Bitcoin’s turbulent 2021
The past year has been turbulent for the world’s most valuable cryptocurrency — Bitcoin.
Currently valued at approximately R762,000 ($47,700), the cryptocurrency experienced record highs and steep declines throughout the year.
Bitcoin also received its most significant update in four years, improving its network privacy, scalability, and security.
In addition to flash crashes experienced during 2021, the cryptocurrency’s value has also been under threat from proposed regulations around the globe.
Several of the most significant Bitcoin-related events of 2021 are explained below.
Record highs
Bitcoin broke through two significant thresholds in 2021, surging past $50,000 (R798,000) in February and going even further to break $60,000 (R957,000) in the following month.
Bloomberg attributed the breakthroughs to a stimulus-fueled rally of the past year that prompted investors to ignore signs of speculative fervour.
The cryptocurrency’s turbulence showed throughout the year, having peaked at over $65,000 multiple times, including February, April, and November.
Antoni Trenchev, managing partner and co-founder of Nexo in London, said that “Bitcoin’s resilience is proving to be the stuff of legend.”
“Every correction is an opportunity to reset and restart the move upwards.”
Bitcoin broke $60,000 in March 2021
Elon Musk’s influence
Bitcoin’s value seemed to be substantially affected in the first half of the year by Tesla CEO Elon Musk’s comments.
While Musk’s remarks posted on Twitter could lead to the cryptocurrency jumping in value, he also negatively impacted the price during the year.
Bitcoin plunged 15% in May after Musk expressed his concerns over energy requirements associated with the cryptocurrency.
Musk said he was worried about the “rapidly increasing use of fossil fuels for Bitcoin mining and transactions”, after which the currency dropped to $46,045 (R735,000).
Bitcoin’s value also slid in June after Musk posted a cryptic tweet hinting at a potential split with the most prominent cryptocurrency.
#Bitcoin 💔 pic.twitter.com/lNnEfMdtJf
— Elon Musk (@elonmusk) June 4, 2021
Musk’s positive influence on the cryptocurrency was observed multiple times throughout the year, including sparking a “winning spree” in July following his positive comments regarding Bitcoin.
The billionaire’s comments came during a panel held on the future of the cryptocurrency, after which the token’s value climbed 8%.
Bitcoin’s biggest update in four years
Bitcoin’s most significant update since 2017, Taproot, was activated on 14 November and integrated new features that improve privacy, scalability, and security on the Bitcoin network.
The update also enabled Merkelized Alternative Script Tree (MAST), which is designed to enhance the efficiency and privacy of smart contracts by revealing only the relevant details of the contract when spending Bitcoin.
Bitcoin’s update had been on the cards since June 2021, when 90% of Bitcoin miners signalled their support.
MAST replaced the previous mechanism of locking transactions until specific conditions are met — pay to script hash (P2SH).
P2SH allows anyone to see how a locked transaction’s conditions could be met, whereas MAST hides all the requirements except those met when a transaction was processed.
Another notable feature of the Taproot update is the introduction of Schnorr signatures, which allows for more complex transactions to be made on the Bitcoin network.
Now read: Bitcoin closed 2021 with a big drop
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