VanEck outlined an ambitious scenario in his latest report in which Bitcoin (BTC) could reach a staggering $2.9 million per coin by 2050 under a “base case.” research report.
According to the report – written by the company’s head of digital assets, Matthew Sigel, and senior investment analyst Patrick Bush – the expected valuation depends on the adoption of Bitcoin as a global medium of exchange and reserve asset, which could potentially revolutionize the international financial system. .
10% of world trade
According to the company’s base case, Bitcoin could reach $2.9 million per coin. Meanwhile, in a bear scenario, BTC is expected to reach at least $130,314, while in a bull scenario, the price will rise to $52.4 million per coin.
VanEck’s base case states that Bitcoin could handle 10% of the world’s international trade and 5% of domestic trade by 2050. The company also predicted that central banks will hold 2.5% of their assets in BTC.
This scenario, based on global growth forecasts and the velocity of money, suggests a potential Bitcoin price of $2.9 million, resulting in a total market capitalization of $61 trillion.
The report highlighted that Bitcoin’s scalability issues, historically a major barrier to its adoption, will be addressed by emerging Bitcoin Layer-2 (L2) solutions. These solutions could enable Bitcoin to support a global financial system that better meets the needs of developing countries.
Transforming the monetary system
VanEck’s analysis delved into current trends in the International Monetary System (IMS) and projected a shift away from traditional reserve currencies such as the US dollar, the euro, the British pound and the Japanese yen.
The report attributes the possible shift to the declining global GDP shares of these economic leaders and declining confidence in their currencies due to budget deficits and geopolitical decisions. It added that businesses and consumers around the world are likely to recognize the endemic shortcomings of alternative fiat currencies as inflation and devaluation continue to rise.
According to the report, this will ultimately highlight Bitcoin’s potential as a neutral medium of exchange with immutable property rights and predictable monetary policy.
VanEck outlined several critical areas where Bitcoin could transform the IMS. It said Bitcoin’s immutable monetary policy and decentralized nature could position it as a reliable reserve currency, similar to gold but with greater flexibility and efficiency.
L2 solutions, such as the Lightning Network and various sidechains, are poised to scale Bitcoin’s transaction capabilities, making it viable for large-scale international trading.
Challenges
Despite the optimistic outlook, VanEck acknowledges several risks that could hinder Bitcoin’s growth. One of the biggest concerns is the immense rising energy demands of future Bitcoin mining, which could potentially require new innovations in chip design and energy production.
Furthermore, as Bitcoin inflation decreases, transaction fees should become a primary source of revenue for miners and allow them to operate sustainably. The company also highlighted that other cryptocurrencies and potential technological advancements pose a competitive threat to Bitcoin.
Furthermore, coordinated efforts by governments around the world to ban or regulate Bitcoin could have a significant impact on its acceptance and value, depending on the approach different governments take.
VanEck’s detailed analysis presents a compelling vision of Bitcoin’s future, highlighting its potential to become a cornerstone of the global financial system. While significant challenges remain, the research highlights the transformative impact that Bitcoin and its Layer-2 solutions could have on international trade and finance by 2050.