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2021 brought a new wave of popularity to the cryptocurrency industry. Technologies such as NFTs and the metaverse have become widespread, and the list of countries that have officially recognized blockchain has increased. However, states reacted differently to the rapid development of digital currencies.
For example, El Salvador adopted Bitcoin as legal tender, and the US Securities and Exchange Commission (SEC) listed the first Bitcoin ETFs on the Chicago Mercantile Exchange (CME). Canada has also launched its own Bitcoin ETFs, promoting acceptance of the cryptocurrency among institutional investors.
NFTs have seen huge success this year with record sales and performance. What was a small cryptocurrency niche in previous years has become a new trend. Binance launched its own NFT platform to meet growing demand, with Fortune 500 companies increasingly investing in NFTs.
NFTs are also playing an important role in the development of metaverses, another popular trend in 2021. Tech giants and small developers are participating in the creation of a 3D virtual space using cryptocurrencies. The topic of virtual interaction is also related to Web3, the concept of decentralization of interaction on the Internet. This year, major investment firms have shown support for the adoption of blockchain in online interaction, data, privacy and finance.
Another news is fan tokens, which provide benefits for fans on the blockchain. Their sales this year have exceeded all expectations thanks to wide distribution among fans of sports clubs, including FC Porto and S.S. Lazio.
At the end of the year, Bitcoin reached a new all-time high (ATH) of almost $70,000.
Introduction
Something new happens in the world of cryptocurrencies every year. However, 2021 turned out to be particularly eventful: from the sale of expensive NFT works to new all-time highs for Bitcoin. Let's remember everything that happened this year.
Cryptocurrency regulation
Over the years, cryptocurrency has gradually become regulated by legislation. However, not all governments view the new trend in the same way. Some states, such as El Salvador, have recognized digital currencies at the official level, beneficially integrating them into everyday life. Others, on the contrary, tightened taxation in an effort to control the new technology.
Salvador
On June 5, 2021, El Salvador made headlines around the world when it announced that Bitcoin would become the country's official means of payment. Since September 7, 2021, all enterprises in the country have truly begun to accept BTC as payment for goods and services. Thus, El Salvador became the first state to recognize Bitcoin as a payment method. In honor of this event, every citizen who downloaded the government digital crypto wallet received $30 in Bitcoin.
El Salvador is using Bitcoin to reduce transfer fees since a large portion of the population receives money from abroad. In addition, blockchain can solve the problem of access to banking services for the majority of Salvadorans. Some see El Salvador's move as a way to improve its reputation, as the country is known for its large number of criminal gangs and underground economy.
USA
In addition to the launch of a Bitcoin ETF, there has been a lot of discussion in the US regarding the SEC. In particular, the complexities of regulation of stablecoins and decentralized finance (DeFi) were discussed. Therefore, most likely, next year we will have a fresh piece of news.
Bitcoin ETF
The creation and regulation of Bitcoin ETFs are seen by traditional investors as key to cryptocurrency adoption. Unlike private investors, highly regulated companies and funds cannot simply open a wallet and start trading cryptocurrency. In 2021, after much discussion among regulators in Canada and the United States, Bitcoin ETFs were released that allow Bitcoin to be traded without owning the asset. Many Bitcoin ETFs, such as BITO, use BTC futures contracts as the underlying asset.
The SEC favored futures ETFs linked to existing bitcoin futures on the Chicago Mercantile Exchange (CME). Since these derivatives are already regulated in the US, there were no major problems with the implementation of Bitcoin ETFs. There are currently three ETF fund options in the US, with the possibility of physically backed funds emerging in the future.
Non-fungible tokens (NFTs)
Although NFTs have been around for a long time in the blockchain world, 2021 has seen them gain immense popularity. In March, the most expensive NFT piece, “Everyone: The First 5,000 Days,” was sold for $69,000,000. Another area of use was NFT games, which also quickly gained popularity.
Establishing the authenticity of an NFT work is quite difficult. However, this issue was resolved with the help of digital rarity, which solved the problem of copying that arose with proving the authenticity of digital assets and files. The sheer number of use cases for NFTs allows developers to experiment across industries, so we can expect the trend to grow in popularity in 2022.
Metaverse
Another common trend in 2021 has been the development of metaverses. The main reason lies in the interest from the tech giants. On October 28, Facebook changed its name to Meta and outlined a vision of a three-dimensional virtual universe that connects different aspects of life. Strong interest in the concept of the metaverse can be seen in Google Trends.
However, Meta is not the only company. The creators of many crypto projects have built entire worlds based on the concept of the metaverse. Thus, Decentraland allows you to explore a three-dimensional world, own virtual land, and even earn money using the play-to-earn mechanism. Blockchain games like Axie Infinity also combine gaming experience with a steady income. And although there is no single metaverse yet, its separate parts are gradually beginning to appear.
Web3
Web3 is the concept of a new version of the Internet based on public blockchains such as Ethereum or Binance Smart Chain. The term was first coined in 2014 by Gavin Wood, co-founder of Ethereum and founder of Polkadot. However, it was only this year that the concept began to gain traction, especially after interest from major investment firms such as Andreessen Horowitz in October 2021.
Web3 aims to use decentralization as the basis for new developments on the Internet. How does this project differ from the metaverse projects? The Metaverse is a new virtual world. Web3, in turn, focuses more on the existing Internet as a way to manage identity, personal information and interactions. The concept will also allow sites and applications to make better use of large amounts of data to improve network performance.
NFTs, DAOs (decentralized autonomous organizations) and DeFi are aiming to become important parts of the Internet, like email, PayPal and 2FA (two-factor authentication) for Web 1.0 and Web 2.0.
Binance Fan Tokens
October 21, 2021 Binance and S.S. Lazio launched the first fan tokens, whose owners receive unique privileges: the right to participate in voting for team decisions, the opportunity to earn NFTs and interact with their favorite clubs.
Despite the rise in popularity of fan tokens in 2021, their history began much earlier. Fan tokens emerged at the end of 2019 with the launch of JUV, a Juventus token that allows you to interact with the team and gain access to unique benefits.
On Binance Launchpool, users can stake BNB and receive a share of the Binance Fan Tokens on offer. At the moment sales are going very well. For example, the LAZIO token was owned by 225,583 users who allocated 8,110,631.97 BNB, that is, sales exceeded the target amount by 1,005 times.
Cryptocurrency market and historical highs of Bitcoin
After skyrocketing last year, Bitcoin is back above its all-time high. Let's look at the graph.
Point 1 shows that the rally at the end of 2020 continued into January 2021 with a peak of approximately $41,000. After fears of a bear market followed by a correction, Bitcoin continued to rise and reached $63,000 (point 2). The events of June had a negative impact on the coin’s exchange rate, as about half of all Bitcoin mining capacity was turned off in a matter of days.
However, the Bitcoin rate rose again, reaching a new all-time high of about $69,000 in November. Let's also look at the all-time highs of some of the other cryptocurrencies with the largest market caps.
Summary
One of the hot topics of 2021 was the introduction of new ways to use blockchains - NFTs and metaverses. Today, Bitcoin, mining and cryptocurrency trading are becoming increasingly popular among users around the world. 2021 is different from previous ones with a large variety of trends that will continue to develop next year. It looks like 2022 has quite a few surprises in store.
