At the beginning of 2021, Minecheck put forth several predictions and trends about what we expected to see in the cryptocurrency and financial landscape in the upcoming year. As we approach the end of 2021, we’re taking a look back to see how our predictions held up.
1. Traditional Finance Enters the Digital Currency Space
Our prediction: 2021 will see an increase in the number of traditional financial institutions embracing cryptocurrency.
What occurred: Cryptocurrencies have, in fact, become more widespread among traditional financial institutions. In fact, 2021 was a milestone year, witnessing several of the world’s leading institutional financial arms offer cryptocurrency as an asset class to investors. For instance, in March, Morgan Stanley announced it was launching access to three funds enabling Bitcoin ownership – the first major U.S. bank to offer the most popular cryptocurrency as an asset class. Other investment firms, such as Goldman Sachs, JPMorgan Chase and Wells Fargo, followed suit.
Furthermore, in August, the world’s largest investment house, Blackrock, revealed major investments of $384 million through its ETFs in cryptocurrency mining companies; and earlier this month, Fidelity Investments launched a Bitcoin spot ETF in Canada called Fidelity Advantage Bitcoin, making it the largest asset manager to offer a Bitcoin ETF; even Visa recently announced a new consulting service to help banks weigh their plans for cryptocurrencies. And giants PayPal, Venmo, Mastercard and even Twitter are now allowing customers to transact in Bitcoin.
Accordingly, the debate about whether financial institutions are going to adopt crypto has largely been put to rest.
(You can learn more about investing in cryptocurrency here).
2. Decentralized Finance (DeFi) Will Gain More Momentum
Our prediction: 2021 will witness greater momentum toward Decentralized Finance (DeFi) – a term encompassing a variety of financial applications in cryptocurrency and blockchain geared toward removing central financial intermediaries, such as brokerages, exchanges or banks.
What occurred: Decentralized finance continues to be one of the fastest-growing sectors within the cryptocurrency ecosystem. In fact, data shows that the total value locked in all DeFi protocols – one of the best ways to measure sentiment within the DeFi sector, according to analysts – hit an all time high of $236 billion in November, up from just $1.01 billion in February 2020.
Needless to say, DeFi adoption is a trend that has seen exponential growth, and is one that is likely to continue, particularly as younger generations remain skeptical about traditional finance systems. Dapps such as Aave are providing users with the ability to borrow against collateral, lend, invest, get a mortgage, and even purchase insurance with less red tape and bureaucracy.
As one article has pointed out, “When defi first started making waves, most of the dapps that people interacted with leveraged the Ethereum (ETH) blockchain. Toward the end of 2021, all that has changed as cross-chain technology is hotter than ever and dapps are now supporting a myriad of networks.”
Furthermore, some universities are now offering DeFi-focused courses to help educate students on the basics of decentralized systems. For instance, the University of California at Berkeley added a massively open online course, or MOOC, on decentralized finance to its Fall 2021 semester offering.
3. Decentralized Storage: The Rise of Filecoin
Our prediction: 2021 will witness the rise of Filecoin – a system offering a storage network that allows users to buy and sell unused storage on an open market.
What occurred: Given the increased momentum toward Decentralized Finance (DeFi), and given that Filecoin is one of the leading decentralized storage networks, it’s not surprising that it generated a lot of buzz this year. Designed to be both a decentralized file storage and content distribution network in one, Filecoin’s listing on Coinbase in December 2020 and Grayscale Investments’ inclusion of a Filecoin Investment Trust to its roster of crypto investment vehicles brought it into the forefront this year.
Filecoin’s (FIL) value started to take off in early 2021, peaking at more than $190 in April, but falling below $140 in the months that followed. In mid-October 2021, its price hovered just over $70. But WalletInvestor estimates that the token (FIL) will cost $93.71 by the end of this year. They expect this trend to continue in the future, with the price reaching $188.46 by the end of 2022, $281.84 by the end of 2023 and $470.63 by the end of 2025.
(You can learn more about Filecoin here).
4. The Rise of Web 3.0
Our prediction: 2021 will witness the rise of Web 3.0, which shifts power away from “tech giants” toward everyday individuals, creating a “global network” of connectivity and ownership.
What occurred: At the time of our prediction, we had already seen examples of Web 3.0 with various applications, such as the decentralized lending solution Compound, video encoding service Livepeer, and social media platform Akasha. Numerous Web 3.0 projects continue to develop and become more mainstream. Given that cryptocurrency was the first massive global use case of a decentralized computer network, Web 3.0 is closely tied to cryptocurrencies. Web 3.0 projects are being built on Bitcoin (such as Stacks), Etherum and other blockchains, such as the Web 3.0 Foundation, which works with the Polkadot and Kusama blockchains.
Furthermore, 2021 saw the migration of millions of users from Google Chrome to Brave Browser, which incorporates Blockchain capabilities and enables users to turn off tracking cookies and advertisements, freeing them from the surveillance of big tech.In September, Brave surpassed $36 million monthly active users – up from 13.5 million in March 2020 and 20 million in October 2020.
There’s even been greater awareness around the concept of Web 3.0, particularly after Facebook’s rebranding to “Meta” in late October, as “Web 3.0” mentions are rising more than +450 percent QoQ on a 30-day moving average.
Final Thoughts
2021 was a big year for the cryptocurrency and decentralized finance space. In addition to the above, 2021 saw the installation of 10,000 Bitcoin ATMs worldwide; the launch of the first Bitcoin ETF in the U.S. in October; the decision by El Salvador to become the first country to legalize Bitcoin payments and transactions and use it as a currency; and tech giants Tesla and MicroStrategy adding Bitcoin reserves to their balance sheets, to name a few.
Furthermore, politicians and professional athletes also announced that they will be taking some or all of their salary in Bitcoin, including NFL’s LA Rams’ Odell Beckham Jr. and Green Bay Packers’ Aaron Rodgers, NYC Mayor Elect Eric Adams, and Miami Mayor Francis Suarez.
Given these developments, we can only assume that 2022 will be another year witnessing explosive growth in the cryptocurrency space.