Bitcoin 2030: The Long Term View
From a thought experiment after the 2008 financial crisis to becoming the fastest asset to command a market cap of over $1 trillion, Bitcoin has come a long way in merely a decade’s time. At the time of writing, Bitcoin trades at $28,740 with a market cap of approximately $550 billion according to data from CoinGecko. However, for people who understand Bitcoin’s strong fundamentals, the journey is merely beginning as it continues to be a sound store of value and a hedge against inflation in countries marred by hyperinflation such as Turkey, Zimbabwe, Argentina and many others.
In this article, we take a long-term view of Bitcoin. What does Bitcoin look like in the year 2030? Will it continue to be the world’s leading and most reliable crypto asset? Will more nation-states adopt Bitcoin as legal tender? In this article, we will answer all of these questions and more.
The Present State of Bitcoin Adoption
While Bitcoin has had its periodical moments of glory in the past, the onset of the coronavirus pandemic specifically led to the flow of capital to Bitcoin to date. Despite crashing almost 50 percent in value in March 2020, Bitcoin hit an all-time high figure of $69,000 within less than two years in November 2021. In between, fueled by the US Federal Reserve’s unchecked money printing, the USD continued to lose its value in Bitcoin terms. Furthermore, as a means to save the value of their cash, companies and nations around the world pivoted to Bitcoin as a safe haven to park their capital. At its peak, Bitcoin reached a market cap of more than $1 trillion, which is greater than the GDP of countries like Indonesia, Turkey, The Netherlands and Saudi Arabia.
An argument can be made stating that Bitcoin’s latest bull market following the coronavirus pandemic was unlike any of its previous market cycles. The level of adoption witnessed by Bitcoin in the past two years dwarfs that of its preceding ten years of existence. As Bitcoin transforms into a mainstream phenomenon, its long-term bull case continues to become stronger and the recent chain of events is a testimony to the same.
Let us quickly recount some of the most significant developments in the past two years that have catapulted Bitcoin into the mainstream.
What Are the Key Bitcoin Adoption Metrics Today?
We first saw Bitcoin on Wall Street when business intelligence software provider MicroStrategy’s CEO Michael Saylor announced that the company had added BTC to its balance sheet. The domino effect started as Saylor quickly reached the likes of Elon Musk and even certain countries around the world that passed new legislatures to declare Bitcoin legal tender. In the next section, we will dig deep into three major factors that show institutional confidence in Bitcoin and how it is poised for an enviable future.
Legal Tender in Nation-States
On September 7, 2021, the Central American country El Salvador sent shockwaves across the world when it announced it had officially adopted Bitcoin as legal tender. In purely official terms, a legal tender is any coin or banknote that must be accepted if offered in payment of a debt. In El Salvador’s case, the literal definition of legal tender was extended to also include the world’s premier digital currency, Bitcoin. Back then, El Salvador’s President Nayib Bukele said the move to adopt BTC as legal tender would help the country’s citizens save a whopping $400 million a year on commissions for remittances while also aiding those who remain unbanked on the 21st century.
Shortly after embracing Bitcoin as legal tender, El Salvador wasted no time to launch its national crypto wallet called Chivo. The government created a $150 million fund to facilitate seamless conversion between USD and Bitcoin. In an attempt to incentivize the citizens, a nationwide plan to airdrop $30 worth of BTC to every citizen was announced. The country’s finance minister at the time, Alejandro Zelaya, stated that he expected more than 2.5 million citizens to download the Chivo wallet. For the uninitiated, El Salvador has a population of 6.5 million.
In a bid to ensure that the country’s transition to a Bitcoin-based economy is as smooth as possible, the government undertook a nationwide measure to install Bitcoin ATMs. The move to adopt BTC as legal tender generated an overall positive response from the El Salvadorans. The majority of citizens welcomed the decision as there is a significant number of families in El Salvador that are dependent on their family members’ income in the US. Typically, legacy systems charge an exorbitant amount of transaction fees for inward remittances to El Salvador. However, by adopting Bitcoin, citizens could now stop worrying about that.
Most recently, President Bukele unveiled the plans to develop a retro-futurist ‘Bitcoin City’ in El Salvador that would be the go-to place for Bitcoin holders from across the globe to settle in and enjoy certain benefits such as zero tax on cryptocurrencies, subsidized property, etc.
Following in the footsteps of El Salvador, the African nation of Central African Republic recently announced its plans to embrace Bitcoin as legal tender. The second country to do so, the Central African Republic currently uses the French-backed CFA franc as its currency. However, by adopting Bitcoin as legal tender, the Central African Republicans will not only have a tool to tackle the country’s rising inflation but also benefit from using a decentralized, peer-to-peer monetary network that can be used to send and receive payments around the world instantaneously.
We have already witnessed politicians and lawmakers in several countries championing the cause of making Bitcoin legal tender. Some of these countries include Panama, Mexico, Russia and others. With time and rising Bitcoin adoption, expect the list of countries that have Bitcoin as legal tender to grow even larger.
Bitcoin’s Use for Payments
Bitcoin has also witnessed a strong trajectory in terms of its use as a medium of payment. Although BTC was already accepted by several companies and businesses the world over as a medium of payment, electric-vehicle giant Tesla’s announcement of accepting payments in BTC changed the game for good. In March 2021, Tesla CEO Elon Musk announced that the company would accept the largest and most prominent cryptocurrency as a form of payment for the purchase of electric vehicles. The announcement received major fanfare from the wider crypto community and the price of Bitcoin rallied to the upside making a new all-time high record. It’s worthy of note that although Tesla decided to discontinue accepting BTC payments for its vehicles due to its supposed energy-intensive mining mechanism, Musk recently went on record stating that Tesla will ‘most likely’ restart accepting Bitcoin as payments. The only question that remains is when.
Similarly, another major breakthrough for Bitcoin’s adoption as a medium of exchange was reached when Stripe announced its plans to expand its global payouts services with the help of Bitcoin integration. For the uninitiated, users can already tip BTC to other people on Twitter using the tipping feature on the micro-blogging website. The Bitcoin tipping feature on Twitter was introduced by Strike, a Bitcoin wallet app that allows users to connect their BTC wallet to social media websites and enjoy the benefits of the world’s largest decentralized P2P network. As a result of the integration with Strike, Twitter users who have their BTC wallet linked to their profile will receive notifications when they receive a BTC tip through Strike, enabling them to quickly reply to the tipper or send an emoji to express their gratitude.
In addition to the aforementioned examples, a number of entities around the world continue to adopt BTC as a medium of exchange to boost their businesses. For instance, the UAE’s Emirates Airlines announced it would soon accept Bitcoin from passengers looking to book a flight with the airline. In a similar vein, fashion and lifestyle brand Gucci announced on May 5 that it would soon start accepting Bitcoin payments in some US-based retail stores in a bid to push for crypto adoption.
When we talk about Bitcoin adoption, it is impossible to overlook the corporate adoption of the largest and most important digital asset today. At present, MicroStrategy owns a total of more than 125,000 BTC on its balance sheet and the CEO of the company, Michael Saylor, has officially stated several times that he will never sell his Bitcoin holdings. To date, Saylor has bought several ‘dips’ in Bitcoin and continues to accumulate the hardest money on earth during times of rampant inflation. It’s no surprise that by accumulating Bitcoin, MicroStrategy not only avoided diminishing purchasing power of its cash reserves in an inflationary environment but also benefited in the form of the rise in its share price. For instance, MicroStrategy started buying Bitcoin in August 2020 when its share price was hovering around $120. However, in February 2021, the price of MicroStrategy’s share hit a staggering $1034 on the back of a strong balance sheet bolstered by Bitcoin’s parabolic run.
Akin to MicroStrategy, the second major firm to purchase Bitcoin and add the same to its balance sheet is none other than Elon Musk’s Tesla. On February 8, 2021, reports emerged stating that Tesla had purchased Bitcoin worth a staggering $1.5 billion. The mammoth purchase is a testimony to Musk’s confidence in BTC as a store of value as the investment in Bitcoin was a significant portion of Tesla’s overall cash reserves.
Earlier this year, accounting giant KPMG announced that its Canadian branch had purchased some Bitcoin for its corporate treasury. Although the company did not divulge the USD value of its BTC purchase, one can assume the figure to be north of millions of dollars considering KPMG’s business scale. At the time, KPMG Canada’s managing partner Benjie Thomas noted that the investment reflects the firm’s belief that institutional adoption of digital assets and blockchain technology will continue to grow and become a regular part of the asset mix.
These examples indicate the institutional trust in Bitcoin as an asset class. If anything, the number of companies holding BTC on their balance sheets is only going to increase with time as BTC continues to cement its position.
What are the Factors that Strengthen Bitcoin’s Long-Term Bull Case?
There are also several other factors that bolster Bitcoin’s long-term bull case. In the following section, we will discuss in brief some of the factors that can propel Bitcoin to heights never witnessed before. These factors not only hold the potential to help push BTC’s price upward but could also play a significant role in fostering a positive public perception of the top cryptocurrency.
Potential Impact of the Next Bitcoin Halving on BTC’s Price
The impact of a Bitcoin halving on BTC’s price cannot be overstated. Historically, every Bitcoin halving has preceded a historic bull run for the top cryptocurrency. This happened in 2012, 2016, and most recently, in 2020 shortly after the onset of the coronavirus pandemic. After hitting a macro-bottom price level of approximately $3,800 in March 2020, Bitcoin went on to hit a new all-time high (ATH) of almost $69,000 in November 2021 and continues to trade above $30,000 at the time of writing.
For the uninitiated, a Bitcoin halving involves cutting down the Bitcoin mining rewards for miners by half. The basic premise behind the halving is to create a supply scarcity for BTC every four years. Currently, Bitcoin miners earn 6.25 BTC for every new block that they add to the Bitcoin network.
Past data indicates that on average, the price of Bitcoin has at least quadrupled after every Bitcoin halving. Therefore, assuming the price of Bitcoin hovers around $50,000 during the halving in 2024, it won’t be a stretch to say that BTC could hit as high as $200,000 in the period following the halving.
The Role of the Lightning Network in Bitcoin’s Future Success
Satoshi Nakamoto kept the network’s decentralization and security as the highest priority. As a result of the infamous blockchain trilemma, the Bitcoin network suffers from slow transaction speed due to its small block size which ensures the underlying network is not centralized and managed by few entities. While the small block size helps with keeping the concentration of power at bay, it does not help the transaction speed. Fortunately, Lightning Network gets the job done.
DeFi on Bitcoin
While the majority of DeFi infrastructure was built on Ethereum, RSK paved the way to grow the DeFi ecosystem on top of Bitcoin. Unlike Ethereum, DeFi on Bitcoin doesn’t suffer regularly several drawbacks such as sky-high gas fees and alikes.
DeFi built on RSK offers a wide array of protocols that individuals can use to benefit from DeFi’s unparalleled advantages generating passive income from BTC.
Bitcoin Mining Is Getting Increasingly Eco-Friendly
One of the most vocal arguments against Bitcoin is its supposed energy-intensive nature on the back of its Proof-of-Work consensus algorithm which requires sophisticated machines to use a large amount of energy to solve equations to validate Bitcoin transactions. As a result, even Tesla had to suspend accepting BTC for payments due to the blockchain’s high carbon footprint in a business environment that is getting increasingly eco-friendly.
A growing number of Bitcoin miners are pivoting to utilizing renewable sources of energy to power their machinery to mine BTC. For instance, in July 2021, the Bitcoin Mining Council (a self-governing body that aims to turn Bitcoin mining eco-friendly) presented its first quarterly report where it shared several insights indicating the rapid pace at which Bitcoin is turning green. The report found that Bitcoin miners are quickly becoming more energy-efficient by using sustainable energy sources such as wind, solar, hydro, etc. Furthermore, the report also found that Bitcoin is powered by a higher mix of sustainable energy (close to 56 percent) than any other industry or major country.
With renewable sources of energy becoming more mainstream due to the effects of climate change, it won’t be long before we see the Bitcoin network being powered solely by eco-friendly energy and end the energy-intensive debate for once and for all. Full bitcoin mining with green energy will be a reality.