Ethan Lou: Why 2021 will be remembered when crypto has gotten serious

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While it’s easy to get lost among memes, this year has also been marked by a serious crescent under everything.

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Ethan Lou, Financial Post Special Coins associated with crypto metavers have exploded with the news from Facebook. Photo by REUTERS / Dado Ruvic / Illustration / File Photo Item content

The dog parts exploded. The same goes for pictures of “punks” and monkeys. Someone sold a digital artwork to Christie’s auction house for the cheeky sum of $ 69 million. Elon Musk tweeted the markets at unexpected highs and lows. Tungsten cubes have become a thing. A group of crypto enthusiasts raised more than US $ 40 million to buy a copy of the US Constitution, but were outbid by a hedge fund chief. Then there was El Salvador, where the 40-year-old head of state wore a baseball cap inside out while telling crowds he would build a “bitcoin city” at the foot of a volcano. Tired of 2021?

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It was, without question, a crazy year. But that’s not because of some inherent quality in the crypto world. All of the above happened against a backdrop of perpetual economic recovery and pandemic-linked inflation in a foamy market where retail investors at Reddit gave birth to the term ‘meme action’. Instability, disaster, pestilence and polarization circulated everywhere. The world is already strange and volatile, and crypto is just a reflection of it.

And while it was easy to get lost among the memes and quirks, it was clear that something bigger had happened to crypto in 2021 as well: it had gotten serious.

It was therefore not at all surprising that this year saw Bitcoin rise to all-time highs, reaching US $ 68,000 and becoming a trillion dollar asset – with a slew of new coins joining the party. Even El Salvador’s decision to adopt Bitcoin as legal tender was understandable.

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This year marked how money was revealed for the collective illusion that it is – an artificial construct that “just can’t work if people don’t collectively take a leap of faith,” as Neil Buchanan, economist and professor of law at the University of Florida, wrote.

And like the emperor’s clothes, traditional currency collapsed. In Argentina, stores were forced to freeze certain food prices for 90 days. In Venezuela, people shaved gold glitter to pay for items. Inflation in the United States has hit a 39-year high, and a long-ridiculed idea of ​​2011 has returned to the public discourse: why shouldn’t the government, faced with a funding problem, just strike a coin? US $ 1 trillion?

The metaverse is already here, and crypto will save it from Big Tech domination A digital loonie is coming, even though the Bank of Canada won’t say it directly Credit card giants aren’t waiting to be disrupted when it comes to crypto

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If this is the solution in traditional monetary systems, why not move on to another collective illusion? In Game of Thrones, a brothel owner tells a religious extremist, “We both peddle fantasies…. Mine happens to be entertaining.

At the same time, fantasies of different kinds descended. Digital works of art sold for millions. Facebook rebranded itself as Meta as Mark Zuckerberg showed off an immersive VR world, the least realistic aspect of which was his awkwardly choreographed ad. These two trends are not unrelated. The idea of ​​the metaverse that Zuckerberg envisioned has long been pursued by crypto scholars, in which NFTs (non-fungible tokens) are an important mainstay. Coins associated with crypto metavers have exploded with the news from Facebook. Everything has been underlined by the fact that virtual objects and experiences have more and more tangible and real value.

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Virtual power can also extend to the real world. This blockchain-based cryptocurrency group may not have succeeded in buying the US constitution at auction, but the fact remains that it raised $ 47 million effortlessly and could have easily contributed. big changes thanks to it. Another such blockchain group, called a Decentralized Autonomous Organization (DAO), is trying to free Ross Ulbricht, the imprisoned founder of the Silk Road dark web market. A real company, the ShapeShift exchange, was even considering dissolving its corporate structure to become a DAO in order to thwart regulators. Remember the crypto crash in the US Senate in July that stalled the White House’s $ 3.5 trillion infrastructure bill? This year has clearly shown that the industry has influence and is ready to exert it.

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On a larger stage, China has spent the year testing its digital yuan. The United States currently wields great economic power through its control over international flows of funds, and the digital yuan risks disrupting that. The digital yuan will be used even more during the Beijing Winter Olympics in 2022, and its geopolitical implications will only grow.

If you’re looking for a price prediction for 2022 here, you’ve come to the wrong place. I once made the mistake of giving one on Reuters Television, and I still think about it when I close my eyes. But a much easier prediction to give: Crypto will sink deeper into our lives, maybe even without us realizing it, but it will be no less strange.

Ethan Lou is a journalist and author of Once a Bitcoin Miner: Scandal and Turmoil in the Cryptocurrency Wild West.

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