strategies in digital payments will underpin the success of a market expected to increase from $3.8 trillion globally this year to more than $5 trillion by 2020.

The new report, Strategies for Payment Providers: Opportunities, Risks & Competition 2017-2021, pinpointed Mastercard’s two-pronged approach; the company is developing partnerships with third party wallets from players such as Apple and Samsung, while also introducing its own API-based wallet.

It also argued that Visa’s attempts to reduce friction in online payments through the implementation of one-click login (Visa Checkout) will increase conversion rates and overall online customer spend.

‘Best-in-Class’ Payment Providers

Meanwhile, the study identified best-in-class players across the digital payments ecosystem, placing the following companies at the head of their respective Juniper Leaderboards:

• Digital Wallets: PayPal
• PSPs (Payment Service Providers): First Data
• Telco Payment Providers: Vodafone

The research claimed that PayPal’s decision to enable in-store, NFC payments using HCE (Host Card Emulation) was a potential game-changer for the US digital wallets space, enabling the company to leverage its strength in online payments. It also highlighted First Data’s strengths in integrated payments, the company processed nearly 90 billion transactions in 2016, and commended Vodafone for the continuing success in payments via its subsidiaries in sub-Saharan Africa.

“Flexible, Localised Solutions” Needed

The research also defined a series of key strategic approaches for players across the digital payments market. For example, it argued that PSPs need to be able to offer merchants a range of options, including hosted payment pages and API integration, thereby allowing them to choose how much control they wish to exercise over the process.

According to research author Dr Windsor Holden: “To succeed in an increasingly competitive environment, it will be essential for PSPs to provide merchants with an array of flexible, localised solutions with transparent pricing structures.” 

Juniper Research is acknowledged as the leading analyst house in the digital commerce and fintech sector, delivering pioneering research into payments, banking and financial services for more than a decade.

Juniper is the only analyst house specialising in blockchain research, providing key insights into market trends, technology platform provider activities and corporate deployments, informed by an extensive enterprise market survey and interviews with players across the value chain.

Source: Juniper Research