Looking Back On The Crypto Year 2021
This blog post will cover:
- Elon Musk's Tweets
- Meme Tokens and Dog Tokens
- Eco Mining
- NFT boom
- Crypto Legislation
- Digital Yuan
- Digital Shekel
- China Bans Crypto
- Bitcoin and Ethereum Updates
- Crypto All-Time Highs
December is already here, the year is going to its end, and it is a perfect time to recall what has happened in the Crypto World during this year and what trends were set.
Elon Musk's Tweets
This year Elon Musk surprised the crypto community with his sudden support of Dogecoin. His tweet started a price increase of the coin.
This brought unexpected attention to a coin that had been created as a joke, and this crypto was able to get into the top ten cryptocurrencies. In May Elon Musk asked his followers if they would like Tesla to accept DOGE as a payment method.
The entrepreneur’s posts with his new Shiba Inu puppy pushed the price of the SHIB token and started some sort of a spat between two cryptocurrencies that use the same dog as an icon.
Meme Tokens and Dog Tokens
With the help of Elon Musk dog coins and meme coins became a very hot topic of the year. Due to the twitter posts the entrepreneur made, the world received at least two more meme coins. First of all, it is Floki Inu (FLOKI), named after Elon Musk’s dog. Developers of this coin are unknown, however, it is understood that they were inspired by the success of Shiba Inu coin.
Another project that appeared is Dogelon Mars (ELON). On its official website it is said that Dogelon is not a meme coin, but a very real project that will develop with time. It was created as a universal currency that people from everywhere can use.
In March Elon Musk announced in his Twitter account that Tesla will allow purchasing cars with Bitcoin. This happy news existed for two months only. After that, the entrepreneur expressed concerns about the environmental situation and bad influence of Bitcoin mining.
This situation gave a start to eco-mining discussions. It turned out that a lot of people had been preoccupied with this problem before. It also appeared that there were lots of opportunities to mine using the energy that is currently being wasted. However, it is very difficult to calculate accurately how much electricity Bitcoin consumes annually. According to some resources, it must be around 91 terawatt-hours of electricity.
Anyway, the discussion is not over, and probably we will be able to see some interesting solutions.
NFT became a very hot topic in 2021, this is what was driving massive crypto adoption this year:
- Celebrities started to issue NFTs
Since NFT really provides a number of opportunities for people of art, a lot of celebrities joined the community and issued their own NFTs. Such people as Snoop Dogg, Ellen DeGeneres, Shawn Mendes, Tony Hawk, Cara Delevigne, and many others became a part of the NFT boom. They also started to educate their audiences about a new way of supporting favorite artists.
Undoubtedly, celebrities attract a lot of attention to the subject. And we would like to mention one person in particular, John McAfee. He was a well-known character in the Crypto World. He was extremely supportive of Bitcoin and believed it should reach $1,000,000 by 2021. He participated in a variety of crypto projects and provoked a lot of hype around crypto. Unfortunately, in 2021 he passed away at the age of 75.
- Gaming industry using NFTs
Also, the gaming industry is using NFTs very actively now. Now there are lots of opportunities to find NFT games that suit any interest. You can read more about it in this article.
- NFT became a marketing tool
The increasing popularity of NFT attracted interest from major companies. Unexpectedly, it became a new marketing instrument. So now NFTs issued by well-known companies are available for purchase. Thus, people now can buy digital tacos by Taco Bell, digital versions of Nike sneakers, or a whole range of cute NFTs made by Coca-Cola. Social networks also joined the movement. For example, TikTok issued an NFT collection, which is made of TikTok best moments in collaboration with some influencers.
Since more people have joined the Crypto World, the problem of legislation became more urgent. Mostly governments tend to tighten the laws and regulations, adding new taxes for those who use or mine cryptocurrencies. However, this year brought up a totally different example. In order to protect the country from fast progressing inflation, El Salvador not just allowed crypto, but gave it a status of a currency.
Another example of a country that is trying to fight hyperinflation with cryptocurrency is Venezuela. Its crypto, Petro, is backed by oil reserves. Crypto traders from Venezuela are among the most active worldwide.
In some countries, people face cryptocurrency taxation in case they use it actively, for example, trade crypto or pay with it (e.g. Spain and France). In other countries, cryptocurrencies are considered to be property and then crypto owners have to pay wealth tax (e.g. Switzerland). Some countries already have a lot of cases for crypto taxation, such as the USA. They have capital gain taxes as well as income taxes.
Apart from attempts to settle tax policy, the excitement around cryptocurrency and blockchain technology pushed central banks around the world to start creating CBDC (central bank digital currency). Several countries became very successful with these projects. Here are some of them:
It was created to change the traditional payment system of China. It is supposed to be safer than the regular banking system. During the year, several cities have tried it out.
The Bank of Israel also issued CBDC. A pilot program was tried out. At the same time, the government was continuously reminding people about the fact that CBDC is just a type of payment system, and has nothing to do with cryptocurrency.
Nigeria issued its own CBDC, called eNaira. This happened right after the government forbade using cryptocurrencies in February this year. The government believes that CBDC will help to increase the country’s GDP and to bring more people into the official banking system.
China Bans Crypto
2021 is marked with another cryptocurrency ban. This time the Chinese government decided to declare all crypto transactions illegal, including mining and exchanging. Moreover, starting from this year Chinese citizens are not allowed to work for crypto-related companies anymore. Basically, this regulation speeded up the process that was already going on in China. Exchange services were moving out from Mainland China. The sphere that was affected the most is mining. The official announced reason for that is the protection of the national economy from crime and money laundering.
Right after the new law was announced some international crypto companies decided to cut ties with Chinese clients. However, most of the companies did not comment on the situation. This was not the only effect that legislation had. Bitcoin price also shook a little.
Bitcoin and Ethereum Updates
2021 brought some improvements to these major crypto projects. Let’s take a look at them.
Bitcoin introduced a number of improvements. For example, in 2021 Bitcoin’s core cryptography was upgraded with the help of Schnorr digital signature scheme, its scripting language was also reformed. It was activated on November, 12. It really consists of three parts: Schnorr Signatures, Taproot, and Tapscript. Recent changes are known as Taproot or BIP Taproot (Bitcoin Improvement Proposals Taproot). One of the interesting things about these improvements is that they showed a new way of spending Bitcoin. Pay-to-Taproot (P2TR) gives users an opportunity to pay to a Schnorr public key or the Merkle root. It also provides a possibility to create a UTXO that can be unlocked and spent by the owner or anyone who can fit the requirements of any script within the Merkle tree.
Ethereum went through two significant hard forks. At the beginning of the year, the Berlin fork occurred. It brought the following changes: ModExp gas costs, the specified algorithm of gas costs, support of multiple transactions, and an optional access list.
In June the Ethereum network went through the London hard fork. This stage was concentrated on two main things: fees and speed. Ethereum has a well-known problem with fast-growing gas fees. Thus, one of the main focuses was to slow down the increasing gas fees. The second focus was on changing the limit of the number of transactions that could be processed per second. October was marked with another update, called Altair. It was the first upgrade to the Ethereum Beacon Chain, which introduces PoS to the ecosystem. Since that moment Ethereum’s PoS and PoW chains run in parallel. This is the first step towards a complete merge with the Beacon chain planned in 2022.
All these improvements were meant to bring Ethereum a little bit closer to Ethereum 2.0.
Crypto All-Time Highs
This November was full of all-time highs! Several coins hit new heights. Let’s look at some of them:
- BTC surpassed $68,789 mark
- ETH reached $4,891 in November
- MANA hit its all-time high of $5.90 in November
- AVAX also reached its peak price of $146.22 in November
- Another achievement of November is SOL with $260.06
This is not the full list, but this shows how November brought many coins up. However, the declining trend followed in December. In spite of that, we can see how committed the crypto teams are, they are willing to achieve more in the future. It's fascinating to see what the crypto projects will surprise us with next year.
2021 was full of events. Crypto development is definitely gaining speed. This year we saw amazing examples of how community and particular people could actually influence prices and movements. We are witnessing a struggle that governments have trying to inscribe the phenomenon of cryptocurrency into the traditional economy. We have also found out that there are no boundaries for what these technologies can enable us with. The greatest examples are the NFT boom and fast-developing gaming industry. As the usage of crypto is becoming more intuitive, more people are getting involved. It is amazingly interesting to follow this process. Are you also excited about the next year?