The blockchain industry is racing forward at an incredible pace. The sector is continuously changing, with new cryptocurrencies being released every minute. Consequently, people are increasingly interested to buy Bitcoin and take part in the financial revolution we are experiencing.
In this article, we explore 5 of the most important trends in the blockchain industry for 2021. The topics discussed in this list are the ones that were majorly responsible for the value of the crypto market reaching a new all-time high of over $2 trillion in 2021.
Top 5 blockchain trends in 2021
Every 4 years, the crypto markets return into another bullish cycle. And every time, there are different trends that are more or less responsible for this upward momentum in the industry. Below are 5 of the most stimulative trends that impacted the markets in the current cycle.
1. Decentralized finances – DeFi
DeFi is a crypto ecosystem where different platforms aim to provide traditional investment instruments in a completely decentralized manner. In DeFi, instead of a bank, peers can exchange assets, lend and borrow them, and be rewarded for doing so through the power of smart contracts.
While DeFi has been a growing industry for some time now, this growth has accelerated considerably in the past year. The amount of funds locked in this ecosystem has grown from $7 billion to $80, a 1000% increase in 12 months!
The reason behind this is because DeFi is providing increasingly easier platforms to use, with better ROI than ever before. Some yield farming techniques allow for 100% APY, which would be impossible using traditional banking products.
2. Non-fungible tokens – NFTs
NFTs are unique digital assets that can be used to represent anything of value on the blockchain. For instance, they can be used to tokenize digital art, gaming items, collectibles, even real estate.
The main appeal of these unique assets is that they are easily transferable and can be sold on open marketplaces such as Opensea. Some popular artworks and collections were sold for hundreds of millions of dollars.
The most expensive cryptopunk, a collectible digital avatar was sold for $11.7 million, a record-breaking price for just a few hundred pixels. Consequently, investors are going crazy over NFTs and are hunting the next big thing that would help them make x100 returns with as little effort as possible.
3. Institutional interest
The price of bitcoin has been increasing ever since the COVID19 market crash in March 2020. This has drawn many retail investors to the original cryptocurrency, like many times before. However, one important trend that we are seeing in this cycle, is that cryptocurrencies are drawing in institutional investors as well.
The trend was started by Michael Saylor’s Microstrategy. This company started investing billions in Bitcoin and hasn’t stopped ever since its first purchase in August 2020. Today, the company has accumulated around 108,992 Bitcoins at the moment of writing.
Additionally, Tesla joined the Bitcoin shopping spree in February 2021, acquiring more than $1.5 billion worth of BTC. As a result, investments such as these have given the crypto market some well-deserved legitimacy and stability.
4. Meme coins
On the other side of the spectrum, we have meme coins. Dogecoin and its copycats have been gaining crazy values during this cycle.
This success is mainly because of Elon Musk and his open support of the DOGE cryptocurrency. His DOGE-focused tweets have always resulted in price spikes, making long-term holders and new investors quite happy.
Consequently, a wide variety of copycats appeared on the market, SHIB, DOGELON, CUMMIES, all of which tried to jump on the DOGE popularity bandwagon.
Some of them even succeeded, as the Shiba Inu token managed to reach the top 50 by market cap. With that said, most, if not all, of these tokens have zero fundamental value. They are incredibly risky assets and investing in them is akin to gambling.
5. Central bank digital currencies – CBDCs
And finally, there are the CBDCs. Governments all over the world are scrambling to draw out regulative frameworks for Bitcoin and its peers.
However, they are also simultaneously working on their own cryptocurrencies that would be issued by their respective central banks. CBDCs are digital versions of FIAT currencies that would be linked to the countries’ treasuries.
These are not to be confused with stablecoins which are usually issued by private companies and backed 1 for 1 by fiat money in private reserves.
Consequently, governments are racing against each other to push out their own CBDC. China looks to be in front of the competition, as they have already begun mass-scale testing for its digital yuan.
Every crypto market cycle can be linked to some outlandish event. In 2017, ICOs drove the market forward and created a bubble that caused a terrible price crash. That said, the landscape seems to have evolved quite a bit since then. There are still some irrational investments like NFTs and meme coins. However, institutional money is bringing some stability to the market.
While cryptocurrencies remain unpredictable, they seem to have gained some much-needed maturity that could help them finally gain mainstream adoption.
Read more: How to Become a Blockchain Developer