The Bitcoin booth at the 2015 Consumer Electronics Expo (CES) in Las Vegas, Nevada. Ethan Miller/Getty Images Today I want to consider the outlook for bitcoin.

2014 was its worst year on record.

It fell by 67%, from $800 to $320 a coin. In doing so, it beat the likes of the Russian rouble and the Ukrainian hryvnia, to the dubious honour of being the world’s worst-performing currency.

You know what the world’s best-performing currency was by the way? Nope, not the US dollar, but the Somali shilling. Yup. It surprised me too.

Anyway, back to bitcoin…

The bursting of the bitcoin bubble

So far, 2015 has not been any better than 2014 for bitcoin. At one stage last week, bitcoin had fallen by another 47% to $170, though the price has since rallied to around $210.

Given that I’ve just written a book on the subject, you might expect me to be uber-bullish. But I’m not. I’m bullish on the tech. The tech is amazing. It’s going to change the way we operate.

But the price of a bitcoin? That’s a different matter.

In November 2013, one bitcoin cost the same as an ounce of gold – $1,240. It had risen by over 1,000% in just a few weeks. Every Tom, Dick and Harry was starting up his own currency. There was talk of bitcoin replacing the US dollar and eradicating poverty.

It bore no resemblance to what was going on in the real world. Few people were actually using bitcoins to buy stuff – which is what money is for. Bitcoin had become a speculative asset.

I do think that bitcoin, or one of its off-shoots, will eventually become the global standard for online transactions. And I think it will have a role to play in bringing unbanked people in developing markets into global commerce.

But we are many years away from that. The bitcoin price at the end of 2013 suggested it was going to happen tomorrow, when the reality was that it had barely a couple of a million users. Read this Money Morning I wrote at the time. It shows how hysterical things had become.

Cast your mind back to the most famous bubble of recent times. I’m not talking about London property – that bubble never burst – but about dotcom stocks in 2000.

Computers were slow. Most of us were still using dial-up modems. The internet had just 361 million users (5% of the world’s population).

Now, almost everybody in the developed world has fast computers and broadband, and the internet has three billion users – around half the world’s adult population. And yet the Nasdaq, where most tech companies are listed, is trading 10% lower than it was then.

That’s because, even although the Nasdaq was ‘right’ – the internet did change the world – by 2000 the prices of stocks listed on the Nasdaq bore no relation to what those companies were actually doing in the real world. It was a bubble.

Something similar, but smaller, has happened with bitcoin. And bubbles take some time to get over.

There’s a long, slow road ahead for bitcoin

But just as internet usage grew in the real world post-2000, so is bitcoin adoption. The number of bitcoin wallets grew from 3.2 million at the start of 2014, to eight million by year-end, according to Coindesk’s latest State of Bitcoin report. By the end of 2015, that’s expected to rise to 12 million.

Of course, given that most users have more than one wallet, you’re still talking about less than five million users.

The number of merchants accepting bitcoin rose from 36,000 to 82,000, with 140,000 forecast for 2015. Even Microsoft is now accepting bitcoin, as well as the likes of Dell and Time. Again, that is a positive development – but what proportion of these merchants’ trade is actually transacted in bitcoin? Pretty small I expect.

At the start of 2014 there were just four bitcoin ATMs. Now there are over 340. Another positive growth story, but compare 340 bitcoin ATMs worldwide to the number of cash ATMs.

Venture capital (VC) is pouring into the sector – and it really is pouring. From $98m invested in 2013 to $335m in 2014.

Silicon Valley alone is responsible for about 30% of this. Along with Hollywood and Wall Street, Silicon Valley is one of America’s three biggest brain pools. These people are not stupid. They can see beyond the falling price, beyond the fact that bitcoin is out of fashion (mainstream mentions are down by over 75%), and beyond the ridicule of last week.

But they’re betting on new companies that will make use of the tech, not necessarily that the price will rise next month. Of course, they’d prefer the price to be rising, but it isn’t essential to their agenda.

Bitcoin 2.0 – how the blockchain could change the world

In short, the initial excitement phase of bitcoin is over. Now it’s on the long, slow climb to mainstream adoption. In terms of price, we’re kind of where the Nasdaq was in 2001-03. It wouldn’t surprise me – as things stand for now, at least – to see $100 a coin before we see $400.

But the tech is amazing, and worth familiarising yourself with. It is known as the ‘blockchain’. I liken it to a supersonic database. The genius behind it is that it eliminates the need for third parties.

We already know that – thanks to bitcoin – you can send money from one person to another without the need for banks. But developers are now taking the tech and seeing what else it can be used for.

They’re finding new ways to communicate and socially network without third-party providers (the likes of Gmail, Apple, Facebook or Twitter). They’re finding ways to draft and enforce contracts without the need for lawyers (these are known as ‘smart contracts’). They’re finding ways to issue and trade shares – without the need for traditional stock exchanges and financiers.

It’s known as Bitcoin 2.0 and, for now, that’s where I think the fireworks will be.

The problem is, as yet, most of the companies operating in the field are still private, so it’s difficult to invest. But that gives you more time to get to grips with how bitcoin works. Here’s a reminder of my handy little guide to getting started with bitcoin.

1. Go to Blockchain or Coinbase and get yourself a wallet. All you need is an email address and password. You will then be told your wallet address. Copy it.

2. You now need to deposit some money. In the UK, you could go to Bittylicious. Paste your wallet address where it says “bitcoin address”. Now deposit £20 via your credit card.

3. Get a friend to do the same.

4. Practise sending each other small amounts of money.

5. Go to a café that accepts bitcoins and buy yourself a coffee.

Well done. You’re now part of the revolution.