12 key moments that fueled crypto’s record growth in 2021

It’s been a record yr for the cryptocurrency market, which briefly surpassed $3 trillion in worth in November. Bitcoin, the biggest cryptocurrency by market worth, and ether, the second-largest, hit all-time highs, whereas altcoins, like meme-inspired dogecoin, surged in reputation.

Other digital property, like nonfungible tokens, or NFTs, bought for thousands and thousands of {dollars} alongside high quality artwork in main public sale homes like Sotheby’s and Christie’s. In addition to artwork, NFTs representing in-game assets and digital land soared in worth as nicely.

Blockchain-based functions, together with decentralized finance, or DeFi, garnered curiosity from each retail and institutional buyers, pushing the growth of Web3, which is the decentralized iteration of the web based mostly on blockchain expertise that powers NFTs and underpins cryptocurrencies.

All of this helped push cryptocurrency into the mainstream in 2021.

Though there have been numerous defining moments this yr, listed here are 12 highlights.

1. Bitcoin surpassed $1 trillion in market worth for the primary time

2. Interest in NFTs exploded after Beeple’s $69 million sale

3. Elon Musk contributed to dogecoin’s record excessive

4. El Salvador adopted bitcoin as authorized tender

5. Ethereum launched EIP-1559 and prepared for the merge to Eth2

In August, a major upgrade to Ethereum went live. The upgrade, called London, included Ethereum Improvement Proposal (EIP) 1559, which modified the best way transaction charges, or “gasoline charges,” are estimated. It additionally began the discount of ether’s provide.

Additionally, Ethereum builders ready for the community’s upcoming shift to a proof of stake mannequin by way of various upgrades all year long.

Currently, Ethereum operates on a proof of work mannequin, the place miners should compete to unravel complicated puzzles in order to validate transactions. This mannequin will get plenty of criticism for its environmental influence because it requires an excessive quantity of pc energy.

In 2022, Ethereum plans to shift to a proof of stake mannequin, the place customers can solely validate transactions in line with what number of cash they maintain, fairly than the energy-intensive mining rigs used now. This transfer is a part of the merge to Ethereum 2.0, or Eth2.

Eth2 will likely be vastly impactful, since it would change the Ethereum infrastructure and finally make mining out of date.

6. Over $600 million was initially stolen in a record DeFi hack

In August, DeFi platform Poly Network was hacked. Initially, over $600 million was stolen. 

Experts said that the hacker was able to exploit an issue within the network’s code. Though the hacker ultimately returned the stolen funds, it was one of the biggest cryptocurrency thefts ever.

This kind of fraud was not uncommon throughout the year. Over $7.7 billion was stolen in cryptocurrency scams worldwide in 2021, according to a report by blockchain analytics agency Chainalysis. That’s an 81% rise in comparison with 2020.

Rug pulls, a sort of rip-off the place builders abandon a challenge and depart with buyers’ funds, grew to become the “go-to rip-off” of the DeFi ecosystem, Chainalysis wrote in its report. In 2021, rug pulls accounted for over $2.8 billion stolen, or 37% of all cryptocurrency rip-off income, in comparison with 1% in 2020. 

7. China banned cryptocurrency — once more

In September, the People’s Bank of China confirmed its continued crackdown on cryptocurrency.

According to a Q&A on its website, the PBOC said that all crypto-related activities are illegal in China, including services such as trading digital assets, order matching, token issuance and derivatives. In addition, overseas crypto exchanges providing services in mainland China are also illegal, the PBOC said.

China’s renewed crackdown on bitcoin mining throughout the year pushed the market elsewhere, and in October, data from the University of Cambridge showed that the U.S. grew to become the No. 1 vacation spot for bitcoin miners.

The information acknowledged that 35.4% of bitcoin’s hashrate, which is the collective computing energy of all miners, was in the U.S. as of July, overriding China for the primary time. Cambridge additionally discovered that China’s common month-to-month share of the worldwide hashrate in July zeroed out, which was a significant reversal from September 2020 when China captured about 67% of the market.

8. The first U.S. futures-based bitcoin ETF launched

9. The first bitcoin upgrade in four years activated

10. Lawmakers focused on regulation as crypto lobbyists emerged

11. Ethereum rivals earn market share

As demand for Ethereum, the most used blockchain network, surged this yr, different initiatives emerged in an try to compete.

Two embrace Avalanche and Solana, each of which launched in 2020 as platforms for sensible contracts and the creation of decentralized functions. Each of their tokens, AVAX and SOL, respectively, jumped into the highest 10 cryptocurrencies and earned market share among the many relaxation.

As a results of rivals reminiscent of these, the full worth locked (TVL) on DeFi increased seven times year-over-year, surpassing $200 billion, DappRadar reported. However, almost 60% of the TVL nonetheless stays on Ethereum.

12. DAOs enter the mainstream

Disclosure: “Saturday Night Live” is a TV present of NBCUniversal, the mum or dad firm of CNBC.


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About the Author: Daniel