Here we are at the end of 2021—was it a good year? In many ways, it was, and in many ways, it wasn’t. But it was definitely a year full of major changes that will impact the blockchain industry (and life in general) for a long time to come.
In this article, we’ll do a fairly all-around review of the blockchain world in general and then explain what it all means for BSV in particular.
As a reference, you can check out our previous article on how BSV investors expected things to pan out at the start of 2021.
In many ways, 2021 echoed 2020, a year where investors and value-creators, frustrated by a year of stagnation, tried to make up for lost time—only to be thwarted by circumstance and policy again.
It was a year where international travel, events, and collaborations remained difficult to organize. And now, in December, authorities are once again discussing lockdowns, shutdowns, and penalties for non-compliance with health mandates.
That said, there was a surprising amount of activity in BSV and across the entire blockchain world. BTC (at least on the surface) had a bumper year, reaching an all-time-high fiat unit price of almost US$68,000 in November and gaining further attention when El Salvador announced the whole country would begin accepting BTC payments in October. More on that shortly.
In general, 2021 was a bumper year for business deals for blockchain and digital assets. Some reports indicated a 130% increase in M&A transactions, totaling over US$6 billion in value. While this activity indicates increasing mainstream interest in blockchain, it is also a sign the industry is becoming increasingly centralized—which can be a dirty word to industry participants. The technology itself may be “open,” but control over access, use, and influence is consolidating in the hands of a few prominent players, making blockchain look more like the legacy financial industry.
BSV’s lack of price action
Using those metrics, it would also appear (on the surface) that BSV missed out on a lot of the action. Its own unit price peaked at US$436 in April 2021 and $423 in May but spent most of the rest of the year around the $150 mark before finishing it in the $120 range. For reference, the BSV unit price was $164 on January 1, 2021.
It’s important to note, once again, that these values are based on speculative trading on markets shown again and again to be highly manipulated. The BTC price in particular is driven mainly by large issuances of Tether (USDT), while real-world acceptance and use of BTC has been spotty. Even El Salvador, despite its valiant effort to promote “Bitcoin,” has run into several problems with transaction speed, usability, and access to technology.
In a world where trust in governments and fiat currencies has fallen, and inflation is beginning to bite into family budgets, you’d expect a bigger rush to digital assets in mainstream populations. This has so far not happened, and it’s still difficult to find businesses outside the various digital asset communities that accept these assets as payments. “Crypto trading,” for all its hype, is still largely a casino. It has made a handful of people fiat-rich for sure, but transforming the world economy was supposed to be the goal.
Regulation starts to hit well-known blockchain projects
2021 was a year when financial regulators started to get more serious about policing the digital asset industry. Although the SEC, CFTC, and non-U.S. authorities had taken previous action against ICO operators and blatant fraudsters, the blockchain world hadn’t seen much meaningful regulation of major and well-known networks.
This, as Dr. Craig Wright has repeatedly warned, would change at some point. In 2021 we saw he was right… again. “Top Five” digital assets like Ripple and Tether were both caught in the regulatory headlights, while popular exchanges like Binance and BitMEX found themselves less welcome in several jurisdictions. In BitMEX’s case, there have also been criminal charges.
While all the above-mentioned companies are still doing business, authorities have made it clear they’re watching closely and will pounce on any further slip-ups. Being “decentralized” and “multi-jurisdictional” no longer implies immunity from regulations, and there’s a growing understanding that actions taken one year can have serious consequences several years later.
Though less formalized, for now, the push for “ESG” in corporate operations is also starting to influence business decisions. BTC has been a target for sustainability activists for many years, thanks to the massive energy consumption required to “secure” its network. While its supporters argue that Bitcoin is a worthy activity and worthy activities justify the cost, it’s hard to justify BTC’s consumption levels to power a network that can only process four transactions per second worldwide.
“Proof-of-stake” (PoS) networks have become more popular amidst this change, but that model has its problems with governance and security. BSV has shown that proof-of-work (PoW) remains the only consensus model to correctly balance incentives and energy consumption, with its ability to handle thousands (or even millions) of transactions per second making its energy consumption levels far more justifiable. Major accounting firm MNP stamped their seal of approval on BSV in November, calling it the most efficient of the BTC, BCH, and BSV group and predicting BSV would become more efficient as usage increases.
The world becomes (even) more digital
One potentially positive outcome from the COVID-19 pandemic (and there aren’t many) was an increased interest in online and digital services. With most people in the world unable to travel physically, they turned to online communications and gatherings and spent more time exploring online options from home.
Growing distrust in fiat currencies, stock markets, and increasing social media censorship have prompted interest in alternative options. Government attempts to give their populations a digital identity have so far been unreliable and insecure, leaking personal details and exposing large holes in existing record-keeping systems. This may also lead to a willingness to explore high-capacity blockchain networks in the near future.
Whether health-tracking systems are for the greater good of mankind or not, they appear now to be inevitable save for a massive cultural shift. Should they exist, it’s better to run them on a platform such as BSV, which at least guarantees data ownership to individuals and a secure record showing where alterations to information have occurred.
What was the biggest story in BSV?
We did a quick straw poll on Twitter to ask the BSV industry what they considered the biggest Bitcoin story in 2021. The results were:
What has been the most significant development in the #BSV world in 2021?
(Feel free to suggest others if you don't like the choices)#Bitcoin #BSVblockchain
— Jon Southurst 🚂 @1259 (@BitcoinSVtrain) December 21, 2021
Like it or not, Craig Wright’s legal battles in and out of court are significant to the Bitcoin story. Perhaps the issue had more prominence thanks to his recent jury victory in the long-running Kleiman v Wright trial. But BSV’s legitimacy as “the real and original Bitcoin protocol” rests heavily on Dr. Wright’s claims to be Satoshi Nakamoto and the extent to which the public outside of BSV accepts it.
Should the mainstream media not accept Dr. Wright’s story, it becomes far easier for social media trolls and policy influencers to dismiss any BSV project, no matter how well it works, as something to disregard. These opinions have power over decision-makers who know little about Bitcoin, blockchain, or its historic issues. Media reports from the Cøbra decision and then the Kleiman trial in late 2021 showed the public is definitely prepared to accept the idea that Dr. Wright created Bitcoin. More importantly, his enemies are having difficulty proving him wrong, even when afforded the full opportunity to expose new evidence in front of a judge and jury.
For these reasons, Dr. Wright’s legal issues have been one of the main BSV stories in 2021. It can seem like a sideshow for those already convinced, but they remain significant.
Gaming and NFTs were definitely hot topics among the Bitcoin-literate. The sheer volume of conversation on social media platforms like Twitter and Twetch shows there’s plenty of interest in the subject.
CryptoFights (by FYX Gaming) and Haste Arcade were among the most prominent launches on the gaming front. They both demonstrated the power of BSV’s microtransaction ability/speed/cost combination. The number of transactions they have sent to the blockchain shows BSV’s unbounded capacity to scale—without running into the kinds of slowdowns and congestion other networks have experienced when attempting similar launches. The Duro Dogs game was an interesting combination of gaming and tokenized collectibles and has also been popular with users.
All the above are well-designed gaming platforms in their own right, showing that BSV apps can have appeal even to those with little interest in digital asset trading or how blockchains work.
NFT collections, along with their associated promotion, satisfied collectors looking for some speculative trading action without BSV price volatility. Art and collector card sets may not be the ultimate best use-case for BSV tokens, but there is definitely a market for such items, and the BSV blockchain has proven itself a worthy platform. For enterprise users to trust BSV to handle business-critical tokens like contracts and invoices, property deals, and personal records, there must first be examples of how securely the system works. NFT collectibles, whether they count as “legitimate” investments or not, serve this purpose.
Social media may not have been a hot discussion topic, but BSV platforms like Twetch and Relica continued to grow in 2021. Twetch launched its own NFT market and token sets, as well as its 3.0 application to enthusiast users. Relica served up its first GPS features with value-drops and treasure hunts, later opening those features to all users in December.
Whether 2021 was a great year or a terrible year may depend on personal experience. The only thing for certain is, the world is seeing massive disruption and upheaval across nearly all sectors of business and society, and the results will impact our lives for a long time to come. The lesson is that, no matter what happens, it’s crucial to stay aware of it all, imagining solutions that not only work well but lead ultimately to fair and accessible outcomes for humanity in general.
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