5 cryptocurrencies that revolved around Bitcoin in 2021

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As it stands, it will be another strong year for the stock market. Until the end of November, the broad base S&P 500 had gained 22% for the year, doubling its average annual total return of the previous 40 years.

But it’s been an even more impressive year for Bitcoin (BTC -11.65%), the world’s largest cryptocurrency. By early evening on November 30, Bitcoin had gained 97% since the start of the year. While this lags behind its average annual return over the past decade, I highly doubt its long-term investors make much of a fuss.

Image source: Getty Images.

Bitcoin’s awe-inspiring 2021 has come on the back on the back of a number of catalysts. In no particular order, we witnessed:

Usefulness increased in the real world, with El Salvador accepting it as legal tender and Tesla Motors briefly taking it as payment for its electric vehicles. Taproot’s long-awaited upgrade is taking effect, which now enables smart contract-based transactions on Bitcoin’s blockchain and further bolsters security. Investors are cramming into Bitcoin as an inflation hedge. With a limit of 21 million tokens, the perception of scarcity has hodlers regard it as a store of value, with U.S. inflation peaking in three decades. The listing of the very first Bitcoin exchange-traded fund (ETF), which gives additional legitimacy to the fact that the world’s largest digital currency is here to stay.

Yet as impressive as Bitcoin’s 2021 gains are, the major digital token’s year-to-date performance has lagged seriously behind a number of other popular coins. The following five cryptocurrencies have all absolutely revolved around Bitcoin in the first 11 months of 2021.

Shiba Inu-themed pieces exploded in 2021. Image source: Getty Images.

Shiba Inu: 65,684,832% gain since the start of the year

Let’s not beat around the bush: Shiba Inu’s absurd over 65,600,000% year-to-date gain (SHIB -13.83%) could become the biggest life-changing increase we’ve ever seen in a year.

A number of factors played a role in its takeoff to the moon, such as a growing number of crypto exchanges listing SHIB for trade, the launch of the decentralized exchange ShibaSwap in July, and the landing of the chain of AMC Entertainment cinema as the first major dealer. . But the biggest catalysts of all have without a doubt been the Fear of Missing Out (FOMO) and the huge social media buzz created by SHIBArmy.

While there is no denying that the pocket change made Shiba Inu’s first investors rich in 2021, there is also plenty of reason to believe that this bubble will burst in the months and years to come. Shiba Inu offers no competitive advantage over other payment coins, and it has not been well received by businesses, with fewer than 375 merchants accepting it for payment globally, by Cryptwerk.

Additionally, history has shown that moon gains in the crypto space are almost always encountered with reversions of 90% or more within a short period of time.

Image source: Getty Images.

The Sandbox: gain of 18,599% since the start of the year

Another digital currency that came out of nowhere to leave Bitcoin in the dust (or should I say in the sand?) Is The Sandbox (SAND). SAND tokens have gone from less than $ 0.04 on January 1 to almost $ 7 on November 30, resulting in a cumulative gain of almost 18,600%.

These big wins are the result of some of the most buzzy keywords of 2021: “metaverse” and “non-fungible token,” or NFT. The metaverse describes an evolution of the Internet that allows users to interact in a 3D environment. Meanwhile, NFTs provide compelling proof of ownership of digital assets, which are stored on the blockchain.

The Sandbox is a virtual world built on the Ethereum blockchain that allows developers to monetize their creations. The key here is that unlike traditional game development, developers would retain ownership of their assets as NFTs. These NFTs could be monetized on The Sandbox market or potentially integrated into the game created.

A gain of nearly 18,600% shows just how much excitement surrounds the metaverse and NFTs. However, it is uncertain whether SAND, the platform’s main token, has a viable future at this point.

Image source: Getty Images.

Solana: 12,965% gain since the start of the year

Solana (SOL -8.38%), which climbed almost 13,000% in 2021 to become the fifth digital currency in terms of market value, also made the rounds in Bitcoin.

The tangible excitement surrounding Solana has everything to do with the speed and scalability of its blockchain network. For example, before the Taproot upgrade, Bitcoin was only able to process about 7 transactions per second (TPS). In comparison, Solana has the capacity to manage 50,000 TPS. It’s more than the leading payment processing companies.

It should be noted that not only is Solana fast, it is considerably cheaper than Bitcoin. The typical Solana transaction costs around $ 0.000025. In short, a user wouldn’t incur a $ 1 fee until they hit around 4,000 transactions on the Solana blockchain.

But it’s the scalability of Solana that’s the most exciting. Solana’s competitive advantage is its Proof of History (PoH) protocol. With PoH, a record is made of the time that has elapsed between events. Since validators don’t have to talk to each other to determine this amount of time, this speeds up the network considerably and should allow for rapid scaling.

Image source: Getty Images.

Dogecoin: 4.321% gain since the start of the year

Shiba Inu wasn’t the only dog-inspired coin that reported a huge return to its hodlers in 2021. Even though Dogecoin (DOGE -16.25%) fell significantly from its May high, tokens DOGE are still up over 4,300%. This year.

While Solana offers clear differentiation and competitive advantages, Dogecoin’s decision was primarily driven by hype and intangible factors. For example, Tesla CEO Elon Musk, who owns Dogecoin tokens and identifies himself as the “Dogefather,” is known to post Shiba Inu-themed tweets denouncing dog-themed cryptocurrencies. With the exception of Musk who tweeted that he would work with the developers of Dogecoin to improve the network, nothing the richest person in the world tweeted about DOGE should affect its usefulness or l network efficiency.

Speaking of which, Dogecoin might be even more of a miss than Shiba Inu in the utilities department. Although nearly 2,000 merchants accept DOGE for payment, according to Cryptwerk, it took eight years to reach that figure. For context, there are over 32 million businesses in the United States and over 500 million entrepreneurs worldwide.

Minimal utility aside, Dogecoin’s transaction fees are higher than most other popular digital currencies, and the average number of transactions on its blockchain recently hit a three-year low in September. The hype surrounding DOGE seems to be dying out.

Image source: Getty Images.

Cardano: 788% gain since the start of the year

A fifth and final popular cryptocurrency that revolved around Bitcoin in 2021 is Cardano (ADA -12.09%). Despite a nearly 50% retracement from its early September high, Cardano has gained nearly 800% this year and became the sixth largest crypto by market value ($ 52.1 billion).

Similar to Solana, speed and transparent innovation are the driving forces behind a significantly higher price for the ADA token on the Cardano blockchain.

Last year, Shelley’s upgrade increased the number of nodes network participants could run, which subsequently increased the average number of daily transactions on the network from around 2,000 to over 100,000. The buzz in 2021 was Goguen’s highly anticipated upgrade. Goguen introduced smart contracts to Cardano’s blockchain, which enables the development of decentralized financial and non-financial applications.

The next blockbuster upgrade will be Hydra, although there is no set timeline for its implementation. Hydra will continue to use the main blockchain for general ledger settlements, but intends to process transactions in off-chain staking pools, known as Hydra nodes, to increase speed and scale the network rapidly.

Cardano and Solana appear to have stamina after their monstrous gains this year. Meanwhile, the jury on Shiba Inu, Dogecoin and The Sandbox is still absent.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Questioning an investment thesis – even our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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