"The shadow of crisis has passed, and the State of the Union is strong."

Those words were uttered by President Barack Obama during his 2015 State of The Union address. And if you're applying that same concept to the FinTech world and the application of bitcoin, you'd have to flip those comparisons around.

The shadow of crisis seems to be creeping up (with prices teetering around the mid-250s) and the State of Bitcoin is weak.

And yes, in case you're wondering, there is a State of Bitcoin and Blockchain, and it comes in the form of a quarterly report from CoinDesk. And in that hefty quarterly analysis, what was discovered?

That banks are embracing the blockchain while bitcoin is slumping. A lot. Of course, we already knew these facts, but what the State of Bitcoin report shows is just how much the support for bitcoin is dwindling.

(We’re surprised it’s taken this long, to be frank.)

In fact, for VC investors, that rate dipped 10 percent from 21 percent to 11 percent in Q3. That comes at the same time that many mainstream financial players have concluded that the future of bitcoin is not about bitcoin, but rather the blockchain and the blockchain itself.

[bctt tweet="That banks are embracing the blockchain while bitcoin is slumping."]

What’s interesting about the State of Bitcoin, as noted in the report, is that the bitcoin community — perhaps now more than ever — is divided into two types of categories: licensed and regulated, and free and decentralized. The bitcoin-protocol conversations about regulation, money laundering and government interference in financial innovation are also stronger than ever.

Interesting enough, while the license factor has given some credibility to the market, the amount of bitcoin startups that have fled the NY market shows the chilling impact on potential innovation. As the CoinBase report points out, the cost of a NY BitLicense is roughly $100,000 (and it probably can't be paid in bitcoin). There's only been 20-some BitLicenses filed, and 15 operations have been seized.

That can't help bitcoin's case for less regulation.

The report also digs into marketplaces and merchants that accept bitcoin, which also revealed a dim outcome for the already struggling cryptocurrency.

Connie Chung, senior payments product manager at Expedia, explained that there still is a lack of understanding about bitcoin. In Q3 alone, bitcoin purchases on the travel marketplace were down 40 percent.

“If we give [suppliers] a bitcoin payment, they don’t know what to do with it. It’s not a currency they understand,” Chung said.

But that hasn't stopped Expedia from accepting the currency — since they don't want to turn bitcoin-loving travelers away (particularly as it's been viewed as trendy to travel the country on bitcoin, and bitcoin only).

“We accept bitcoin as a way of just allowing customers to pay with whatever method they want to pay," Chung told CoinDesk. "For us, bitcoin is on an even playing field with the other payment types we offer."

But there's still a serious problem in the bitcoin community: the dark market. The biggest reason that governments, financial institutions and businesses are erring on the side of caution about embracing bitcoin as a legitimate payment method.

Take, for example, the amount of transactions processed across BitPay in Q3, which totaled a daily average of $435,000. On the contrary, however, the dark market daily sales volume hit up to $650,000 and was stable around $300,000-$500,000 a day. Traditional bitcoin services still can't seem to compete with the dark side of bitcoin.

While the number of merchants that accept bitcoin has been on a steady climb since 2013, the projections for most of 2015 show that the growth in the industry has remained relatively flat. Perhaps all the negative bitcoin press has finally weighed down its reputation.

The report, citing research from PYMNTS and InfoScout, even pointed to the fact that consumers' concerns about using bitcoin are similar to the same reasons consumers aren't buying into Apple Pay. They aren't sure how it works, they forgot how it works, are concerned about security and fears that the transaction won't work.

Who knew bitcoin and Apple Pay would have anything in common?

Bitcoin remittances have also failed to ignite across the globe, mainly because of these reasons: extra currency conversion steps; costs; fee changes; too consumer-centric (not B2B); bitcoin brand mistrust; and regulation and access to bank barriers. There's also the fact that bitcoin ATM installments are moving at a much slower rate than they were a year ago. Less than half, in fact.

Even bitcoin mining has taken a hit. Since Q3 in 2014, the quarterly increases in mining difficulty has drastically dropped, as has the percentage increase in mining difficulty — two factors that have played into bitcoin's rough quarter.

But on the positive side, the State of Blockchain is trending on an upward path. Just from studying the Google search results for "blockchain," it's clear people's blockchain curiosity is getting sparked.

Even banks are helping the blockchain name in three ways, the reports points out: They are engaged with bitcoin startups or independent blockchain tests; they have published reports on blockchain; and they've invested in bitcoin startups.

Still, there's still a disconnect in the market that hasn't quite been settled.

“To be used by financial institutions, including capital markets firms and insurers, blockchains just supplant the costly methods introduced by bitcoin with a mechanism that guarantees security, privacy and speed without paying for anonymous consensus,” wrote Jeff Owen and Sigrid Seibold, managing directors at Accenture.

So perhaps, for now, it's best to call things what they are: Call bitcoin, bitcoin, and blockchain, blockchain.

That's what last week's bitcoin tracker also concluded.

As MPD CEO Karen Webster pointed out in her controversial column last week, it’s imperative to separate the bitcoin from the blockchain — posing the questions: Can we agree to move time, energy and brain cells away from bitcoin as an alternative currency? And to disentangle the technology of the blockchain away from it, too?

[bctt tweet="Perhaps it's best to call things what they are: Bitcoin, bitcoin, and blockchain, blockchain."]

As she explains in the piece, the blockchain is a technology that is used to continuously record every bitcoin transaction that takes place. It is the distributed database or public ledger that updates itself every 10 minutes and is the technology that underpins bitcoin. And that’s the very reason why the two haven’t been able to untangle themselves from the same conversation.

But Wall Street and major banks across the world have started the conversation about the power behind the blockchain — sans bitcoin. While bitcoin cannot be talked about without talking about the blockchain, it appears the blockchain can very much be talked about without talking bitcoin.

Still, some continue to use them interchangeably. And until that stops, the blockchain won’t be able to reach its full innovative potential among the mainstream financial services. And until blockchain is divorced from bitcoin, the duo will likely continue to tank.

[bctt tweet="Until blockchain is divorced from bitcoin, the duo will likely continue to tank. "]

Bitcoin Tracker Week 95

The Good, The Bad — The Top Bitcoin Stories Of The Week

Bitreserve Drops The 'Bit' And Becomes 'Uphold'

What's in a name? Apparently, a lot when you're a cloud currency startup trying to make a name for yourself in a rocky bitcoin world.

Just this week, Bitreserve took a big step toward innovating its own business model — which is aimed at transforming the global financial services using cloud technology. That's why Bitreserve has rebranded as Uphold. But why the name change?

Some in the mainstream media have speculated that it's to get away from bitcoin. But that may be a bit of a stretch. They make a good case that Bitreserve may want to drop the name that's associated with something that's often viewed as negative, but Bitreserve's CEO Anthony Watson made it clear in its mission that bitcoin will remain part of the business model.

It's just getting removed from the name. And a little buried into the business model so it's more about financial services and less about bitcoin.

"Uphold now connects the world’s legacy and fragmented financial systems, networks and services with our vision for the future of money and finance," Watson wrote about the new vision. "We call it, 'The Internet of Money.' Our members are no longer constrained to only using bitcoin. We are building a platform that simplifies money — allowing anyone, anywhere, the ability to move, convert, hold and transact in any form of money or commodity instantly, securely and for free."

"To this end, starting today — initially in 33 countries — our members can now add funds to their Uphold accounts via bank transfer or by linking credit or debit cards, in addition to bitcoin. Importantly, bitcoin is now another one of the many forms of value we support," he continued.

Can The Liquid 'Sidechain' Improve Bitcoin Security?

Blockstream announced on its website on Tuesday (Oct. 13) its first production sidechain, known as Liquid.

In a statement, Blockstream said Liquid will help improve ... well ... liquidity and capital efficiency through “rapid and secure transfers between accounts" held at either exchanges or brokerages.

The company said it would be launching with Bitfinex, BTCC, Kraken, Unocoin and Xapo, and discussions are allegedly underway with another dozen players in the alternative currency marketplace, ranging from traders to additional exchanges.

Blockstream said that there are delays in the bitcoin market when moving the virtual currency between accounts — an event known officially as Interchange Settlement Lag — tied to technical and liquidity inefficiencies that include both latency and confirmation. As a result, according to the statement, parties on either side of the transaction must have multiple balances and accounts to ensure settlement.

Liquid provides instantaneous fund movement across exchanges, the company said, which helps to minimize spreads. In addition, the Liquid sidechain adds a security layer through “cryptograpically strong” privacy, maintaining the bitcoin staple of not using a third party for transactions.

Another One Bites The (Bitcoin) Dust

Another bitcoin exchange has gone bust. This time, it's Yacuna, a European bitcoin exchange that announced this week that it was closing up shop.

"We want to thank you for all your loyalty and trust. Bitcoin is a wonderful technology, and we are proud that we have developed one of the first European exchanges for virtual currency. But everything comes to an end. Therefore, we will close the exchange at Yacuna.com on November 15th, 2015," the company wrote to customers.

While the tech behind bitcoin is usually lauded as being a faster and cheaper way to move money, the irony of this bitcoin exchange closing is that it also had to alert its customers that the currency the company is returning will be processed manually, which could cause delays. The company also indicated it may eventually be back in the bitcoin world.

“We'd like to thank you again for being a customer of Yacuna. We hope that you will continue to be an integral part of the bitcoin community and support us in our future projects,” the email concluded.

Bitcoin Nodes Go Missing After Spam Attack

And on the dark side for bitcoin...another attack hits the market. This time, it had to do with the number of reachable nodes.

That number has since dropped after a spamming attack hit the bitcoin network, which impacted the memory pool of the nodes. In an interview with CoinDesk, Jay Feldis, from hardware node maker BitSeed, explained what happened in the attack.

"Eventually, the transaction backlog fills up the RAM memory of the nodes. This causes the node computers to slow down dramatically or even freeze up. If a node slows down too much, the bitcoin network considers it to be ineffective and 'offline.' My guess is that most of the offline nodes just stop functioning well enough to respond," he wrote.

And it's stories like these that make many wishy-washy about the concept of bitcoin technology.