The cryptocurrency and blockchain industry witnessed explosive growth in 2021, particularly within decentralized finance (DeFi) and non-fungible tokens (NFTs). This period was defined by significant price movements, institutional adoption, and the emergence of faster smart contract platforms. Below, we explore the notable successes and setbacks that shaped the sector during this pivotal year.
Major Success Stories
Kazakhstan’s Mining Ascent
When China effectively banned Bitcoin mining in May 2021, Kazakhstan quickly stepped in to accommodate displaced miners. Leveraging its affordable and abundant coal-based energy, the country saw its share of the global Bitcoin hashrate surge to 18.1% by July—a dramatic increase from just 1.4% in late 2019. While this established Kazakhstan as a critical hub for mining, questions about its long-term sustainability emerged amid reports of national power shortages during the winter months.
Coinbase’s Public Listing
Coinbase made history in April 2021 as the first major cryptocurrency exchange to go public on a U.S. stock exchange. Its Nasdaq debut was widely seen as a milestone for the industry, signaling growing institutional acceptance. Although its share price experienced volatility throughout the year, the listing underscored the maturation of crypto markets and set the stage for future public offerings in the sector.
The Rise of Solana
Solana emerged as one of the year’s most prominent blockchain platforms, praised for its high transaction throughput and scalability. Capable of processing up to 50,000 transactions per second, it attracted a growing number of DeFi and NFT projects. Despite facing several distributed denial-of-service (DDoS) attacks, Solana’s native token, SOL, climbed into the top five cryptocurrencies by market capitalization.
El Salvador’s Bitcoin Adoption
Under the leadership of President Nayib Bukele, El Salvador became the first country to adopt Bitcoin as legal tender. The government introduced initiatives such as volcano-powered mining and $30 Bitcoin airdrops to citizens. Bukele also announced plans for "Bitcoin City," a proposed digital currency-powered metropolis. While the economic impact remains debated, the move positioned El Salvador at the forefront of monetary innovation.
Beeple’s NFT Breakthrough
Digital artist Mike Winkelmann, known as Beeple, achieved a landmark sale when his NFT artwork "Everydays: The First 5000 Days" sold for $69.3 million at Christie’s. This event not only set a record for digital art but also brought global attention to the NFT market, contributing to its exponential growth throughout the year.
Avalanche Gains Momentum
Avalanche distinguished itself as another high-performance smart contract network, capturing a growing share of the DeFi total value locked (TVL). Its native token, AVAX, entered the top ten cryptocurrencies by market cap, bolstered in part by a strategic partnership with Deloitte to enhance disaster relief platforms for the U.S. government.
FTX and Sam Bankman-Fried
Sam Bankman-Fried, founder of the FTX derivatives exchange, became one of the most influential figures in crypto. FTX grew rapidly throughout the year, securing a $900 million funding round and establishing branding partnerships, including with the Miami Heat NBA team. Its expansion reflected rising interest in sophisticated crypto trading products.
OpenSea’s NFT Dominance
As the leading marketplace for NFTs, OpenSea capitalized on the digital art and collectibles boom. The platform recorded substantial revenue through its 2.5% transaction fee, underscoring the profitability of well-positioned intermediaries in the NFT ecosystem.
ProShares Bitcoin ETF
The launch of the ProShares Bitcoin Strategy ETF (BITO) marked a significant regulatory milestone. As the first U.S.-approved Bitcoin futures ETF, it attracted considerable trading volume upon debut. However, some investors expressed disappointment that it did not directly track spot Bitcoin prices.
Notable Setbacks
Meta’s Diem Stablecoin Struggles
Formerly known as Libra, the Diem stablecoin project led by Meta (formerly Facebook) faced continued delays and regulatory challenges throughout 2021. Key executives departed, and the project’s future grew increasingly uncertain amid rebranding efforts and heightened regulatory scrutiny.
Central Bank of Nigeria’s Restrictions
The Central Bank of Nigeria directed financial institutions to close accounts associated with cryptocurrency transactions, citing concerns over illicit activities. Despite these measures, peer-to-peer Bitcoin trading continued to thrive, making Nigeria the second-largest such market globally by August 2021.
Legal Troubles for Virgil Griffith
Ethereum developer Virgil Griffith pleaded guilty to conspiracy charges after delivering a presentation on blockchain technology in North Korea, violating U.S. sanctions. His case served as a cautionary tale regarding the legal risks associated with international crypto activities.
Iron Finance’s Collapse
The decentralized finance project Iron Finance experienced a catastrophic collapse when its native token, TITAN, plummeted to nearly zero within hours. The incident, described as a "crypto bank run," highlighted the risks associated with algorithmic stablecoins and inadequate stabilization mechanisms. Prominent investors, including Mark Cuban, suffered losses and called for clearer regulatory frameworks.
Frequently Asked Questions
What made Solana stand out in 2021?
Solana gained attention for its high transaction speed and scalability, processing up to 50,000 transactions per second. This made it an attractive platform for DeFi and NFT projects seeking alternatives to slower and more expensive networks.
Why was Coinbase’s IPO significant?
Coinbase’s public listing represented a major step toward the institutional acceptance of cryptocurrencies. It demonstrated that crypto businesses could meet regulatory requirements and achieve mainstream financial recognition.
What was the impact of El Salvador’s Bitcoin law?
El Salvador’s adoption of Bitcoin as legal tender sparked global debate about the role of cryptocurrencies in national economies. While intended to promote financial inclusion and innovation, the move also faced criticism regarding volatility and implementation.
How did OpenSea dominate the NFT market?
OpenSea benefited from being an early and user-friendly marketplace for NFTs. Its low transaction fee and wide selection of digital assets made it the preferred platform for artists and collectors alike.
What caused the collapse of Iron Finance?
Iron Finance’s collapse resulted from design flaws in its stabilization mechanism, which could not withstand rapid selling pressure. The event underscored the importance of robust economic designs in DeFi protocols.
Why did the ProShares ETF receive mixed reactions?
While celebrated as a regulatory milestone, the ProShares ETF disappointed some investors because it was based on Bitcoin futures rather than spot prices. This structure introduced additional complexity and cost compared to a direct Bitcoin ETF.
The events of 2021 illustrated both the potential and the challenges within the crypto industry. From groundbreaking innovations to cautionary failures, the year set the stage for continued evolution and maturation. For those interested in exploring real-time market tools, staying informed remains essential in this dynamic landscape.