Why are Kiwis losing interest in bitcoin?

New Zealanders aren't quite as enamoured with bitcoin as they once were. Photo/file.

Google trend data shows that bitcoin is receding back into its niche after a period of enormous hype.

Searches for 'bitcoin', 'how to buy bitcoin', 'invest in bitcoin' and 'bitcoin price' have all steadily declined since peaking in December.

Google trend data measures interest in a topic over time, with 100 indicating peak popularity.

In New Zealand, searches for 'bitcoin' reached a zenith during the week of 17–23 December last year, but have since dropped down to an interest level of 22 or about a fifth of what it was during the height of the hype.

Before Bitcoin exploded into the mainstream, it generally bounced around at an interest level between 10 and 20.

The data also strongly suggests that New Zealanders have lost their appetite for investing in bitcoin, with trend data showing that interest in the phrase 'invest in bitcoin' has dropped to zero from a peak in early December.

This shift in interest isn't altogether surprising, given the recent volatility of the cryptocurrency. After a period of rapid growth in November and December, bitcoin has suffered a number of high-profile crashes.

On December 23, which was also the final day of the peak, bitcoin lost 45 per cent of its value and this was followed by another steep drop in January when South Korea announced it was banning all cryptocurrency trading in the country.

This volatility coupled with long transaction times has also led to questions as to whether bitcoin is even capable of functioning as a currency at all.

These concerns are perhaps best illustrated by the local example of real estate firm Century 21 First Choice Realty opening the door to payment in bitcoin for a section in Kaiuma Bay in Marlborough Sounds.

The property was valued at $200,000, but given the constant fluctuations in the value of bitcoin it was challenging to even pinpoint how much the property was worth in the cryptocurrency at any given time.

The real estate agency's owner Joseph Lupi recently told the Herald that while two potential buyers expressed interest in buying the property in bitcoin the sales did not go through, largely due to the uncertainty associated with the value of the currency.

What this shows is that bitcoin still isn't stable enough to function as a standalone currency. Its value is still inextricably linked to existing currencies, which means it will likely still be a while before we assign a 'bitcoin' rather than 'dollar' value to real world items.

The decline in interest and value does not, however, suggest that cryptocurrency technology is set to recede into irrelevance.

Reuben Tucker, ANZ's head of transaction banking for New Zealand, recently told Herald journalist Frances Cook that while various cryptocurrencies might come and go, the tech that makes digital trading possible will becoming increasingly important. Although there's no guarantee that bitcoin will be around in the future, Tucker said the blockchain definitely will be.

Listen to "Cooking the Books: Why bitcoin could be mainstream by 2019" on Spreaker.

"The best way to see blockchain is as the rails that power many other technologies, and bitcoin is one of them," Tucker said.

"The blockchain is almost more important to understand because that is going to be the best view for the future in terms of how we will deliver technology. [When it comes to] individual cryptocurrencies, we wouldn't want to speculate on which ones will survive … There are dozens out there in the market."