NFTs and SNL: Crypto Keeps Burrowing Into the Mainstream


Crypto has been many things in its short history. 2021 was the year it became part of the mainstream.

Elon Musk

tweeted about it, often. It was parodied on “Saturday Night Live.” Collins Dictionary dubbed “NFT,” the abreviation for nonfungible tokens, its word of the year.

Institutional investors looked for ways to get in, and the first bitcoin ETF started trading. Individual traders bought crypto on their phones when they weren’t snapping up

GameStop Corp.


GME -4.47%

About 16% of the U.S. population holds or has held cryptocurrencies, according to Pew Research Center. In 2015, Pew found that only 1% of Americans held or had held cryptocurrencies. The number of people holding cryptocurrencies globally doubled in 2021 to about 220 million, according to crypto.com.

Crypto prices remained as volatile as ever. From January to April, the price of bitcoin doubled. From April to July, it fell more than 50%. It doubled again a few months later, hitting a record of nearly $70,000 in November. On Friday it was trading at around $46,000, still up some 60% from its price of roughly $29,000 at the start of the year.

In percentage terms, bitcoin’s gains actually represent one of its weaker years. In 2020, the digital currency rose more than 300%. In dollar terms, however, 2021 was by far the cryptocurrency’s biggest year.

The total value of cryptocurrencies more than tripled at its peak in 2021, rising to as high as $2.98 trillion from less than $1 trillion in January, according to CoinMarketCap. It has fallen to about $2.2 trillion recently.

Coinbase Global Inc.

, which operates the second-largest crypto exchange, went public with much fanfare in April. It became the most prominent in a crop of publicly traded crypto-focused companies, including

Galaxy Digital Holdings Ltd.

,

Marathon Digital Holdings Inc.

and

Riot Blockchain Inc.

Coinbase Global, which operates the second-largest crypto exchange, went public in April.



Photo:

Michael Nagle/Bloomberg News

Coinbase’s stock, however, has been as volatile as the assets that trade on its exchange. After closing at a high of $357.39 in November, it closed Friday at $252.37

Two notable new uses of crypto technology drove up interest in crypto.

The first was NFTs, which are digital tokens like bitcoin but different in that each one is unique. The artist Beeple caught the art world’s attention with the $69 million sale of a digital image and associated NFT in March. Artists, musicians, celebrities such as

Martha Stewart

and companies including

PepsiCo Inc.

all created nonfungible tokens.

NFT sales totaled about $14.4 billion over the past year, according to nonfungible.com, up from $65 million the year before.

Shiba Inu Coin’s recent surge, and subsequent fall in value, is part of a growing trend of meme coins that are rivaling some of the largest digital tokens in the world. WSJ retail investing reporter Caitlin McCabe explains why investors are pouring money into this meme based cryptocurrency. Photo: Amber Bragdon/Getty Images

The other popular use was decentralized finance, or DeFi for short. DeFi is a broad, catchall phrase for what are essentially banking services—mainly borrowing or lending cryptocurrencies—offered on blockchain-based platforms. The total amount of money on DeFi platforms, a figure called total value locked, rose to $243 billion from $19 billion at the start of the year, according to the website DeFi Llama.

Those two uses have given a big boost to the Ethereum network, which operates like an open version of an app platform such as Android or iOS. Numerous DeFi and NFT services operate on top of Ethereum. The network processed more than $2 trillion of transactions in every quarter of 2021, according to the research firm IntoTheBlock. That is triple the amount in the fourth quarter of 2020.

All of this activity has attracted venture capital. VCs, which first invested in bitcoin in 2013, plowed more money into the sector in 2021 than in every other year combined. In the U.S. alone, venture funds invested $7.2 billion into the crypto space in 2021, according to data from PitchBook. Globally, venture capital invested $29.4 billion.

Write to Paul Vigna at [email protected]

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *