2021 Cryptocurrency Review

【TL; DR】
1. The emergence of NFTs, the metaverse and Web 3.0 in 2021 has turn the field of encryption into a public topic of conversation.
2. The regulatory policies around cryptocurrency in various countries has changed rapidly and is gradually moving towards polarization.
3. Bitcoin surpassed crude oil and natural gas as the best performing asset in 2021.

In 2021, the first country to use Bitcoin as legal tender emerged; The Financial Services Committee of the U.S. House of Representatives held an equal dialogue with encryption experts to accelerate the implementation of cryptocurrency supervision; Canada launched its native Bitcoin ETF; NFTs and the metaverse were born, turning cryptocurrency from a niche trend to a public topic of conversation; The concepts of the metaverse and Web 3.0 attracted major technology and Internet companies.

For cryptocurrency, this year may be gratifying. However, we also see that global regulation is gradually moving towards polarization. No one knows whether regulatory policies are good or bad for the encryption field. This has not been the best year or the worst year. In the market, perhaps keeping calm is the best way to survive. Looking back on the year we were in, we experienced and witnessed many of the ups and downs of the industry together.

NFTs, The Metaverse & Web 3.0

In March, Christie's auction house auctioned an NFT with a final trading price of US $69.34 million. This event became the explosion point for NFTs by achieving great exposure, which ignited the global NFT boom. People are keen to use NFT avatars on social platforms. The valuable NFT avatars used by various stars and bloggers caused NFTs to become a hot topic on social media. Google Trends shows that this year, users searched for "NFT" more than "encryption" or any specific cryptocurrency.


Following the NFT boom, the "Metaverse" has come into the spotlight. Major technology companies have announced their plan to enter the field of the "Metaverse", and the number of trademark applications of the Metaverse exceeded 12,000. Facebook, the American social media company, changed its name to Meta and announced the creation of a new product team to develop the "Metaverse".

The concept of the "Metaverse" is not new to us. We all have had a glimpse of this magical space in the film Ready Player One. At present, GameFi has let us experience the world of the "Metaverse" in advance. Gaming platforms such as Axie Infinity and Decentraland, enable users to earn income while experiencing an alternative lifestyle in the "quasi Metaverse." Taking current geopolitical circumstances into consideration, it is not surprising that people naturally gravitated towards the idea of moving freely in a multiverse of metaverses while being able to increase their wealth economically through the gamification of “play to earn.”


With the emergence of the concept of the Metaverse, Web 3.0 has quickly become the central issue in the blockchain field.. People realize that the current web 2.0 era has been monopolized by major technology giants, who have controlled data information and resources such as content creation and social networking.

An equal and decentralized Internet environment may not come into being until the full emergence of the era of Web 3.0.

Global Regulatory Trends

El Salvador Regards Bitcoin As National Currency

In the month of June this year, the El Salvadoran Congress voted to approve the proposal of Bitcoin as a national currency that was submitted by the president. In September, Bitcoin officially became legal tender in El Salvador, and therefore became the first country in the world to use Bitcoin as legal tender.

The United States Included Cryptocurrency in Its Regulatory Plan

In the month of October this year, the OCC (Office of the Comptroller of the Currency) released the banking supervision operation plan for the fiscal year 2022, and cryptocurrency was included in the plan for the first time.

In December, the House Financial Services Committee held hearings on the crypto industry and convened executives of relevant companies for discussion. The hearing was rated by the media as "the most friendly hearing to the crypto industry in history", which also made the experts of the crypto industry optimistic about future crypto regulation.

South Korea proposes to ban anonymous transactions of cryptocurrency and requires all P2E game software in the app store to be removed.

In order to eliminate the use of cryptocurrency for illegal activities and money laundering, South Korea plans to ban all anonymous virtual currency transactions, starting from March 2022. South Korea will ban withdrawals from the Korean exchange to non KYC wallets. In the future, when the exchange transmits virtual assets such as Bitcoin or Ethereum, the record of "who sends and who receives" will be kept, and the transfer can only be made between "licensed exchanges”.

In December, the South Korean government asked to delete the existing P2E games from Google Play and the iPhone App store, and asked the main mobile app market to "prohibit the launch of any game that needs to be purchased in the APP before playing ".

The Reserve Bank of India supports a total ban on cryptocurrencies

In December, the Reserve Bank of India expressed its full support for the prohibition of cryptocurrency to its Central Committee. According to informed sources, this may be related to the Reserve Bank of India who spoke in detail on cryptocurrency, the macroeconomy, financial stability and foreign exchange management to the Central Committee.

China regulates cryptocurrency mining and speculation in digital asset trading

In September, China's National Development and Reform Commission(NDRC), as well as the People's Bank Of China(PBOC) and other departments issued a series of announcements on regulating mining and speculation in crypto trading. The NDRC and other departments issued notices on regulating cryptocurrency "mining." It mentioned the strengthening of double constraints on energy consumption for new "mining" projects. Following the issuance of the announcement, provinces and municipalities across the country started self-examination of their "mining" activities with the aim of eliminating operations. By December, 15 provinces in China had carried out special rectification for their "mining" operations.

Russia's central bank intends to impose a total ban on cryptocurrencies, and the Savings Bank of the Russian Federation is to launch a blockchain ETF.

In December, the Governor of the Russian Central Bank said that the Central Bank of the Russian Federation plans to impose a total ban on the crypto sector in the near future. In the same month, the Savings Bank of the Russian Federation launched a blockchain ETF to track the performance of major crypto companies, such as Coinbase. Called "Sber - Blockchain Economy", the fund is about to trade under the ticker $SBBE. According to the official announcement, it will be "the first Russian ETF that allows investors to make money in the blockchain market".

Bitcoin

Bitcoin outperformed crude oil and natural gas as the best-performing asset in 2021, according to third-party data. At the beginning of the year 2021, the price of Bitcoin continued the previous year's rally and surged to the $20,000 mark. And then with Tesla purchasing Bitcoin and Elon Musk's support for the cryptocurrency, BTC saw a massive bullish run again, skyrocketing to $60,000. In May, China issued an announcement to regulate cryptocurrency mining and speculation, causing the BTC price and its network computing power to plummet. In December, however, BTC saw a short-lived price correction of over 20% and network-wide computing power has gradually recovered to pre-regulation levels of 190.55 EH/s.

The year 2021 also saw a soft fork called "Taproot", the most significant technical upgrade to the Bitcoin protocol since SegWit in 2017. It improved the anonymity of transactions on the Bitcoin network and improved transaction performance by changing the data structure of the blocks themselves.

Conclusion

2021 witnessed many more examples of practical applications of blockchain technology. A growing number of people are joining this space and making it more popular. When it comes to blockchain, people are no longer just referring to price, but are eager to utilize this technology to foresee more real-life possibilities. In an era where the epidemic is continuously prevailing, perhaps, the "total digitalization" based on blockchain technology is one of the keys to the world of tomorrow.

Author: Jill Ma, Gate.io Researcher
*This article represents only the views of the researcher and does not constitute any investment suggestions.
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