Bitcoin is one of the most turbulent and volatile assets in today’s market. The roller coaster ride that it has been on over the past few years shows no signs of slowing down, but some analysts are predicting a future for Bitcoin by 2021. What does this mean for other cryptocurrencies? Will there be any new contenders to take up its role at the forefront or will BTC be surpassed?
The year for Bitcoin is the first in a series of articles that will give an overview on the current state of crypto from 2021. These articles are meant to be brief and informative, not overly technical nor do they delve into speculative predictions. The goal is just to lay out some facts as we approach this formative time in cryptocurrency history
The “top 3 cryptocurrency to invest in 2021” is a list of the top coins that are predicted to be worth more than $1,000 by the end of 2021.
While 2021 provided some relief for crypto investors throughout the world, it was still mostly driven by anxieties that originally surfaced in 2020. The ground under everyone’s feet continued to shift, even if they didn’t realize it, from growing inflation rates to another wave of coronavirus-related epidemics.
While many traditional financial institutions expected Bitcoin (BTC) to easily reach a price target of $100,000 by the turn of the year, the flagship crypto continued to exhibit high volatility despite hitting an all-time high of $69,000 earlier in November, and essentially just moved in a broad sideways channel for the past ten months.
However, Bitcoin has seen a lot of changes this year, most of which have been beneficial but some of which have been unfavorable. Many of these ideas, as well as others, will be explored in this article. So, without further ado, let’s go right into the meat of the issue.
El Salvador is leading the way in terms of adoption.
El Salvador, often known as the “Land of Volcanoes,” startled the world by becoming the first government to embrace Bitcoin as legal cash in 2021, perhaps opening the way for other nations to follow suit, particularly those struggling with high inflation, such as Turkey, Venezuela, and Zimbabwe.
I just emailed a photo of the #BitcoinLaw to Congress. twitter.com/DljnxsXlyt
June 9, 2021 — Nayib Bukele (@nayibbukele)
And, although the move didn’t exactly turn El Salvadorans into BTC believers overnight, President Nayib Bukele has been quite savvy in his approach to resolving his country’s economic issues. Citizens were granted access to a Chivo cryptocurrency wallet, and he promised to fix the country’s present internet connection problems.
Finally, El Salvador’s highly touted “Bitcoin Bond” — which uses a federated BTC sidechain to issue a legally viable monetary bond — is being viewed as an appealing money-making avenue by many because it provides users with a novel way of investing in the currency as well as a chance to obtain citizenship in the country.
Bitcoin transactions are gaining traction.
Over the course of 2021, the Lightning Network (LN) saw enormous growth, with an increasing quantity of cash being pumped into different LN channels – particularly as additional nodes appeared on the network apparently every day.
At the time of writing, more over 3,300 BTC were locked across multiple public Lightning channels, with additional monies presumably stored behind other private/unannounced channel networks now being run between various exchanges.
In terms of enhancements, the Lightning Network’s infrastructure (such as Amboss) received a number of big overhauls this year, enhancing the system’s native node administrative capacity as well as retail consumer UX for Lightning wallets. In the future, LN’s BOLT-12 module promises to simplify recurring payments while also enabling additional helpful features like contributions through static QR codes.
Taproot finally makes its long-awaited appearance.
The activation of the Taproot update was one of the major successes for the Bitcoin network since the SegWit redesign of 2017 — a procedure that expanded the block size limit on the asset’s blockchain by deleting signature data from transactions contained in each block —
Taproot is primarily intended to assist the flagship cryptocurrency’s community of supporters and key developers in gaining greater access to a “policy privacy” framework, letting them to avoid disclosing all of the conceivable ways in which they may spend their BTC.
Support for Bitcoin Node Taproot: 63.49 percent
Number of nodes: 31329 is the number assigned to the taproot. 17122 is a non-enforcement number. 33 luxuries 863 svgeSmRKxM pic.twitter.com/svgeSmRKxM
January 1, 2022 — Taproot Signal (@taproot signal)
To be more technical, the upgrade improves the effectiveness of some multisignature arrangements while also making individual Lightning Network transactions more safe and private.
However, more work may be required before these benefits can truly be realized, particularly on the MuSig2 front — a simple and highly practical two-round multisignature scheme that makes transaction facilitation hassle-free for Bitcoiners — as well as certain technical niches associated with Lightning Network-based client implementations and improved hardware wallet support functionality (meant solely for Taproot).
China has produced a mining disturbance.
The fact that China issued an unambiguous blanket ban on its local crypto economy upset Bitcoiners, as well as crypto fans in general, this past calendar year.
Despite the fact that the eastern powerhouse has issued numerous such prohibitions in the past, the threat this time was far more serious, as a large number of crypto mining companies were forced to relocate from the country’s borders in order to stay afloat — with many having to shut down permanently.
Following the huge exodus that followed the ban’s implementation, Bitcoin’s hash rate plummeted to new lows, dropping from roughly 180 exa-hashes per second (EH/s) to around 90 exa-hashes per second (EH/s), only to quickly recover. Miners traveling to more friendly regions of the globe, such as the United States of America, Kazakhstan, Canada, Belarus, and others, were credited for most of the BTC hash rate recovery.
Following the restriction, the crypto market saw an increase in the number of publicly traded miners, demonstrating these companies’ capacity to tap into debt capital markets and expand substantially, due in large part to their ability to borrow enormous quantities of money against their locally produced coin.
Infrastructure construction is on the rise.
Bitcoin’s ever-expanding network of supporters continues to invest in the digital currency’s technological advancement. Organizations like Spiral, Blockstream, and MIT’s Digital Currency Initiative have all given large sums of money and sponsorship funds to aid Bitcoin Core developers all across the world.
Chaincode Labs, the Human Rights Foundation, and the cryptocurrency exchange BitMEX all made significant donations to help the Bitcoin ecosystem grow. The grants were intended to help awardees continue their work on improving the reliability of the Lightning Network’s payment system as well as improving the implementation of the Stratum v2 Bitcoin mining pool protocol.
Bitcoin is being added to the coffers of major mainstream corporations.
No discussion of Bitcoin’s just finished calendar year would be complete without mentioning how some of the world’s most powerful investors continued to pile into the flagship cryptocurrency. In this sense, the year 2021 began with the Dogefather, Tesla CEO Elon Musk, spending $1.5 billion in Bitcoin, making it one of the greatest investments by a mainstream firm in the flagship cryptocurrency.
Tesla even said in an SEC filing that it would enable its customers to utilize BTC as a form of payment for its different services for a certain period of time – a decision that was later reversed. As was to be predicted, the digital asset’s price rocketed to an all-time high of $43,000 in a matter of minutes after Musk’s apparent support for it became public.
Bitcoin may now be used to purchase a Tesla.
March 24, 2021 — Elon Musk (@elonmusk)
Microstrategy CEO Michel Saylor, whose maximalist mindset was represented by his steady accretion of the prime cryptocurrency, both while it was hovering at its all-time highs and lowest levels, was the only guy to outdo Musk with his Bitcoin acquisitions this year. Microstrategy currently owns a massive 124,391 bitcoins, which were acquired for roughly $6 billion. According to conservative calculations, the corporation has already profited $2.1 from its BTC investments.
Financial institutions get involved.
Soon after Musk’s debut into the realm of Bitcoin, a slew of other financial services behemoths, like Mastercard and Bank of New York Mellon, began providing a broad variety of crypto-related services to its customers, ranging from custody to payments.
Similarly, U.S. Bank, the country’s fifth-largest commercial bank, said that it was providing a fully functioning crypto custody service to its customers, supporting them in keeping their private keys for Bitcoin, Bitcoin Cash (BCH), and Litecoin (LTC) with the assistance of NYDIG. State Street and Northern Trust were among the other large financial companies in the United States to make similar announcements.
Marathon Patent Group, a Nasdaq-listed company, made a $150 million Bitcoin acquisition as part of its reserves at the start of the year, while social media behemoth Twitter enabled a ‘crypto tipping’ option for its users. Not only that, but Square, the payments company led by Jack Dorsey, said that it will devote 5% of its assets to Bitcoin, believed to be worth $170 million.
Finally, a number of other businesses, including WeWork, AXA, and Substack, announced their intention to begin taking Bitcoin payments, a move that has been imitated by companies with a lesser market size all around the world.
The influence of Bitcoin on the environment has been a topic of discussion.
Last year, another big source of debate around Bitcoin was the currency’s environmental effect, with a growing number of studies demonstrating the digital currency’s huge yearly power usage.
To put things in context, according to a University of Cambridge study, Bitcoin uses 707 kWh each transaction, which equates to around 121.36 terawatt-hours per year. Many large nations, like Argentina, the Netherlands, and the United Arab Emirates (UAE), have claimed that this energy is sufficient to meet their power demands.
The clash between bitcoin miners and energy executives is just getting started.
Financial incentives will revolutionize the oil and gas business while also benefiting the environment. https://t.co/UcXUbaciib
September 4, 2021 — Pomp (@APompliano)
However, in recent months, a growing number of mining companies have made the switch to renewable energy. MintGreen, a cleantech bitcoin mining company located in Canada, has secured an agreement with Lonsdale Energy Corporation to provide heat produced by Bitcoin mining to inhabitants of North Vancouver, British Columbia, by the beginning of 2022.
Similarly, several other companies, such as CleanSpark and Bit Digital, have switched to a more ecologically friendly Bitcoin harvesting method. In fact, according to a recent research, hydroelectric power is now the most prevalent source of energy for miners, with a little more than 60% of all mining farms throughout the world using this renewable power medium to aid their day-to-day operations.
Global regulatory monitoring is becoming more intense.
This year, China wasn’t the only country to develop and implement a total ban on Bitcoin, with Egypt, Algeria, and Iraq all enacting blanket prohibitions on crypto firms operating inside their borders. This might be partly due to the fact that more than a dozen public and private mining corporations were able to amass hundreds of millions of dollars in the third and fourth quarters of 2021, causing authorities to take notice of the industry like never before.
The fact that Bitcoin miners were able to produce over $15.3 billion in income, a value that marked a year-on-year rise of 206 percent when compared to 2020, added to the rising regulatory pressure. This may have prompted governments to consider methods to rein down this sector’s exponential development.
The Finance Minister speaks about the Cryptocurrency and Regulation of Official Digital Currency Bill, which is set to be introduced in 2021.
Source https://t.co/LcKeY2RYn5 pic.twitter.com/JKMPZpOLq1 https://t.co/LcKeY2RYn5
July 5, 2021 — Kashif Raza (@simplykashif)
In some countries, such as India, where cryptocurrencies appeared to have gained traction in recent months, the government decided to begin considering new legislation — the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 — aimed at prohibiting “private cryptocurrencies,” a term whose definition has yet to be defined. However, India is committed to encouraging the use of blockchain technology and other digital assets that come within its regulatory authority.
On the New York Stock Exchange, the Bitcoin ETF makes its debut.
The introduction of the world’s first Bitcoin exchange-traded fund (ETF) on the New York Stock Exchange on October 19, 2021, was hailed as a watershed moment for crypto fans all around the world (NYSE).
The United States Securities and Exchange Commission (SEC) recognized ProShares’ Bitcoin Strategy ETF as the world’s first exchange-traded fund based on Bitcoin futures, providing investors with a unique way to participate in the leading cryptocurrency.
The offering drew a record amount of institutional money as soon as it went live. The demand was so great that the CME Group, the parent issuer of ProShares’ Bitcoin Strategy ETF, had to submit an application with the SEC shortly after its introduction, requesting that any limits on the maximum number of contracts that may be purchased in connection to the ETF be lifted.
Initial Public Offering (IPO) of Coinbase
Coinbase’s initial public offering (IPO), which saw the cryptocurrency acquire permission from the conventional financial sector, was another event that may not be connected particularly with Bitcoin but was emblematic of the currency’s expanding market strength (as well as general acceptability).
Coinbase’s IPO price point of $381 was much higher than its pre-listing reference price of $250, indicating increased institutional interest for the crypto-focused company.
Looking forward to the year 2022
Bitcoiners all around the world are looking forward to seeing how the market develops in the next year, particularly with worries of inflation and economic instability looming big over the globe. However, it looks that the ecosystem around digital assets has continued to evolve, with a growing number of conferences and meetings scheduled for 2022.
With the arrival of the Metaverse in 2021, NFTs gain genuine usefulness.
Furthermore, as a more decentralized future approaches, more individuals are realizing the necessity of safeguarding their BTC — particularly in terms of how they spend/receive their coins and how they conduct their transactions in a secret manner.
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The “which crypto grew the most in 2020” is a question that has been asked before. There are many different types of cryptocurrencies, and there is no one answer to which cryptocurrency grew the most.
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