Tuesday 14 June 2016 4:14 pm

Business leaders believe bitcoin will "fail to become a widely accepted method of payment"

Business leaders do not believe bitcoin, the world's leading cryptocurrency, will become a "widely accepted method of payment" in future, according to new research. 

More than six in 10 (61 per cent) respondents to the Smith & William Enterprise Index survey also said they did not see bitcoin as having had a big impact on the major currencies and models of payment over the past five years. 

"Once heralded as the currency of the future, bitcoin has taken severe hits to its reputation and popularity over recent years," Fergus Caheny, a partner in investment management at Smith & Williamson, said. 

"Whilst still having its place, as an international currency and within certain sectors, our respondents thought it would fail to become a widely accepted method of payment."

In February this year, figures released by bitcoin payments processor BitPay found the number of retailers accepting the cryptocurrency has surpassed 100,000 and included Microsoft, Dell and PayPal. 

Read more: Bitcoin will become the sixth largest global reserve currency by 2030

In December 2013, a bitcoin was worth over $1,100, though this slid by over $900 to $180 in January 2015.

During a rally over the last week, the value of a single bitcoin has soared to highs of over $700, following a surge of demand from China fuelled by worries about corporate debt and potential economic instability. 

For some, the gains made over 2016 and investment in the sector are proof that the currency has an optimistic future ahead, but these will only be solidified if it is adopted by large institutions.  

"The fact that bitcoin and blockchain investment continues to grow as it has in the first half of 2016 is a testament to the potential long-term success, especially considering overall tech funding is decreasing," Oliver Carding, founder of CoinJournal, told City A.M. 


"However, the figures are not surprising considering the damage to its reputation during 2014. More mainstream adoption will likely come as the result of larger financial institutions utilising the technology to improve their service for customers."

Read more: Luxembourg grants Bitstamp the first European bitcoin exchange licence

Charles Hayter, chief executive and founder at CryptoCompare, said: "Bitcoin is still a volatile, nascent asset that is finding its feet on the global stage and will continue to hold potential in remittances and troubled economies. It has been tarnished by its affiliations to the criminal underworld, but these have generally been exaggerated.

"For bitcoin to become ubiquitous would require a large shift in the status quo, which is unlikely – however – bitcoin's underlying technology, and derivatives thereof, will impact many areas of government and industry from identity through to welfare payments," Hayter added. 

"National and bank based cryptocurrencies are some of the potential offshoots from bitcoin that are on the horizon – along with reward programs."

In May Santander announced it had become the latest bank to experiment with blockchain, the technology that underpins bitcoin.