In a new July 24, 2024 report from VanEck, the investment firm’s digital asset research team, headed by Matthew Sigel and Patrick Bush, makes an exceptional prediction: bitcoin could skyrocket to a value of $52.38 million per coin by 2050 under its most optimistic scenario. bitcoin-2050-valuation-scenarios-global-medium-of-exchange-and-reserve-asset/” target=”_blank” rel=”nofollow”>analysisTitled “bitcoin Valuation Scenarios in 2050: Global Medium of Exchange and Reserve Asset,” it paints a picture of bitcoin transforming into a cornerstone of the global monetary framework, functioning as an important international medium of exchange and a reserve currency.
How bitcoin Could Reach $52.38 Million
The report delves into the potential trajectory of bitcoin and predicts that it will become the leading reserve currency by mid-century. “By 2050, we see bitcoin consolidating its position as a key international medium of exchange and eventually becoming one of the world’s reserve currencies,” the researchers say. This scenario is based on the expectation that current trust in traditional reserve assets will erode, primarily due to unsustainable fiscal policies and geopolitical decisions by current economic leaders.
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VanEck predicts that solving bitcoin’s scalability issues through new Layer 2 solutions will significantly improve its functionality, making it an attractive option in developing countries’ financial systems. “Combining bitcoin’s immutable property rights and sound monetary principles with the enhanced functionality provided by Layer 2 solutions could enable the creation of a global financial system capable of better serving the needs of the developing world,” Sigel and Bush argue.
In its analysis of the International Monetary System (IMS), VanEck highlights the declining relevance of the major currencies (US dollar, euro, yen and pound sterling) in global trade. They predict a reduction in their collective share in cross-border payments from 86% in 2023 to 64% in 2050. “This opens up significant opportunities for bitcoin to become an important alternative for settling international trade,” the report suggests.
The base case scenario projects bitcoin to reach a valuation of $2.9 million per coin by 2050. This prediction is based on the cryptocurrency’s projected role in settling a portion of global trade (10% of international trade and 5% of domestic trade), combined with a significant allocation as a central bank reserve.
“This scenario would result in central banks holding 2.5% of their assets in btc, contributing to a total market capitalization of $61 trillion.” From this perspective, bitcoin is anticipated to account for 1.66% of global financial assets, taking advantage of the anticipated growth in global trade and investment demand.
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However, the bullish scenario presented by VanEck describes an even more optimistic outlook in which bitcoin’s integration into the global economy is profoundly more significant. The report suggests that bitcoin could facilitate 20% of global international trade and 10% of domestic trade volumes by 2050.
In this scenario, bitcoin accounts for a staggering 29.79% of global financial assets. Notably, this scenario implies that nearly 99% of the bitcoin supply would be removed from circulation, due to its store of value properties, leaving only about 210,000 btc in active circulation.
The report also highlights existing limitations in bitcoin’s ability to function as a medium of international trade, particularly its current transaction processing capacity and lack of support for complex smart contracts. However, VanEck is optimistic about future improvements, suggesting that “continued development in bitcoin’s infrastructure, particularly through layer 2 solutions, will progressively improve its functionality and attractiveness as a robust, decentralized financial system.”
To conclude the analysis, VanEck believes that bitcoin is not simply a financial tool, but a transformative economic force that redefines money in a global context. “bitcoin applies constitutional restrictions to money, represents a system created by the people, for the people, and could serve as the ultimate check against the often arbitrary financial powers of the State,” the report reflects.
At the time of writing, btc was trading at $64,210.
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