Bitcoin (Cryptography: BTC) It is the world’s largest cryptocurrency. At the time of writing, its market capitalization was $1.8 trillion, representing more than half of all the total amount of coins and tokens in circulation throughout the industry, currently at $2.9 trillion.
MicroStrategy (NASDAQ:MSTR) Co-founder Michael Saylor believes there are still significant benefits as he predicts Bitcoin will rebuild the entire financial system thanks to its decentralized nature, cap supply and a secure system of records called blockchain. His predictions suggest that Bitcoin could skyrocket 13,800% by 2045, reaching $13 million per coin.
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Saylor backs up his predictions with action – he effectively sits on over 538,000 bitcoins on a micro strategy, valued at a whopping $50 billion. But how realistic is his long-term price target?
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There is no denying that existing systems of records are extremely inefficient. For example, there is no centralized database of real estate holdings in the United States. In other words, buying and selling of real estate often involves significant legal costs and a long-term due diligence process. Furthermore, it is difficult to determine whether investors are being valued fairly, as intellectual property owned by companies is tracked by their own internal systems with little transparency.
Saylor believes that many of these problems can be solved by “tokenizing” all global assets. This means moving records and ownership into the blockchain. It means information about all real estate, and all shares of all companies are made public and simplified transactions.
As Bitcoin is fully decentralized and cannot be controlled or manipulated by people, companies or governments, Saylor considers it to be a complete reserve asset for the tokenization process. Everyone needs to own Bitcoin to join the new financial system, as it is the currency that people use when purchasing, selling or transferring tokenized assets.
There are around $500 trillion worth of assets all over the world. Therefore, Saylor believes that it will take for the vision to be made until 2045 to become a reality. He believes the first step is for the US government to create a digital asset framework (a system of rules and law). This could be possible under President Donald Trump.
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If Saylor is right, he believes the new financial system will ultimately send Bitcoin to $13 million.
Bitcoin’s Saylor price target is the highest in the industry. Even Cathie Wood’s Ark Investment Management, which is highly positive on Crypto Space, believes Bitcoin will only reach $1.48 million by 2030 in its most bullish scenario.
Saylor’s $13 million price target provides Bitcoin with a fully diluted market capitalization of $273 trillion. This is about nine times the annual production of the entire US economy. It also combines nearly six times the bitcoin of all 500 companies in the S&P 500 total, and is now worth $47.5 trillion.
Personally, I don’t think Bitcoin will reach those heights. Efforts to tokenize all the assets of the world will encounter monumental political challenges and implementing a global financial system using one single currency also creates considerable inefficiency. Because all countries’ economies operate at different speeds, that’s why the euro, for example, caused problems for countries like Greece.
The Greek economy produces approximately $243 billion annually, which is much lower than the German economy, which generates around $4.5 trillion in annual activity. Exports are generally cheaper and attractive to global trading partners, as Greece has a weaker currency. However, as both countries use the euro, Greece is trapped at the same exchange rate as Germany, putting it at a disadvantage as it cannot adjust its currency to compensate for its weaker economic position. Greece is essentially forced to operate on unequal conditions, crushing its competitiveness.
If the world agrees to adopt Bitcoin, this will become a reality of dozens of countries (as it could be even worse for buying existing asymmetry, even if it was used solely to buy assets).
Even if we put Saylor’s prediction aside, Bitcoin may still have an upward potential. Many investors see cryptocurrency as a valuable store. The availability of exchange trade funds (ETFs) added credibility to the idea, as financial advisors and institutional investors can own Bitcoin in a safe and regulated way.
Currently, all gold reserves on the ground are currently $22.5 trillion. Bitcoin’s market capitalization should surge 1,150% accordingly, and translates to a price per coin of $1,071,400. There is no guarantee that it will get there, but it may be a more achievable target in the long run than Saylor.
It is important to remember that MicroStrategy, the company of Saylor, owns over 538,000 Bitcoin. Therefore, he is definitely “talking his book” when he publishes a very bullish prediction.
Consider this before purchasing inventory with Bitcoin.
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Anthony di Pizio does not occupy any of the stocks mentioned. Motley Fool has a position and recommends Bitcoin. Motley Fools have a disclosure policy.
According to Michael Saylor of MicroStrategy, the unstoppable cryptocurrency, which could rise by 113,800%, was originally issued by The Motley Fool
