Bitcoin—it’s essentially the digital money system that could serve as the currency of the future. But the way most see it, it’s the invisible money that’s suffering from a lack of consumer and investor confidence.

Imagine the bitcoin concept as being a bank account of money that’s stored and used on the Internet. Instead of paying with physical cash in a shoe store, you would use your bitcoins from your bitcoin bank account to make the purchase online.

You can get bitcoins in ways like working for certain companies to earn bitcoins, selling products in exchange for bitcoins or exchanging a different currency for bitcoins.eap-blog-CTA

 

A Bleak Outlook for the Shiny Gold

Entrepreneurs seeing potential with the digital money system began developing products to get ahead in what could be the beginnings of a universal currency. Yet while bitcoin innovation is up, investors are lying low.

A VentureBeat report stated bitcoin startup investments from venture capitalists as plummeting by 41 percent in the third quarter of 2015 from the second quarter. The decrease comes after an investment peak at $230 million during the first quarter.

Looking at the amount of venture capital invested in bitcoin startups over the last several quarters, it seems as though the amount of investors willing to take the risk with the digital money system is on the decline.

With the exception of the third quarter in 2014, which totaled just $75 million in bitcoin startup investment, an uptick in the amount of venture capital for bitcoin startups was on the rise until it began to fall in quarter two of this year.

 

Sitting Back and Watching the Show

Some argue investors are holding back until they see success in their current holdings. And rightfully so. Bitcoin startup Buttercoin tanked in 2015, and BitPay, a payment processing company for Bitcoin, recently cut a portion of its staff.

The recent negative moves of other bitcoin startups have waved red flags for investors as well.

Even more, Overstock.com reported bitcoin usage by its customers had decreased by 50 percent this year from 2014, showing that consumers are choosing other currency beside bitcoins to make purchases.

Though some are arguing the slump as a temporary trend, investors are continuing to keep their bits away from the digital coins. Until venture capitalists regain confidence in bitcoin startups, paper and metal have the vote.  

Sources:

http://www.coindesk.com/bitcoin-explained-five-year-old/http://www.bloomberg.com/news/articles/2015-10-26/the-bitcoin-startup-boom-comes-back-down-to-earth

http://venturebeat.com/2015/10/27/investments-into-bitcoin-startups-drop-off-a-cliff-in-q3-following-q1-peak-down-over-40-on-q2/

http://www.investopedia.com/terms/b/blockchain.asphttp://www.americanbanker.com/news/bank-technology/nasdaq-signals-confidence-in-bitcoin-not-just-the-blockchain-1074405-1.html

http://www.forbes.com/sites/laurashin/2015/09/09/visa-citi-nasdaq-invest-30-million-in-blockchain-startup-chain-com/

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