Happy Birthday, Bitcoin! What's Next for the Flagship Cryptocurrency?

Just this week, the world’s first cryptocurrency celebrated its 14th birthday. Since its creation in 2009, Bitcoin (BTC 0.05%) has become the pioneer of an entire asset class and went from being worth mere pennies to hitting an all-time high, just shy of $70,000, in November 2021. In addition to its monumental price ascension, it has become recognized as an official currency of two countries, is held by Fortune 500 companies, and has benefited from an ever-growing user base thanks to some technological advancements.

Of course, all of this raises the question: Where could Bitcoin be in another 14 years? 

A glimpse into the future based on the present

By 2037, I believe there will be a handful of realities that could unfold for Bitcoin in the future. While I am confident there will be developments we can’t yet envision, we should take any predictions with a grain of salt. As much as I hope to be correct, I don’t have a crystal ball. But I do have data and research on which to base my hopes. 

First, let’s start with the low-hanging fruit. Year after year, more people are purchasing Bitcoin. Since 2009 the number of users holding at least 0.1 Bitcoins has increased, and even in the midst of recent market turmoil, it hit an all-time high of 4.1 million wallets. Thanks to technological advancements, like the Lightning Network, which makes using Bitcoin for daily transactions much simpler and cost-effective, it isn’t difficult to imagine a future where your favorite retailers accept Bitcoin as payment.

Building on the momentum of more users, I believe that in another 14 years, there will be more countries that recognize Bitcoin as legal tender. El Salvador made history in 2021 when it became the first country to give it official status, and six months later, the Central African Republic followed suit. But both of these countries are relatively small players on the world economic stage. By 2037, I wouldn’t be surprised if countries such as Nigeria, Thailand, Turkey, or Argentina decide to give Bitcoin legal status. These countries are home to some of the largest populations of Bitcoin users in the world, and should one decide to make the decision, it could lead to another following suit — a phenomenon known as game theory.

Bitcoin’s next accomplishment will result in it becoming a staple of both individual portfolios and corporate balance sheets. Companies such as Fidelity already offer Bitcoin exposure for clients and are looking at giving employers the option to offer employees access to Bitcoin through their retirement plans. There’s also the institutional side of things. Just this year, the world’s largest asset manager, BlackRock, said it would offer its capital-rich institutional customers access to Bitcoin. As leaders in their industry, it might be safe to assume that more competitors will follow suit to meet an increase in demand.  

In addition, I believe the regulatory environment around Bitcoin will be much clearer. Currently, the guidelines and legislation around digital assets are about as clear as mud. In the last year, countries such as Germany, Brazil, and Japan have all ratified comprehensive legislation, thereby clearing the air and providing better legal guidance. With events like the bankruptcy of crypto exchange FTX unfolding this year, it’s likely that a precedent may have been set for legislators to step in and deliver sooner than later. With a comprehensive framework in place, it could provide investors with more confidence that Bitcoin is a legitimate asset and also make the tax environment more favorable and better understood.

All of these things would lead to greater demand. And with more demand and less supply, prices go up. By 2037, Bitcoin will have gone through four more halvings, and around 96% of all coins will be in circulation — leaving just 4% left to satisfy any increased demand.

Let’s talk numbers

Based on past data, after each halving, Bitcoin produces less of a return than in the previous halving (the most explosive growth was in its early years), but that doesn’t mean it won’t continue to climb. Analysts and Bitcoin fanatics such as Cathie Wood have called for a $1 million price tag for Bitcoin by 2030. I’m not convinced that might be in the cards this soon, but even if her team at Ark Invest were only half right and off by a handful of years, a $500,000 mark by 2037 would represent a whopping 2,800% return from today’s measly price of around $17,000.

Overall, the potential impact of Bitcoin by 2037 will depend on how widely it is adopted and how it is used. While it is difficult to predict what the future will hold, it is clear that Bitcoin has the potential to bring about significant changes in the way that we think about money and value.