As new investors stepped into the sector, Blockchain, NFT, DeFi, and Metaverse became the most popular words on the agenda. So much so that in the Google search trends in Turkey in 2021, we see that the searches for the term “Bitcoin” are more than 300 percent compared to the previous year.
So, why was 2021 such an important year?
In 2021, Bitcoin investments of institutional players and companies’ plans and projects for the crypto money sector came to the fore. The interest of institutions accelerated the adoption of the masses. This has prompted regulators to take action. While the said regulation studies increased the confidence of investors, new developments such as DeFi, NFT and GameFi, which are based on blockchain technology, also had a great impact. Let’s take a brief look at how this cycle happens.
Bitcoin has attracted the attention of corporate companies (and innovative business people).
Institutional investors’ interest in Bitcoin started in the last months of 2020 and continued into 2021. These investors, including Tesla, Microstrategy, Square and Coinbase, hold billions of dollars worth of cryptocurrencies today.
Of course, every statement made by the very popular leaders of these companies is followed closely by the industry. In February, Elon Musk announced that Tesla bought $1.5 billion worth of Bitcoin and also plans to sell cars with Bitcoin.
While this approach was seen as an important development that created confidence for the industry, the negative comments he made about the environmental impact of Bitcoin in the following months confused them. Although all these statements caused serious fluctuations in the price of Bitcoin, they did not have a lasting effect and the number of users on cryptocurrency exchanges increased.
One of the names that attracted the most attention with his Bitcoin-related posts in the last months of the year was Twitter CEO Jack Dorsey, who said, “If I wasn’t on Square or Twitter, I would be working on Bitcoin.” Frequently voicing his belief in Bitcoin, Dorsey launched a $23.6 million Bitcoin fund during the year.
Payments company Square, on the other hand, announced plans to move it into the decentralized financial services market via Bitcoin, and recently changed the company’s name to Block.
Alongside institutional investors, the steps of leading “traditional” companies towards the crypto money sector came to the fore. Visa said it has launched a consulting app to assist its clients in the world of cryptocurrencies. Mastercard, on the other hand, made a statement that it paved the way for its contracted banks to show more flexibility in Bitcoin and cryptocurrencies. AMC, the largest movie theater chain in the USA, announced that movie tickets can be purchased with cryptocurrencies.
In many countries, steps have been taken to integrate the crypto money industry with the existing system.
The public offering of Coinbase in April with a valuation of $86 billion had a great impact. The fact that one of the largest companies in a sector, where the markets were approaching with a question mark until recently and public regulators took a cautious attitude, was offered to the public with a high valuation created the expectation that the regulatory institutions will regulate the companies operating in the sector and oversee Bitcoin and the ecosystem that develops around it.
In September, El Salvador became the first country to declare Bitcoin its official currency. With this step, 2.1 million people in the country started using the digital currency wallet Chivo. The next step of the government in El Salvador, which has a population of 6.5 million, was the decision to issue Bitcoin bonds worth $ 1 billion and for 10 years, despite the IMF’s warnings.
In October, the first exchange-traded fund (ETF) based on Bitcoin futures contracts began trading on the New York Stock Exchange (NYSE). The first ETF was owned by Proshares, and many Bitcoin ETFs were subsequently approved. According to Forbes, the global crypto ETF market, which reached a size of $ 20.23 billion on November 30, grew by 549% compared to the end of 2020.
The $ 1.2 trillion infrastructure package approved by US President Biden in November included the definition of “broker” for businesses in the crypto money industry. With the legalization of the bill, the US Internal Revenue Service will be able to request reports from those operating in the blockchain network, and it will open the way for taxation on the earnings of those engaged in this activity. Enforcement of the law in January 2024; It is suggested that some changes may be made during this period.
New business models developed with blockchain technology began to come to the fore.
With the smart contracts feature of the Ethereum network, which ranks second after Bitcoin with its market value, in addition to interpersonal money transfer; Many different business models, including prominent trends such as DeFi and NFT, began to be constructed. With the development of new business models and the increased processing load on the network, the transition to the more scalable and nature-friendly Proof-of-Stake model has begun.
The implementation of more efficient consensus algorithms related to this process, which we call Ethereum 2.0, and their adoption by blockchain networks are welcomed. The expectations are that the transition to Web 3.0 will accelerate with all these steps.
DeFi was one of the most heard concepts outside of the metaverse throughout the year. The growth in DeFi, defined as the banking sector of the future, has approached from $600 million in 2020 to $300 billion by the end of 2021.
In the state of Wyoming, which has become an important center of studies on crypto assets and blockchain in the USA, a regulation proposal has been submitted so that DAOs, which are decentralized autonomous organizations, can be defined within the framework of the current regulation.
In case of enactment of the law, DAOs can be defined as legal entities. Thus, DAOs will have rights such as employment, opening a bank account and signing authority. In addition, DAOs will be able to own physical assets, and the functioning of smart contracts belonging to the relevant DAO and the rights of the participants will be protected.
‘NFT’ becomes word of the year, ‘Metaverse’ arouses curiosity
The popularity of NFTs, which we started to hear in the first months of 2021, has grown so rapidly that Collins Dictionary has designated “NFT” as the “word of the year”. In March, US artist Beeple’s NFT painting “Everydays: The First 5000 Days” attracted the attention of the whole world when it found a buyer for 69.3 million dollars. Throughout the year, artists from all over the world, in many different branches of art, have NFTed and sold thousands of their works. In December, it broke a record with sales of 91 million dollars, thanks to the gamified sales strategy created by Turkish artist Murat Pak with 312,686 different works and participated by 28,000 collectors.
NFTs initially appeared as the digitization of art, but in the following months, it became much more important as a “digital asset” with new usage areas in different sectors.
Metaverse, on the other hand, has become an area where the world’s leading companies from all sectors invest. Huobi Ventures has also become one of the important companies investing in the GameFi and metaverse world with a fund of 9 million dollars allocated in 2021.
Metaverse was an important response in the art world as well as companies. We can exemplify the potential of Metaverse with Fortnite, one of the most popular online games of the last period. At the end of the season, more than 12 million people attended the concert given by the famous rap artist Travis Scott in the game universe. Sotheby’s, one of the largest auction houses in the world, opened an auction house in this world.
So, what awaits us in 2022?
The developments in all these areas will be followed closely in 2022; I think that what is happening in the crypto money industry will not be limited to Bitcoin pricing.
In my article next week, I will talk about the trends we expect to come to the fore in 2022.