THE JOURNEY OF CRYPTOCURRENCIES DURING THE YEAR 2021

The demand for Bitcoin and altcoins has seen a drastic increase during the last couple of months. What comes as a surprise is the extent to which the global crypto population doubled. How quickly the figures jumped from 100 million to 200 million in a matter of a few months is something that caught everyone’s attention. One of the major contributors to this, without a doubt, needs to be accounted for the spike in prices of everyone’s favourite – Bitcoin. On the same lines, Ethereum, too, saw significant growth during the months of May and June as institutional investors continued to favour the token. Going by the reports of the well-known cryptocurrency exchange, the number of global crypto users crossed 220 million by the end of June 2021.

The first four months of the year have been no less than a blessing for Bitcoin. This is because these months saw a spurious demand for Bitcoin. Well not just that, the investors started showing a keen inclination towards altcoins such as Shiba Inu (SHIB) and Dogecoin (DOGE), among others. As a matter of fact, the number of new users in the market spurred naturally. Now here is the most interesting and attention-catching point that is worth a mention – meme coins such as Shiba Inu and Dogecoin saw an increase of as much as 77,37,400% and 3,663%, respectively. Yes, you read that right!

While Bitcoin is around 45% since the start of the year, meme coins such as Shiba Inu and Dogecoin are up 77,37,400% and 3,663%, respectively.

Talking about how the demand for Bitcoin and altcoins would increase in the coming future, it is highly likely that they are used as a medium of currency by incorporating them in every digital wallet. This prediction becomes way stronger as a result of heavyweight institutions like PayPal, MicroStrategy, Visa, and Mastercard announcing their plans to support these cryptocurrencies.

Challenges faced during 2021

However, Bitcoin and altcoins did not always enjoy a smooth and hassle-free journey. Elon Musk’s remarks pertaining to Bitcoin have had a huge impact on not just Bitcoin alone but other cryptocurrencies as well, including Ethereum.

Yet another report put forth states that cryptocurrencies like that of Bitcoin and Ethereum were losing their market shares, as new challengers like proof of work (PoW), environmental impact due to Bitcoin mining, etc. came under more scrutiny.

An obstacle that cropped up with regards to the cryptocurrencies losing their market shares is the consequence of the amount of green energy used in Bitcoin mining. The impact on the environment, as a result of this, has been alarming and of course a cause of concern, for many. Following this, approximately around 90% of the Bitcoin mining has now been shut down in China. Why this has become an issue to be bothered about is because this represented an estimated one-third of the global crypto network’s processing power at one point in time.

Talking about proof of work (PoW), the majority of the cryptocurrencies including Bitcoin and Ethereum use PoW to verify transactions on the blockchain. Under this, an advanced form of mathematics, which only powerful computers can solve, is made use of. On the flip side, this process requires a significant amount of electricity.