2021 has been a really eventful year for the cryptocurrency ecosystem.
We’ve seen new projects launched and others disappear into thin air, some cryptocurrencies have soared to the moon while others have dipped, and so on.
A major trend is the incessant mentions of web 3.0, NFTs, the metaverse and DEFI solutions. All these combine to paint a probable picture of the applications of cryptocurrencies and the technology behind it, in the future.
Mainstream adoption of cryptocurrencies by major companies, has become a thing. Also, investors have begun to recognize cryptocurrencies as an asset class and have resorted to using them as a store of value, to battle the high-flying inflation rate, which shows no signs of letting off.
The highlights in the crypto space are numerous. It would take a long while to count them.
But for this article, I’ll be covering 13 occurences, that have shaped the world of cryptocurrencies in 2021, some of which can revolutionize the crypto space dramatically.
No other year has been as great for the big five cryptocurrencies, as this year. Bitcoin, Solana, Ethereum, Binance coin, and Cardano all hit new all time highs.
In late October, Bitcoin rose to $67000. This ATH was later broken in early November, when it rose to $68000. Though there were predictions that the price could surge to $100000 before the end of the year, it never happened. Instead, there was a plunge to $48000.
However, banking behemoth, JP Morgan, have pegged a long term price of bitcoin at $146000. Bloomberg have also suggested that it may hit $400000 in the Q1 of 2022.
Ethereum, which is the second largest cryptocurrency, hit an all time high of $4800 in November. According to experts, this might be due to the surge in the buzz about Defi, which heavily relies on the Ethereum network. Most Defi applications and protocols, are built on the Ethereum blockchain.
Anyone familiar with cryptocurrencies, would be all too familiar with the term “Ethereum killer”. Solana earned that title, due to its increased scalability and network speed. And the title all but solidified, after it surged to $260 in early November.
Though it’s left to see if it can challenge Ethereum in the long run, the surge in its value may well continue due to the buzz about NFTs and decentralized finance. They both can be built on the Solana network.
Another supposed “Ethereum killer” that fared greatly this year, is Cardano. Its surge began with the inclusion of the support for smart contracts into it’s blockchain network, on the 13th of August. This upward swing, all but solidified when it hit an all time high of over $3.00.
Currently, reports indicate that it leads other cryptocurrencies, with the most developer activity
Finally, Binance coin surged a bit past $690 on the 10th of May. Binance coin is the native coin of the largest centralized exchange, Binance.
Emergence of meme coins
Meme coins are exactly what the name suggests: coins tied to a meme. They differ from other cryptocurrencies, which are usually developed to solve real-world problems.
In 2021, we saw the entrance of two meme coins - Shiba Inu and Dodge coin - into the top ten cryptocurrencies by market capitalization.
Currently, there's a "crypto dog fight" between the two coins. But if I was to predict a winner, Shiba Inu would be my best guess. This is due to the effort by the developers of Shiba Inu, to improve the tokenomics by including real-world use cases.
If they're successful, Shiba Inu would cease to be a meme coin.
Google releases search data: cryptocurrencies dominate
Google released search statistics recently. And the result was perhaps unsurprising: cryptocurrency-themed keywords dominated. In February, we saw a rise in the search query, “how to buy Bitcoin” which surpassed “how to buy stocks”.
Based on data, Dogecoin had the most searches, accompanied by enquiries on the price of Ethereum and GameStop stock.
In the case of Dodge coin, people were mostly searching for the current pronunciation while the search phrase, what is bitcoin, dominated the what-is section of Spanish searches.
For the where-to-buy searches, crypto-themed searches snatched 6 of the top ten spots. Dodgecoin, Shiba Inu, Safemoon, XRP, NFTs and Baby DOGE all made it on the list.
Coins jump at the tweet of Elon Musk
If there’s one person that highly influenced the crypto market this year, it’s billionaire Elon Musk.
His influence on Bitcoin, started as far back as 2014, when he stated that bitcoin could “probably be a good thing”.
In April last year, he announced on Twitter, that Tesla had included $1.5 billion worth of bitcoin to their balance sheets, as a hedge against inflation.
Furthermore, he announced that Tesla were to begin accepting payments in Bitcoin. This lead to a surge in the price of Bitcoin to $58000. However, after he raised concerns regarding the effect of Bitcoin mining on the environment, and Tesla doubling back on the acceptance of Bitcoin payments, the price plunged to $30,000.
His tweets have also led to the pump in the price of Dodge coin. At the beginning of 2021, a unit of Dodge coin went for just 20 cents. However, after a series of tweets in support of Dodge coin, the price soared to a record high of 74 cents.
Also, after Tesla announced on the 14th of December, their acceptance of Dodge coin as payment for some Tesla merch, the price surged by 18.9%.
The influence of influential figures on cryptocurrencies, is set to continue in the new year. And this would encourage mainstream adoption.
NFTs dominate public discourse
We began the year with the NFT-mania.
Every news publication, crypto articles, and the likes, couldn’t do without a mention of NFTs. And this is no fault of theirs.
In 2021, NFTs solidified themselves as a tool to watch out for the future instead of a mere passing fad.
Everydays by Beeple, sold for a massive $69 million. Other NFTs such as Axie, Bored Ape Yacht club, Crypto punks, Crypto kitties, and the likes have also commanded massive valuations.
With the discovery of various applications of NFTs, we’re sure to see more in 2022.
Influx of large companies into crypto
Big companies, like Tesla and Square, included Bitcoin to their balance sheet: US$1.5 billion by Tesla, and US$170 million by Block (formerly known as Square). Companies hold 2% of the total bitcoin capped supply, according to Bitcoin treasuries.
Other companies such as Grayscale, Micro strategy, Snappa, Symbiotic SE, amongst others, currently hold Bitcoin.
Another indication of a foray into cryptocurrencies, was the renaming of two technology companies by their founders: Facebook renamed to Meta, and Square renamed to Block. Both cases, signify the intention of the founders to move towards a crypto-based future.
Countries adopt cryptocurrencies
The adoption of cryptocurrencies by countries is twofold: as a legal tender, and as an investment vehicle.
One big news of the year, was the acceptance of Bitcoin as legal tender, by El-Salvador. This announcement was greeted with mixed reactions, considering the volatility of bitcoin. To this end, the government launched a digital wallet known as Chivo.
Also, statistics released by BuyBitcoinWorldwide, shows that Bulgaria, Ukraine, El-Salvador, Georgia, and Finland, all hold Bitcoin.
Central Bank Digital Currencies (CBDCs)
Central bank Digital Currencies (CBDCs) are a tokenized form of fiat currencies, recorded on the blockchain.
As of the last count, 9 countries have launched their CBDC, while 81 are still in development.
Most noteworthy of the CBDC launches, is the digital Yuan, launched by the Central Bank of China. Pilots have been taking place across the country, and the last one took place in Shanghai in June.
Other countries to launch their CBDCs in 2021, include Nigeria, the Bahamas and Eastern Caribbean (comprises 7 countries).
You can track the development of CBDCs, here.
China goes hard on Cryptocurrencies: fuels Bitcoin slump
From the inception of Bitcoin, china has long been viewed as a crypto-allied environment. Scores of bitcoin miners, charged with processing transactions, operate out of China.
But at the beginning of the year, China announced a ban on bitcoin mining. Subsequently, bitcoin’s processing power declined after many miners were forced to put a break on mining. Due to this decision, there was a shift of miners to the U.S.A., according to research by the University of Cambridge, with the U.S.A. accounting for 35.4% of bitcoin’s hash rate or processing power.
While the market was still adjusting to the shock ban, in September, they took their crackdown on cryptocurrencies and crypto-related-activities, a step further.
They declared all activities associated with digital currencies, as illegal and suggested that a further crackdown was imminent. Crypto-related activities, such as trading, order matching, token issuance and derivatives, were declared illegal, including cryptocurrency exchanges.
After this decision, Bitcoin and Ethereum slumped by 6.5% and 9% respectively. This correlated with the presence of many Bitcoin holders and miners, in China.
This decisions, may be traced to China’s efforts to have a carbon-neutral economy by 2060. And it could also be an implicit effort to support the mainstream adoption of it’s CBDC: the digital Yuan.
Global crypto market cap exceeds USD$3 trillion
The global crypto market cap, exceeded USD$3 trillion in November, last year, according to CoinGecko. To put it simply, the total money in the worldwide market of cryptocurrencies is now over $3 trillion.
This may come as no surprise to close followers of trends in 2021, which contributed to this achievement. These trends included adoption by El-Salvador, mainstream adoption by big tech companies, acknowledgement of bitcoin as an investment vehicle similar to gold, and the likes.
Although there has been a retracement in this figure, current happenings suggest that this may still happen.
Defi white hack: over USD$600 million stolen from the poly network
On the 10th of August, Chinese DEFI platform, the poly network, were hacked. And over USD$600 million worth of digital assets were stolen: US$267 million worth of Ether, US$252 million of Binance Smart Chain tokens, and around US$85 million of USD Coin.
This occurred, due to an exploitation of a flaw in the contract calls.
But the funds were later returned to a multi signature wallet and the hacker, also known as Mr. Whitehat, claimed that the hack was done in good faith, to expose the flaw in the network’s Infrastructure.
Crypto scams featured predominantly in 2021. According to data collated by chainalysis, more than $7.7 billion dollars were lost to several crypto scams.
The most common of all these scams, were rug pulls, which accounted for 37% of all crypto scams. This happens when developers of a project, suddenly pull out their investment and leave outside investors, with assets that have either significantly plunged in value, or have no value at all.
The increase in crypto scams has been used to justify the need for increased regulations and legislations of the crypto space, to protect vulnerable consumers who hardly have a clue of what they’re getting into.
Long-awaited Bitcoin update comes into effect
Bitcoin enthusiasts have been jostling for an upgrade of the network, to increase the speed for processing transactions, reduce the cost associated with it, and include the support for smart contracts.
Their wishes were finally fulfilled in November, with the launch of the taproot upgrade. It includes Schnorr signatures, which are responsible for the increased efficiency and reduced cost of transactions.
DAOS make a public appearance
In November, ConstitutionDAO, which is a Decenteralized Autonomous Organization, joined a bidding war for a copy of the U.S constitution, which had been put up for auction.
They were able to raise $40 million, via crowdpooling.
They lost to billionaire, Ken Griffith but succeded in raising the general awareness of DAOs, and the prospective contributions they can bring to the crypto environment in the future.
It’s left to see where the cryptocurrency ecosystem would be headed in the coming year. But one thing is sure:
Judging from the occurrences of the past year, 2022 is bound to be even more interesting.