Investment manager VanEck predicted in a July 24 report that Bitcoin (BTC) could reach a total market cap of $61 trillion (or about $2.9 million per coin) by 2050 due to massive demand for decentralized currencies used as collateral for transaction settlements and as central bank reserves.
“We can imagine that by 2050, Bitcoin could be used to settle 10% of global trade and 5% of global domestic trade,” VanEck said in the report. “This scenario would lead central banks to hold 2.5% of their assets in BTC.”
VanEck added that the total value of scaling solutions for Bitcoin’s blockchain network, Bitcoin Layer-2, could be around $7.6 trillion, or about 12% of the total value of BTC.
According to the report, “Most importantly, we believe that the scalability issue, which has been a major barrier to widespread adoption of Bitcoin, will be solved by a new Bitcoin Layer-2 (L2) solution.”
According to the report, BTC’s rise will be driven in part by a decline in global economic activity in major economies such as the U.S., the European Union, and Japan. VanEck also expects unfettered deficit spending to lead to a loss of confidence in the currencies of these economies.
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“In this environment of uncertainty, businesses and consumers around the world are likely to recognize the inherent flaws of alternative fiat currencies, creating demand for a neutral medium of exchange with immutable property rights and predictable monetary policy,” the report said. “This is where Bitcoin comes in.”
VanEck specifically cited the declining use of the euro and yen in international payments as an opportunity for greater use of BTC. The report added that the euro’s share of cross-border payments has fallen from around 22% in the mid-2000s to 14.5% today, while the yen’s share has fallen from around 6.2% to 5.4% over the same period.
The report assumes continued fiscal mismanagement and a deterioration in property rights in major global economies, which could contribute to the circulation of fiat currencies. VanEck points out mining, scalability, and regulatory issues as potential risks to continued BTC adoption.
VanEck said gold has an established track record as a global reserve asset, but limitations related to logistics, security and financial integration are obstacles to returning to a gold standard.
VanEck said it was too early to declare a winner among Bitcoin layer-2s, but identified 16 “high-potential” projects, including Lightning Network and Stacks.
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