Cryptocurrency in 2021: A Year in Review
2021 has been the biggest year in the history of cryptocurrencies. Almost every aspect of the cryptocurrency market had some sort of breakthrough, including the reaching new all-time highs, technological advances, mainnet launches, and mainstream media attention. Let’s take a look at some of the events that defined crypto in 2021.
It’s impossible to discuss cryptocurrencies in 2021 without discussing the meteoric rise of memecoins like Dogecoin and Shiba Inu. At the start of 2021, one Dogecoin was worth half a cent and had a market capitalization of $600 million. At the peak of the bull market, Dogecoin almost reached a $100 billion dollar market cap and had a price of 73 cents per coin, a 146x increase from the beginning of the year. This momentum for the memecoin came from massive mainstream media coverage from almost every major news outlet. Even Elon Musk, the world’s richest man, went all-in on promoting Dogecoin on Twitter and went so far as to call it the “people’s crypto.” Though some may argue this was a big setback for cryptocurrencies, as it made the market look like a joke and promoted a worthless coin for what some would consider a pump and dump scheme, there is no doubting that Dogecoin caught the public’s attention in a way that Bitcoin never has.
Similar to Dogecoin, NFT mania also swept the general public, and became a topic of conversation at everything from the Thanksgiving dinner table to Sotheby’s art auctions. The first NFT collection to grow a massive following was Crypto Punks, which is a collection of pixelated images of different characters that now have a floor price above $100,000. The second and arguably even more prominent NFT collection to become incredibly valuable was the Bored Ape Yacht Club, which has seen celebrities like Post Malone, Jimmy Fallon, and Mark Cuban buy apes for millions of dollars in some cases. These have also had a damaging effect on the public perception of the crypto market, as the massive NFT bubble has yet to pop and pictures that do not have any real value other than their value as a piece of art are selling for extremely inflated prices. Nonetheless, the NFT craze shows little signs of slowing down, as companies like Adidas, Pepsi, and Budweiser have recently released their own NFT collections that are now selling for thousands of dollars per NFT.
This mainstream coverage has also been inflated through marketing and advertising, such as Crypto.com’s decision to purchase naming rights to the Staples Center, one of the most famous arenas in the world.
The hype from NFTs and memecoins also proliferated into the cryptocurrency market itself, as almost every top coin saw a new all-time high in 2021. Most significantly, Bitcoin reached a price of $65,000 and Ethereum reached above $4,500, and the entire cryptocurrency market reached a valuation of nearly $3 trillion. Other honorable mentions include Solana, which saw a 100x increase, and Terra’s 114x increase in this past year.
Even though the memecoins and NFTs got the most news coverage, there were much more significant events in the blockchain world happening behind the scenes. For example, Ethereum released their long-anticipated EIP-1559 improvement, which sees a portion of each transaction fee burned from the total supply, which gives Ethereum the possibility of being a deflationary asset. Similarly, Cardano released their mainnet with smart contract functionality, which has been in development for over four years. Polkadot, which is hoping to be the internet of blockchains, also had their mainnet launch and is in the process of onboarding cryptocurrencies to their blockchain ecosystem via their Parachain Launch Auctions.
The adoption of cryptocurrencies has also been rapidly increasing in 2021. This is most evident in El Salvador’s decision to make Bitcoin legal tender, and the revelation of their plans to create a Bitcoin-based city that uses thermal energy from volcanoes to run Bitcoin mines. This can also be seen in Miami, where Mayor Frances Suarez has been promoting Bitcoin and offering government workers the option to be paid in the digital currency. In New York City, the financial capital of the world, newly-elected Mayor Eric Adams has been praising Bitcoin as the currency of the future, and hopes to speed up adoption in the Big Apple. Additionally, around the world, some of the world’s most prominent banks such as Deutsche Bank, Goldman Sachs, and JP Morgan have been releasing reports and analysis about digital currencies. Though not all are positive, the fact that cryptocurrencies are important enough to be noticed by some of the biggest financial institutions in the world is a step in the right direction.
2021 was without a doubt the biggest year for Bitcoin and cryptocurrencies since their creation in 2009. Though it will be difficult for 2022 to beat all of the positivity of the past year, significant events such as adoption from a major tech company, the release of Ethereum 2.0, or a groundbreaking dApp could keep crypto in the spotlight for just a little bit longer.
By Lincoln Murr
