Bitcoin 2050: $52 Million Dream or $0 Nightmare?

Quick Summary

• Bitcoin's Wild Future: Predictions for Bitcoin’s value in 2050 are all over the map. Some experts, like VanEck, see it potentially skyrocketing to $2.9 million or even $52 million, driven by Bitcoin’s possible role as a global reserve currency and changes in the international monetary system.
• Shifting Dynamics: As traditional reserve currencies like the US dollar, Euro, and Yen lose their grip, Bitcoin might step into the spotlight, supported by a growing use of digital assets and emerging market currencies.
• Skepticism Abounds: On the flip side, notable investors like Jim Rogers and Charlie Munger are skeptical, suggesting Bitcoin could crash to zero. They argue that Bitcoin’s long-term value and its challenge to traditional financial systems could spell its downfall.
• Proceed with Caution: With such contrasting forecasts and Bitcoin's notorious volatility, it's crucial for investors to stay informed and cautious. Don’t let the hype cloud your judgment—consider getting professional advice before diving in.

We have almost reached the end of a quarter of the 21st century. Over the last two and a half decades, the world has seen unimaginable advancements in nearly every field.

Among these shifts, the rise of cryptocurrencies stands out, with Bitcoin at the forefront of this digital revolution. But as we look ahead, the future of Bitcoin is a topic of fierce debate.

Will it continue its meteoric rise and become a cornerstone of the global financial system, or could it plummet into obscurity?

Let's explore the starkly different projections about Bitcoin's value by 2050—ranging from a staggering $52 million to a potential collapse to zero—and uncover the underlying factors shaping these forecasts.

Projections Regarding The BTC Value Shooting Up To $2.9 Million (Base) Or $52 Million (Bull)

Being the first decentralized cryptocurrency, Bitcoin generated massive waves across the industry. Currently valued at $55,862 (as of August 6, 2024), BTC continues to grow in a market that is gradually adapting to digital assets.

The ongoing growth of Bitcoin has prompted many experts to predict its fate over the next 25 years. While some predict the cryptocurrency’s value to be over the moon, others predict a harsh crash. Let us understand both these perspectives and start by evaluating the claims regarding the potential rise in the BTC value.

A detailed blog by VanEck dives deep into the fate of Bitcoin by 2050. VanEck’s Digital Assets Research Team projects that the cryptocurrency’s value will soar as high as $2.9 million (in a base scenario) or $52 million (in a bull scenario). Let’s see how they got there.

VanEck shows immense confidence in Bitcoin and claims that it is likely to become a noteworthy reserve currency for the world. It predicts that cryptocurrency will soon become a major international medium of exchange, especially with the launch of the new Bitcoin Layer-2 solutions.

VanEck also predicts that Bitcoin will be used to settle 10% of all international trade transactions and 5% of all domestic trade transactions. Its experts suggest that central banks will hold 2.5% of their assets in Bitcoin by 2050.

Let us highlight a few other significant claims made by VanEck regarding the causes behind the potential rise of the BTC value by 2050:

A Shift In The International Monetary System

A big reason for the rise of BTC value by 2050 is attributed to the changing International Monetary System (IMS). According to this claim, the ongoing trends in the IMS favor Bitcoin as economies across the globe are moving away from the ongoing currency reserves.

Dominated by the US dollar, the current set of currency reserves economies rely on include GBP, Yen, and Euro. The use of a country’s currency in international trade depends on its share of the global GDP. When one or more currencies dominate international trade, they also give the banking system the impetus to develop around them.

VanEck’s research claims that the share of the US dollar in cross-border payments has been stable for the last 45 years (at around 61%). However, the share of the Euro and Yen in global trade is on the decline.

The Euro, which amounted to around 22% of all cross-border payments in the mid-2000s, came down to 14.5% by the fourth quarter of 2023. Speaking of Euro’s Central Bank reserves, the currency dropped from 25.3% during the late 2000s to 19.75% in 2023. The Japanese Yen has had an even worse fate, falling from a 12% share in cross-border payments during the mid-1990s to under 5% in 2023. In terms of Central Bank reserves, Yen has come down from 6.2% in the mid-2000s to a little over 5% today.

This indicates that the overall dependence of economies worldwide on the “Principle Four Currencies,” i.e., the US dollar, the Yen, the Euro, and the Pound, is reducing over time. VanEck claims that the void left by these currencies is likely to be filled by Bitcoin in the years to come.

De-dollarization And a New International Monetary System

When we look at the claims made by VanEck and its research, we cannot overlook the effect of de-dollarization. While the US dollar still goes strong as a chief reserve currency, economies across the globe are slowly moving away from it. This shift is called de-dollarization. There are multiple reasons behind this phenomenon, such as:

●       The US dollar becoming increasingly expensive for emerging economies

●       Changes in oil demand and trade relations with the Gulf countries

●       Geopolitical events, the most critical being the Russia-Ukraine conflict

Such a gradual shift away from the US dollar resulted in the formation of a new International Monetary System.

According to VanEck’s research, the value of the Chinese Yuan or Renminbi (RMB) has doubled over the last year. Economies like Saudi Arabia, Brazil, Russia, and many more are conducting international trade using RMB instead of the US dollar. Apart from the Chinese Yuan, emerging economies are also relying on local currencies over the USD. For example, India is already on its way to buying oil using Indian Rupees (INR). It is also settling trade with Malaysia with INR.

Disruption In The Current International Currency Reserves

A shift away from the traditional IMS has jolted the ongoing international currency reserves. VanEck predicts that the world will see an increase in bilateral trade agreements by 2050. The use of Chinese RMB will also increase. It is also likely for the emerging market currencies to take up 3% to 7.5% of Central Bank reserves over the next quarter of the 21st century.

As the dominance of one or more central reserve currencies reduces, VanEck predicts an increase in Bitcoin’s global reserves to 2.5%. The research also predicts a rise in BTC’s share in international and domestic trade to 10% and 5% respectively.

Bitcoin Emerging As A New Reserve Currency

In the new International Monetary System, Bitcoin is likely to emerge as a new reserve currency for economies worldwide. VanEck claims that there aren’t many emerging market countries with the confidence or potential to attain reserve status. While some countries will resort to China and other emerging economies, the ones wary of bad reserve options will turn to BTC.

VanEck suggests that Bitcoin can resolve several pain points affecting the currency reserve users today. It enlists the following advantages BTC will have as a new reserve currency:

●       Unchallenged monetary policy

●       Neutrality

●       Adequate property rights

●       A lack of Government bias

If used as a prominent reserve currency, Bitcoin’s agnostic system will facilitate straightforward and logical software algorithms instead of biases and political uncertainties.

The Valuation Of BTC By 2050

VanEck uses three major components for Bitcoin’s valuation by 2050 – BTC’s velocity, GDP of trade (local and international) settled using BTC, and actively circulating Bitcoin supply.

VanEck’s valuation of Bitcoin by 2050 relies heavily on the assumption that the cryptocurrency will be an integral part of the International Monetary System in the years to come. It is also assumed that BTC will gain market share from the “Principle Four” currencies dominating the global currency reserves today.

VanEck’s research team starts this valuation by taking the baseline world GDP figures of 2023 along with growth projections. It also assumes the share of BTC in cross-border payments to be relative to the outlook of other currencies relevant to international trade. Considering economies moving away from the Principle Four currencies, VanEck predicts a 20% decline in their market share. As mentioned earlier, BTC’s share increasing to 5% in domestic and 10% in international trade is also considered.

The research team then includes its prediction of Bitcoin holding 2.5% of Central Bank assets by 2050 and 85% of Bitcoin removed from its circulating supply because of its high store-of-value properties.

Assuming the BTC velocity to be ~1.5 (the US average), VanEck concludes its research by arriving at the base value of a Bitcoin being $2.9 million in 2050. This makes up 1.6% of all the world’s financial assets.

While this prediction estimates the bear scenario to drop Bitcoin’s value to $130,314, the bull scenario is estimated to boost it up to a whopping $52 million!

A Robust Counter: Will Bitcoin Go Down To Zero?

While research like the one conducted by VanEck suggests that the value of Bitcoin will soar high in the sky, a few Billionaires and famous personalities predict the exact opposite. The claim here is that the value of BTC will go down to zero in the years to come. How is that so? Let us have a look at the claims made by a few prominent personalities.

Jim Rogers, an investment Guru and a prominent voice in the world of global finance is famously skeptical regarding the “hunky-dory” future of cryptocurrencies like Bitcoin. He shared his reservations at the recent India Today Conclave and said that he does not expect crypto to last long. He clearly refuses to see long-term value in cryptocurrency despite the recent surges.

Interestingly, Rogers compared the value of digital assets like Bitcoin to the value of tangible commodities like sugar and rice. He said, “I have more confidence in the future in real things that people can use than I do in Bitcoin.” Known for his unadulterated opinions, he predicts the eventual demise of Bitcoin. “Bitcoin will disappear and go to zero someday,” Rogers said.

The renowned investor took a clear stance in favor of safe-haven assets like gold and silver over digital assets like Bitcoin. Rogers thinks that while most people understand tangible assets like gold and silver, they do not understand Bitcoin. When asked about his crypto holdings, Jim Rogers said that he owns no cryptocurrencies.

Another famous statement against cryptocurrencies like Bitcoin comes from Charlie Munger, the Vice Chairman of Berkshire Hathaway. At an annual meeting called the “Woodstock for Capitalists,” Charlie called Bitcoin “stupid” and “evil.”

Joined by his CEO Warren Buffet, Charlie also said that Bitcoin is very likely to go to zero. Adding to his argument, he said, “It (Bitcoin) is evil because it undermines the Federal Reserve system and the National Currency system.” At the same meeting, Warren Buffet subtly addressed the frenzy behind cryptocurrencies by commenting, “People are now behaving somewhat more tribal than they have for a long time.”

$52 Million Vs $0: What And Who Should You Believe?

Since its inception, Bitcoin has been termed as a “bubble.” It has had die-hard lovers and dedicated haters for years. If you are an investor struggling with fear, doubt, and uncertainty, it is better to take every claim with a pinch of salt!

Coming to the two sides regarding the value of Bitcoin in the years to come, know that neither of the two claims is foolproof. Bitcoin was criticized and called short-lived when it first gained prominence. However, it has been around for more than a decade, still going strong. This implies that the scenario of BTC going down to zero in the next few years is highly unlikely. We have had crypto billionaires and a plethora of people across the globe who have benefited from crypto investments.

Having said that, VanEck’s prediction about Bitcoin reaching $52 million by 2050 also seems far-fetched. If we stay with this claim, it would mean that the total market value of BTC will amount to a whopping $1,100 trillion or $1.1 quadrillion! This is too good to be true!

To be realistic, let us compare this claim with the value of Nvidia, Microsoft, and Apple – the three most valuable companies in the global market. In 2024, the total market capitalization of these three companies is a little over $3 trillion.

Let us focus on Apple. The company is going strong and is bound to grow in the years to come. According to a forecast by CoinCodex, the Apple stock may reach $2,383 by 2050, gaining 1,211%. This stock price will push Apple’s value to $61 trillion in 2050, roughly 20 times what it is today.

Now, if we compare this with the prediction of BTC reaching $1,100 trillion by 2050, something doesn’t feel right! It does not seem likely for Bitcoin to surpass one of the highest-valued companies in the world by such a big margin.

Having said that, while such predictions are unlikely, they are not impossible. As an investor, you should always keep yourself informed and prepared for the unexpected. The world has seen a plethora of miracles no stats predicted!

The Final Takeaway

The world of cryptocurrencies has always been full of fear, doubt, and uncertainties. Instead of being carried away by lucrative claims or getting disheartened by false alarms, it is best to stay rational and make informed decisions. Fancy headlines often sway investors and prevent them from exercising caution. If you find yourself at a crossroads, seek professional help and proceed with immense caution, especially when your hard-earned money is at stake!