Inventory: The biggest winners and losers in the crypto industry in 2021

The cryptocurrency and blockchain industry has experienced explosive growth in 2021, particularly in its decentralized finance (DeFi) and non-fungible token (NFT) sectors.

The year was also marked by continued price volatility, a major trial in Central America, rising institutional interest, and the rise of some of the faster smart contract networks — all of which are reflected in this year’s list of industry “winners and losers.”

2021 Winners

Kazakhstan

When China effectively banned Bitcoin mining operations in May 2021, Kazakhstan quickly filled the void, sending displaced miners and others to its cheap and plentiful coal supplies. Many companies operate in the Central Asian country, including one of the top five crypto mining pools operated by BIT Mining.

In July 2021, Kazakhstan’s average monthly hashrate share was 18.1%, that is, it accounted for nearly one-fifth of the global Bitcoin mining output, second only to the United States (42.7%), and a staggering increase compared to just 1.4% in September 2019, according to data from the Cambridge Center for Alternative Finance.

Given reports of widespread power shortages in the country as winter sets in, it remains to be seen whether Kazakhstan will be able to maintain its share of global Bitcoin mining in 2022.

Coinbase

Coinbase Global, the largest cryptocurrency exchange in the United States, went public on the Nasdaq on April 14, becoming the first crypto company to be listed on a U.S. stock exchange. The company closed the day at $328.28, with a market capitalization of $86 billion, and this amazing first-day performance has led to comparisons with the initial public offerings of Facebook and Airbnb. However, the company's stock price fell back at the end of the year, with a price of $243.35 on December 18, and a market capitalization of $52.37 billion.

Coinbase's listing is widely seen as another sign that cryptocurrency has become mainstream, with more public offerings to come. Kavita Gupta, founding managing partner of Delta Growth Fund, told Cointelegraph: "Coinbase will be the leader in the entire blockchain community in the public market."

Solana

A wave of new smart contract networks has emerged in 2021. The largest and fastest growing of these is Solana, a super-fast proof-of-stake network that is said to be able to process 50,000 transactions per second (TPS). In comparison, Ethereum can process only 30 transactions per second.

“In the history of cryptocurrency, there may be no project that has seen more buzz and faster transactions in 2021 than Solana,” wrote Ryan Selkis of Messari. The open-source blockchain hosts a growing number of NFT and DeFi projects, despite being the target of several distributed denial-of-service attacks before 2021. According to Cointelegraph Markets Pro, Solona’s native cryptocurrency, SOL, easily ranks fifth among all cryptocurrencies as of Dec. 20, behind only BTC, ETH, BNB, and USDT.

Nayib Bukele/El Salvador

El Salvador made history in 2021 by becoming the first country to declare Bitcoin as legal tender. The country’s dynamic president, Nayib Bukele, has captivated the crypto world with his work: harnessing the energy of volcanoes to power the country’s BTC mining, airdropping $30 in BTC to every adult in the country, and announcing Bitcoin City in late November, a fully functioning city built around Bitcoin that was initially funded by a $1 billion Bitcoin bond.

Only time will tell whether all this amounts to a clear economic "win" for the people of El Salvador, but it's fair to say that Bukele bought the dip and brought some 21st-century innovation and sheen to a poor Central American land that relies heavily on remittances - money that foreign workers send home.

Mike Winkelmann, aka Beeple

In February, Christie’s, the first major auction house to offer a purely digital work as a unique NFT, sold a digital collage that didn’t even have a price tag. No one knew how to put a price on it. Mike Winkelmann (aka Beeple), “Everydays: The First 5000 Days,” sold for $69.3 million, and the art industry may never see anything like it again.

The work sold for more than works by Georges Seurat, Paul Gauain or Salvador Dalí, and put the relatively unknown Beeple among the world's highest-paid contemporary artists, such as David Hockney and Jeff Koons. It also told people outside the crypto world that non-fungible tokens would become a force to be reckoned with. Sales of NFTs have risen sharply in 2021, and in late November, "NFT" was declared the "word of the year" by dictionary publisher Collins.

Avalanche is another high-speed smart contract network that has entered the top 10 in 2021. CoinGecko claims that "Solana and Avalanche are the rising stars in the DeFi multichain," with a total locked value (TVL) share of 6% and 2% respectively in the third quarter. These TVL gains came at the expense of Ethereum, which had almost all of the DeFi TVL (99%) at the beginning of the year. In comparison, Ethereum's TVL share at the end of the third quarter was 76%.

Avalanche’s native currency, AVAX, had a market cap of $27.3 billion at the end of December, ranking 10th, likely boosted by its deal with Deloitte to support the consulting firm’s work with the U.S. Federal Emergency Management Agency.

Sam Bankman-Fried/FTX

In 2021, Sam Bankman-Fried was declared the “richest person in crypto,” largely due to his stake in FTX, a cryptocurrency derivatives exchange he founded in 2019.

By the end of 2021, FTX had become the second-largest crypto derivatives exchange after Binance (futures), according to CoinGecko. Messari called FTX the "fastest growing company ever," noting that Bankman-Fried built a $25 billion business in less than three years with fewer than 100 employees.

FTX closed a $900 million funding round in July, with participation from SoftBank, Sequoia Capital, Coinbase Ventures, Multicoin, VanEck and the Paul Tudor Jones family, among others, increasing its valuation to $18 billion from $1.2 billion previously. In June, FTX secured long-term naming rights to the Miami Heat NBA basketball arena.

OpenSea

The NFT phenomenon is a boon for digital artists, who can sell their works without agents and physical galleries, but they still need digital markets. OpenSea, a pioneer in the NFT art field and a leading NFT marketplace, is one of the biggest winners this year.

According to Cointelegraph Consulting, OpenSea charges a relatively low 2.5% commission on every sale on its platform, but it earned a respectable $79 million in revenue in August 2021. As of November of this year, the company's revenue exceeded $235 million. By December, the situation had not changed much: "The world's dominant NFT trading market is making a lot of money," said Messari.

ProShares ETF

In mid-October, the first Bitcoin exchange-traded fund (ETF) approved by the U.S. Securities and Exchange Commission (SEC) was launched, overcoming a hurdle of sorts. The ProShares Bitcoin Strategy ETF (BITO) became the second-highest-traded fund opening ever on its first day of trading on the New York Stock Exchange, with some calling it a “watershed moment for the crypto industry.”

Its launch ended eight years of fruitless efforts by U.S. fund issuers — the Winkelvoss ETF was the first to be rejected by the SEC in 2013 — but some were disappointed that the groundbreaking fund was a futures-based ETF that did not directly track the price of Bitcoin (BTC). The SEC apparently preferred two layers of regulatory protection — namely, supervision by the Commodity Futures Trading Commission (CFTC) and the SEC — and a few weeks later, the SEC rejected VanEck’s spot market ETF application, further confirming this.

Losers in 2021

Meta（Diem）

Facebook’s Libra stablecoin project (now Diem) was announced with much fanfare in 2019, with a slew of blue-chip partners, but has been continually delayed and scaled back. Today, little is heard about Diem, except perhaps about departures — Dante Disparte left Diem for Circle, for example, and more recently, cryptocurrency chief David Marcus said he would leave the company by the end of the year.

Facebook, renamed Meta, has come under fire from U.S. lawmakers for its “influence” on social media, and a stablecoin project originally scheduled to launch in early 2021 may be collateral damage. There isn’t much clarity in any of the events. As The New York Times commented, “The Libra cryptocurrency was eventually renamed Diem, while the company’s crypto wallet effort was called Novi. The jumble of names often confused people, even inside the company.”

Central Bank of Nigeria

In February, the Central Bank of Nigeria (CBN) ordered all local banks to close the accounts of customers using cryptocurrencies. The CBN governor said that most crypto accounts were used to finance “illegal” activities such as money laundering and terrorism.

Nigeria is expected to launch a central bank digital currency soon, just like China, so the CBN may be following China’s lead and clearing out all competing cryptocurrency businesses before the CBDC is launched. If so, its efforts have failed miserably.

Not only did the cryptocurrency survive, but by August Nigeria had the second-largest Bitcoin peer-to-peer trading market in the world.

Virgil Griffith

There was a time when Virgil Griffith was a celebrity in the crypto world. The former Ethereum developer and US citizen traveled to North Korea to attend a cryptocurrency conference in early 2019. In November of the same year, he was arrested in Los Angeles for violating US sanctions laws.

Ethereum co-founder Vitalik Buterin claimed at the time: “I don’t think Virgil did anything that provided any real assistance to North Korea to do bad things. He was giving his speech based on publicly available open source software information.”

According to the Wall Street Journal, ahead of his upcoming criminal trial in September 2021, Griffith "pleaded guilty to conspiracy to violate U.S. law by traveling to North Korea to give presentations on the use of blockchain technology to launder money and evade sanctions." As part of the plea agreement, he could face up to six and a half years in prison. It is unclear what prompted him to change his plea.

Iron Finance (TITAN)

Maybe using another stablecoin, USDC, and an obscure governance token (TITAN) as collateral for a stablecoin — such as IRON — wasn’t a good idea. In this case, the result was called “the world’s first large-scale crypto bank run” — specifically, a run on the Iron Finance protocol. The result: In late June, the price of TITAN plummeted from over $60 to a few thousandths of a cent in a matter of hours.

CipherTrace later said the incident was the result of a design flaw: “Iron.Finance lacked a proper stabilization mechanism.” But in the meantime, some investors lost money, including Dallas Mavericks owner Mark Cuban, who called for regulation to determine “what is a stablecoin and what collateral is acceptable.” On December 20, ICE was trading at around $0.002.