Bitcoin just soared to a new $1,600 high — but the first investor in Snapchat thinks it could hit $500,000 by 2030

But the cryptocurrency isn't anywhere close to its potential, according to Jeremy Liew, the first investor in Snapchat, and Peter Smith, the CEO and cofounder of Blockchain.

In a presentation sent to Business Insider, the duo laid out their case for bitcoin exploding to $500,000 by 2030.

Their argument is based on increased interest in bitcoin, thanks to:

Bitcoin-based remittances

Remittance transfers, or electronic money transfers to foreign countries, have almost doubled over the past 15 years to 0.76% of gross world product, data from the World Bank shows.

"Expats sending money home have found in bitcoin an inexpensive alternative, and we assume that the percentage of bitcoin-based remittances will sharply increase with greater bitcoin awareness," the two said.

Uncertainty

Liew and Smith said increased political uncertainty in the UK, US, and developing nations would help elevate the level of interest in bitcoin.

"We believe bitcoin awareness, high liquidity, ease of transport, and continued market outperformance as geopolitical risks mount will make bitcoin a strong contender for investment at a consumer and investor level," the two said.

Mobile penetration

Liew and Smith said the percentage of noncash transactions would climb from 15% to 30% in the next 10 years as the world becomes more connected through smartphones.

The global smartphone penetration rate is 63%, and the total number of smartphone users is expected to increase by 1 billion by 2020. The GSMA, a trade body that represents the interests of mobile operators worldwide, says 90% of these users will come from developing countries.

This would make it possible for nearly everyone to have a bank in their pocket, and that should provide a boost for bitcoin as well. Liew and Smith say bitcoin could account for 50% of all noncash transactions.

Here are the basic model drivers Liew and Smith used:

But a lot could go wrong, too. News surrounding bitcoin has been rather negative as of late.

China, which is responsible for nearly 100% of trading in bitcoin, has been cracking down on trading. The three biggest exchanges recently announced a 0.2% fee on all transactions and blocked withdrawals from trading accounts.

The US Securities and Exchange Commission also rejected two bitcoin exchange-traded funds and will rule on another one in the future. It's not expected to be approved.

However, Smith says bitcoin is still in its early stages.

"The SEC's ruling wasn't a surprise to us," he told Business Insider. He said that "getting that sort of approval" could take a long time.

"In the meantime, bitcoin is already simple to buy and hold, and as the asset continues to mature, we'll continue to see an increase in the development and deployment of surrounding products," he said.

And while bitcoin hasn't been granted regulatory approval in the US, it is catching on elsewhere. On April 1, the cryptocurrency became a legal payment method in Japan.

Another threat to its future is developers who are threatening to set up a "hard fork," or alternative marketplace for bitcoin. This would result in the split of into bitcoin and bitcoin unlimited. However, Smith isn't worried.

"Bitcoin has strong economic incentives to prevent this," he said. "If the last two years of healthy contention and debate lead to a conclusion, it's that bitcoin is incredibly resilient and stable. In fact, the bitcoin blockchain has operated for seven-plus years with no downtime, a feat no other back-end system operating at this scale can claim."

But the cryptocurrency sees violent price swings uncommon among the more traditional currencies. Bitcoin rallied 20% in the first week of 2017 before crashing 35% on word that China was cracking down on trading.

The cryptocurrency has regained those losses and is trading up about 67% so far this year.