Key Takeaways
- 2021 was the most eventful year for the crypto industry to date.
- Major events of the year included a boom in meme coins and NFTs, crypto adoption at a nation state level, and rising corporate interest in the Metaverse.
- Mainstream adoption and the growth of the Metaverse look set to be major trends for the year ahead.
From meme coins to the Metaverse, join Crypto Briefing as we look back on the top 10 moments that defined the crypto space this year.
2021 in Crypto
A lot can happen in a year, and 2021 was no exception. For crypto enthusiasts, it was full of surprises. The growing interest in digital assets saw the first nation state adopting Bitcoin as legal tender, dog coins taking center stage as retail joined the market, and major pop artists rushing to get to grips with Ethereum to mint their first NFTs. In fact, the NFT explosion might have been the biggest talking point of the year—and not only among crypto’s ardent believers. There were also plenty of skeptics who critiqued the environmental impact of Proof-of-Work blockchains and speculative nature of the market as digital rocks traded for millions of dollars and big companies like Discord and Twitter hinted at moves to adopt the technology. 2021 was also the year that regulators started to pay close attention to the industry. Binance suffered under the heat, while the SEC Chair and a select few members of the Senate did their best to hold the United States back from benefiting from crypto’s technological promise. Needless to say, picking the most notable moments out of a seemingly endless list of significant events is a challenging task. And yet, we did it. So follow the Crypto Briefing editorial team along as we look back on the 10 moments that defined crypto in 2021.
Elon Musk Helps Dogecoin Rally
It might be hard to remember as far back as January, but the original Shiba Inu-themed coin began the year trading at less than one-hundredth of a penny. Dogecoin’s rally to highs of $0.73 marked one of the year’s biggest and least expected trends: the meme coin frenzy.
Dogecoin lacks any sort of fundamental value proposition aside from its power as a meme, but this didn’t stop it from amassing a huge cult following, particularly after the WallStreetBets-led GameStop saga that unfolded in January. Eventually, Dogecoin attracted the attention of celebrities such as Gene Simmons and Snoop Dogg. However, it was Elon Musk who went above and beyond to take Dogecoin to the moon. The Tesla and SpaceX CEO actively endorsed the asset to more than 60 million Twitter followers and is regarded as the biggest driving force behind the coin’s unprecedented surge.
Throughout Q1, several tweets from Musk caused DOGE prices to spike as mainstream media outlets raised awareness by reporting on the situation. Soon, more big names such as Mark Cuban and Ellen DeGeneres fueled the rally by weighing in with their own takes.
The mania culminated in Musk’s highly-anticipated appearance on NBC’s Saturday Night Live, where he helped the bubble burst by describing Dogecoin as “a hustle,” bringing its months-long rally to an end. Dogecoin’s rise caught many people off guard, but it proved that the power of memes is a force to be reckoned with. While its price has slid lower throughout the rest of the year, copycat projects such as Shiba Inu have carried on Dogecoin’s meme-powered legacy. TC
Beeple Sells a $69.34 Million NFT
At the beginning of 2021 it was hard to find anyone outside of crypto who knew what the acronym “NFT” stood for. Now, non-fungible tokens are everywhere, thanks in large part to growing adoption among stars like Grimes and The Weeknd, and groundbreaking sales such as Beeple’s earth-shattering Christie’s auction for his “Everydays: The First 5000 Days” piece.
Described as Beeple’s magnum opus, “Everydays: The First 5000 Days” comprises 5,000 images taken from the first 5,000 days of Beeple’s “Everydays” project. It was also the first purely digital artwork to be sold at Christie’s. Like all of Beeple’s earlier NFTs, it was minted on the Ethereum blockchain.
Bidding topped $1 million in the opening minutes, but it was in the final hours that the auction truly took off. A dramatic bidding war saw the auction close at $69,346,250, making it the third most expensive piece auctioned by a living artist. The winning bidder, MetaKovan, paid for the piece using Ethereum.
The Everydays sale arguably marked the beginning of a wider NFT boom that peaked over the summer. It showed that NFTs could receive equal, or sometimes even higher valuations than traditional art, opening the door to mainstream acceptance of NFTs as a medium for art. TC
Coinbase Goes Public
On Apr. 14, Coinbase became a publicly traded company on Nasdaq under the ticker COIN. Days before its direct listing, Coinbase had posted a record-breaking earnings report, revealing that the company made $1.8 billion in the first quarter of 2021, more than its entire 2020 revenue. With such positive news, the exchange’s public offering received a great deal of hype, helping propel Bitcoin to a new all-time high. Meanwhile, the exchange’s valuation hit over $103 billion when trading started.
To mark the historic occasion, Coinbase posted a message on the Bitcoin blockchain in a nod to Satoshi Nakamoto’s Bitcoin genesis block. The exchange included a news headline from the day of its IPO, reading: “NYTimes 10/Mar/2021 House Gives Final Approval to Biden’s $1.9T Pandemic Relief Bill.”
In retrospect, many have called Coinbase’s public offering a “sell the news” event and a signal of the local market top. The day after the IPO marked the beginning of a downward trend in the cryptocurrency market that would eventually see Bitcoin test its February lows.
Regardless of the market’s short term price action, the Coinbase IPO was a landmark moment for the cryptocurrency space. It brought a heightened awareness of crypto markets to traditional financial institutions, while making significant ground for cryptocurrencies and the companies dealing with them to exist within the U.S.’ financial regulatory framework. TC
China Bans Crypto
While not technically tied to a single event, China’s increasing hostility towards digital assets and cryptocurrency mining has been a major theme throughout 2021. Signs started emerging that China was taking a harsher stance on cryptocurrency in May when state officials vowed to curb the crypto mining business in the country, with full-blown bans enforced in certain provinces. The news sent Bitcoin and the wider crypto market tumbling, as China hosted the majority of the Bitcoin hashrate at that time (following the ban, many miners relocated their operations to places like Texas and Kazakhstan).
Following on in June, China’s central bank called for a crypto trading ban in the country, prohibiting its account holders from interacting with crypto trading platforms. Although the announcement was later removed, many saw the writing on the wall, expecting more extreme measures from the Chinese government in the future.
The Chinese government reiterated its crypto crackdowns for a third time this year in September, declaring that almost all virtual currency-related activities were illegal and issuing harsher penalties for those found implicated in crypto trading and mining. As before, the market reacted negatively to the news, but by this point many had started to suspect China was manufacturing negative news, or “FUD” (fear, uncertainty, and doubt) to deliberately depress crypto asset prices. So far, China’s crypto bans appear to have had little lasting effect on the crypto industry as a whole. TC
NFT Summer
Bitcoin might still be the world’s best known cryptocurrency, but this year the mainstream couldn’t stop talking about another more recent innovation in blockchain technology: NFTs. Early in 2021, there was Beeple’s historic Christie’s sale, while major pop artists like Grimes and Kings of Leon announced their own collections of non-fungibles on Ethereum. As NFTs started to appear everywhere, so did the questionable criticisms from crypto skeptics. Still, NFT natives didn’t seem to care. By the middle of the year, NFT trading volumes were booming, helped by growing demand for avatar collections like CryptoPunks and Bored Ape Yacht Club. The interest in avatar projects and other nascent niches like generative art kickstarted what became known as “NFT summer,” a follow-on from last year’s DeFi summer in which the NFT market entered its first period of mania. At the height, the rarest JPEGs were trading for millions of dollars, and new projects were emerging on a daily basis. While the market soon got oversaturated and floor prices fell, NFT summer proved that digital collectibles had found a place at the heart of crypto, and that the space would only grow bigger over time. CW
Solana’s Meteoric Rise
“I’ll buy as much SOL has you have, right now, at $3. Sell me all you want. Then go fuck off.” Those were Sam Bankman-Fried’s now-legendary words to the crypto trader CoinMamba in a Jan. 9 tweet, months before Solana would rise to become the fifth-largest cryptocurrency by market cap. While most onlookers didn’t buy into Bankman-Fried’s conviction in the high-speed blockchain, they likely regretted it once SOL topped $250 at the peak in November.
Bankman-Fried has been a huge driving force behind the Solana ecosystem’s rapid growth through FTX’s support of the network and Alameda Research’s investment portfolio, but there were a number of other important factors that contributed to its breakout year. As crypto prices have risen, Ethereum’s surging gas fees have driven many toward cheaper alternatives—and Solana’s high-speed, low-cost transactions have proven a hit.
It’s also attracted thousands of Rust developers, which has given the blockchain a moat effect against a sea of competitors optimizing for EVM compatibility. Solana also has wealthy investors backing it and a community of DeFi and NFT speculators, many of them newer crypto entrants hoping to make a dime after missing the boat on Bitcoin and Ethereum. The combination of these factors helped Solana rise and keep rising, even after it suffered from a not-insignificant 18-hour outage back in September. In the past, crypto has seen other Ethereum competitors come and go then fade into irrelevance. If things continue like they did in 2021, Solana could be one of the few that bucks the trend. CW
Ethereum Launches EIP-1559
In August, Ethereum upgraded to a new gas fee mechanism that created a fundamental shift in its monetary policy. EIP-1559 launched as part of the network’s London hardfork, and it introduced a gas fee burn that reduced the supply of ETH rather than paying additional fees to miners.
Before EIP-1559, Ethereum users would have to place a bid for gas fees in an auction format to compete to get their transactions added to blocks. This led to frequent fee spikes that affected users’ ability to make transactions. EIP-1559 has made the fee system more predictable and stable against demand shocks.
However, the most impactful outcome of EIP-1559 has centered on Ethereum’s tokenomics. Since EIP-1559 shipped, over 1.2 million ETH worth $5 billion has been burned and put the asset on a deflationary path similar to Bitcoin’s disinflationary properties. In 2022, Ethereum is expected to move from Proof-of-Work to Proof-of-Stake when the Beacon Chain merges with Ethereum mainnet. The switch should lead to a large reduction in token issuance. Various prominent figures have forecast that ETH could become EIP-1559—meaning the amount of ETH burned would surpass the amount issued, leading the supply to deflate over time. VC
Poly Network’s $611M DeFi Hack
Crypto hacks are nothing new, but this year brought more high-value attacks, exploits, and rug pulls than ever before. Many attackers targeted decentralized applications in the burgeoning DeFi space. The one that caught everyone’s attention affected Poly Network, a cross-chain bridge with contracts on Ethereum, Polygon, and Binance Smart Chain.
In August, an unknown hacker leveraged a smart contract vulnerability in one of its bridges to steal $611 million in various crypto assets, making it the biggest crypto heist in history. Outrageously, the hacker decided to tell his side of the story to those watching by answering a Q&A discussion using Ethereum transactions following the attack. They said that they had attacked the project “for fun” and later returned the funds after negotiations with the Poly Network team. The team thanked the hacker, dubbed “Mr. Whitehack” for exposing the vulnerability, and even offered them a bounty reward for their work. VC
El Salvador Makes Bitcoin Legal Tender
Let’s be honest, 2021 wasn’t the best year for crypto naysayers. A common argument among crypto cynics is that governments would ban the asset class if it ever became too big. That argument lost its weight this year when El Salvador became the first country to introduce Bitcoin as a legal currency.
The crypto community was buzzed for weeks after President Nayib Bukele revealed his plans to make Bitcoin a national currency in El Salvador. Announcing the plans at Bitcoin 2021 in Miami, Bukele said that he hoped the move would “generate jobs and help provide financial inclusion to thousands outside the formal economy.” Bukele has since organized a $30 Bitcoin airdrop for El Salvador citizens, used the country’s abundance of volcanoes to mine Bitcoin, and bought the dip at every opportunity the market has presented.
El Salvador’s adoption was historic not only for Bitcoin but also the history of money. For millennia, countries have used legal tender laws to protect their own, state-issued currencies against competing, alternative forms of money. El Salvador broke that tradition as Bukele outlined his hopes to “push humanity, at least a tiny bit into the right direction.”
While the crypto community largely welcomed El Salvador’s move, the policy faced some opposition. Thousands of Salvadorans took to the streets to protest the policy, and officials like the International Monetary Fund and the World Bank issued several statements criticizing the decision. Meanwhile, Ethereum co-founder Vitalik Buterin slammed the country’s adoption policy in a Reddit post, describing it as “contrary to the ideals of freedom that are supposed to be so important to the crypto community” due to the ruling that stipulates that businesses must accept Bitcoin. How El Salvador’s crypto bet will pan out in the long term—and whether any other nation states will join them—remains to be seen. SS
Facebook Rebrands to Meta
If someone had told you that 2021 would see one of the FAANG giants change its name and focus to operate in a realm linked with crypto assets at the beginning of the year, you probably would have laughed at them. Except, that actually happened. In October, Facebook CEO Mark Zuckerberg announced that his company would now be known as Meta, going as far as to say that the company would be “Metaverse first” rather than “Facebook first.” The firm also allocated $10 billion toward the Metaverse and made 10,000 new hires in the European Union to work on its new vision for the future of the Internet.
The announcement was met with skepticism from cryptocurrency proponents, who pointed out that the critical component of decentraliztion would likely be missing from Meta’s plans. Still, the impact of Facebook putting its flag in the ground to acknowledge the potential of crypto has been hard to overlook. Since the announcement, many other major brands like Adidas and Nike have rushed to embrace the Metaverse. Capital has also flooded into the space, with the likes of Enjin and KuCoin launching $100 million funds focusing on the Metaverse. The crypto market has seen the tokens for Metaverse games like Metaverse and The Sandbox soar, while digital plots of land have sold for millions of dollars (Adidas and other major brands have been snapping up plots too). While the Metaverse is yet to be defined, it’s become clear that it’s become a dominant theme in crypto and will likely only grow over time. Grayscale has predicted that the Metaverse will be a $1 trillion market, so it’s not surprising that the likes of Zuckerberg are hoping to jump in. Time will tell how it pans out. BB
Disclosure: At the time of writing, the authors of this feature owned BTC, ETH, MATIC, SOL, and several other cryptocurrencies.
