Bitcoin rates plummet 58% in 2014

The value of popular digital currency bitcoin declined by about 58% in 2014 – the cryptocurrency's most trying year.

According to calculations done by IBTimes UK, based on historical price data provided by CoinDesk, bitcoin opened at $757.49 on 1 January, 2014 and ended the year at $319.70, representing a value decline of 57.8%.

Bitcoin rates peaked at $951.39 on 6 January and there after plunged to the lowest level for the year at $309.87 on 30 December. The cryptocurrency is trading down 1.52% at $314.83 as of 8:11 am BST.

The value decline was despite increased venture capital inflows into the bitcoin industry and adaption of the digital currency by a number of prominent companies during the year.

Meanwhile, a number of central banks have voiced their concerns over digital currencies and have warned customers of the risks involved.

In December, tech giant Microsoft announced that it would accept bitcoin as payment for digital services. In July, PC maker Dell introduced bitcoin payments for online customers in the US following a partnership with Coinbase.

Other big companies that adopted bitcoin payments in 2014 include Dish, Expedia and Overstock.com.

CoinDesk earlier reported that the amount of venture capital flowing into bitcoin startups this year is more than three times the total raised in 2013. Overall, bitcoin firms raised $314.7m in 2014. This represents a 3.3-fold increase year-on-year, in which $93.8m was invested.

However, Charlie Shrem, who was CEO at bitcoin firm BitInstant and a former member at Bitcoin Foundation, was sentenced in December to two years in prison for assisting notorious online black market Silk Road adding to the negative reputation of the currency.

The Mt Gox disaster, in which customers lost 650,000 bitcoins via an alleged hacking attack, still remains unresolved. A number of bitcoin businesses such as Bitcoin Trader, a popular arbitrage service in the digital currency, failed during the year adding to the woes of the industry.

The future of bitcoin

Despite its weakness in 2014, the digital currency is expected to fare well in the future with stable prices and favourable regulations.

"Regardless of the price, it was a huge year for bitcoin," Sonny Singh, chief commercial officer at BitPay, told CNBC.

"A year ago people didn't know if bitcoin was a fad, but today it's for sure that it's going to stay for a long time."

Governments around the world are currently considering bitcoin regulations, with the US planning to introduce BitLicense for the bitcoin businesses.

"We are very close to getting a regulatory framework in place, and that will be a huge boon for the industry," Brendan O'Connor, managing director for trading at SecondMarket, was quoted as saying by CNBC.

"Once it's more black and white, you are going to see more institutional folks buying into the asset class, and the price will go up," O'Connor added.