- 2021 has seen Bitcoin hit all-time highs and adopted as a currency, among other things
- China bans, environmental concerns, and regulatory worries helped temporarily crush it
- El Salvador’s adoption was without doubt the major development of 2021
As usual, Bitcoin’s year has been one of volatility, debate, price fixation, and adoption. Oh, and of course some China bans. In this end of year review we look at how Bitcoin has fared in 2021 in three important categories – price, adoption, and development.
Price
Bitcoin started 2021 priced at $29,000 and, fueled by companies such as Tesla publicly getting on board, hit $61,000 and then $65,000 by April. Naturally, then Bitcoin did what Bitcoin always does, and it got walloped 50%.The reasons for this were four-fold: China was brandishing its banning stick more menacingly than ever; scare stories about its environmental impact were hitting mainstream media outlets in coordinated attacks; governments and regulators were piling in on crypto exchanges; and Bitcoin had gone from $3,500 to $65,000 in under a year.
The cool off lasted two months, with Bitcoin coming back from the dead (again) in late July and hitting new all time highs of $69,000 in November.
Adoption
Bitcoin began the year being the institutional favorite, with multinationals and hedge funds buying in en masse for the first time. This showed that Bitcoin had progressed from being the preserve of criminals to being an asset that big companies wanted on their books. We also saw the likes of MasterCard and Visa both announce plans to implement Bitcoin and other cryptocurrencies into their payment platforms, again showing that cryptocurrency as a whole was finally gaining mainstream acceptance, especially after PayPal and Venmo got on board.
Of course the biggest news in terms of adoption came from El Salvador, where, thanks to the Lightning Network, it was adopted as a legal currency, the first time in history that such a development had been undertaken. With other countries lining up to do the same, 2022 could turn out to be an even bigger year for Bitcoin adoption.
Development
Of course, Bitcoin will never scale to the, er, scale of other blockchains, but the fact that the Lightning Network is powering El Salvador’s Bitcoin use showed that, after 13 years of trying, Bitcoin is finally useful as a currency. While this isn’t a development as such, it should be considered as a developmental milestone.
The Bitcoin network itself did see a major upgrade however, the first since SegWit in 2017. The Taproot protocol was implemented in November after first being proposed in 2018, with the objective of improving transaction efficiency and network privacy as well as the improved ability to support smart contracts.
Bitcoin’s 2021 – Quality Not Quantity
As we can see, it has been a year of a small number of big things as far as Bitcoin is concerned in 2021. Undoubtedly the biggest thing was the adoption as a currency by El Salvador, a move that could well be the first domino in the line, all of which could see 2022 being a year where both adoption and price are the biggest talking points. $100,000 anyone?
