In a novel report dated July 24, 2024, VanEck, the investment firm’s digital asset research team led by Matthew Sigel and Patrick Bush, offers a unique prediction: Bitcoin could rise to a value of $52.38 million per coin by 2050 in their most sanguine scenario. analysisTitled “Bitcoin Valuation Scenarios in 2050: Global Medium of Exchange and Reserve Asset,” it paints a picture of Bitcoin evolving into a cornerstone of the global monetary framework, functioning as both the primary international medium of exchange and reserve currency.

How Bitcoin Could Reach $52.38 Million

The report expands on bitcoin’s potential trajectory, predicting its establishment as a primary reserve currency by mid-century. “By 2050, we see bitcoin solidifying its position as a key international medium of exchange, eventually becoming one of the world’s reserve currencies,” the researchers state. This scenario is based on the expectation that current confidence in conventional reserve assets will erode, largely due to unsustainable fiscal policies and geopolitical decisions by today’s economic leaders.

VanEck predicts that addressing Bitcoin’s scalability issues with emerging Layer 2 solutions will significantly augment its functionality, making it an attractive option for developing-world financial systems. “Combining Bitcoin’s immutable property rights and sound money principles with the enhanced functionality provided by Layer 2 solutions could enable a global financial system that is better able to meet the needs of developing countries,” Sigel and Bush argue.

In his analysis of the International Monetary System (IMS), VanEck highlights the degenerating importance of the major currencies — USD, EUR, JPY, and GBP — in global trade. They predict their combined share of cross-border payments will decline from 86% in 2023 to 64% in 2050. “This opens up significant opportunities for Bitcoin to become a significant alternative for settling international trade,” the report suggests.

The base case predicts that bitcoin will reach $2.9 million per coin by 2050. This forecast 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 lead to central banks holding 2.5% of their assets in BTC, contributing to a total market capitalization of $61 trillion.” In this view, Bitcoin is projected to account for 1.66% of global financial assets, capitalizing on an anticipated augment in global trade and investment demand.

However, VanEck’s bull scenario forecasts an even more sanguine outlook, in which Bitcoin’s integration into the global economy is much more significant. The report suggests that Bitcoin could facilitate 20% of global international trade and 10% of domestic trade volume by 2050.

In this scenario, Bitcoin makes up a staggering 29.79% of global financial assets. It is worth noting that this scenario means that almost 99% of Bitcoin’s supply would be removed from circulation, which would be attributed to its store of value properties, leaving only about 210,000 BTC in energetic circulation.

The report also highlights existing limitations in Bitcoin’s ability to function as a medium for international trade, particularly its current transaction processing capacity and lack of support for sophisticated intelligent contracts. However, VanEck is sanguine about future improvements, suggesting that “the continued development of Bitcoin’s infrastructure, particularly through Layer 2 solutions, will gradually increase its functionality and appeal as a robust, decentralized financial system.”

In summing up the analysis, VanEck sees Bitcoin not just as a financial tool, but as a transformative economic force that redefines money in a global context. “Bitcoin applies constitutional constraints to money, representing a system created by the people, for the people, and can serve as the ultimate check on the often arbitrary financial powers of the state,” the report reflects.

At the time of going to press, the BTC price was $64,210.

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