By 2050, bitcoin is projected to become a significant player in international and local trade, with central banks holding it as a reserve asset, according to a report by asset manager VanEck. The firm also highlighted the importance of Bitcoin layer-2 networks in addressing scaling issues and enabling BTC to be used as a medium of exchange.
VanEck predicts that Bitcoin’s price could reach $2.9 million by 2050, under the assumption that it overcomes various challenges. The firm believes that Bitcoin could become a crucial part of the global monetary system, especially as geopolitical tensions rise and debt servicing costs increase.
Matthew Sigel, head of digital asset research at VanEck, emphasized that Bitcoin serves as a hedge against fiscal irresponsibility, as governments continue to print money and spend on unsustainable goals since the global financial crisis.
In VanEck’s base case scenario, Bitcoin could represent 10% of international trade settlement and 5% of GDP. It may also gain traction as a global reserve asset, potentially competing with major foreign reserve currencies.
For Bitcoin to achieve this status, the report suggests that layer-2 networks will be essential in addressing the blockchain’s limitations and scaling issues. The value of these networks could reach $7.6 trillion by 2050, following a similar valuation model as Ethereum layer 2 solutions.
However, VanEck also highlighted potential risks that could impede Bitcoin’s growth. These include increasing energy demands by miners, the need for innovation in revenue generation, government crackdowns, competition from other cryptocurrencies, and the influence of large financial institutions.
Despite the optimistic price prediction for Bitcoin, the report acknowledges the challenges ahead and the need for continuous innovation and adaptation within the cryptocurrency ecosystem. As the digital asset landscape evolves, it is essential for stakeholders to navigate these risks and opportunities to ensure the long-term success of Bitcoin and other cryptocurrencies.