The biggest letdowns in crypto and blockchain in 2021

The year 2021 was a pivotal year for blockchain technology and cryptocurrency. It has seen both mainstream acceptance and widespread adoption. Many institutions, including large corporations such as Tesla, Goldman Sachs and Bank of America, have taken steps to become part of the ecosystem.

However, there were some issues and events that shook the mood of cryptocurrency investors and the entire community.

VanEck’s spot Bitcoin ETF was rejected by the SEC

According to data from Cointelegraph Markets Pro, Bitcoin rose to an all-time high of $68,789.63 after the United States Security and Exchange Commission approved ProShares’ Bitcoin futures exchange-traded funds fund. ProShares’ Bitcoin Strategy ETF trades under ticker BITO and had the largest ever first day for any ETF in terms natural volume. This shows how eagerly awaited the launch.

The financial regulator rejected Van Eck’s proposal to create a spot Bitcoin ETF on Nov. 12. This caused the price of the flagship cryptocurrency, Bitcoin, to begin its descent spiral.

Jan van Eck, VanEck’s CEO, was not happy with the rejection.

Today’s SEC update denying approval for our physical bitcoin ETF disappointed us. We believe investors should have the opportunity to access #BTC through a regulated fund. A non-futures ETF structure would be better. @tyler @gaborgurbacs
— Jan van Eck (@JanvanEck3) November 12, 2021

Since July 2013, when Tyler Winklevoss and Cameron Winklevoss attempted to launch the “Winklevoss Bitcoin Trust”, the SEC has been trying to approve a spot exchange for Bitcoin.

Related: VanEck’s Bitcoin spot ETF Shunt strengthens SEC’s outlook regarding crypto

Eric Balchunas is a senior ETF analyst at Bloomberg. He expressed his opinion on the rejection by the SEC. Balchunas has voiced concern about the rejection by the SEC of several spot ETF applications. He is now a prominent voice in tracking the latest ETF developments around cryptocurrencies such as Bitcoin and Ether (ETH).

The SEC is Not That Into You (Spot bitcoin ETF Filings). = My summary of @JSeyff’s great note today, explaining why spot Bitcoin hopes are so bleak (unfortunately). It is easy to conclude that the SEC has set a high bar and is inconsistent in their expectations. pic.twitter.com/7HRDReWF2N
— Eric Balchunas (@EricBalchunas) November 18, 2021

Ethereum network: Gas prices out of control

In 2021, the Ethereum network was upgraded with a London hard fork. This put ETH on a deflationary path thanks to Ethereum Improvement Proposal 1559 (EIP). At the time of writing, 1.244 Million Ethereum had been burned and is valued at more than $4.96 Billion.

The introduction of the burn mechanism saw an increase in Ethereum gas fees. This was due to the increased use of Decentralized Finance (DeFi) protocols on blockchain and the proliferation of Ethereum-based nonfungible coins (NFTs). Even up to 2022, gas fees will continue to exceed 100 gwei. Gwei is Ether’s smallest unit, and equal to 0.000000001 Ethereum.

On February 23, gas fees for the network reached a record high of 373.8 gwei. Despite gas fees appearing to be under control between May and Aug, there have been several spikes since that date, which has been very unfavorable for DeFi investors. Many DeFi protocols have been affected and investors have chosen to invest in alternative blockchain networks such as Solana, Polygon, Binance Smart Chain, Solana or Polygon.

Speak up! #eth #gasfees pic.twitter.com/JdO3j0pgtL
— Ceeebastian (@ceeebastian), December 18, 2021

Vitalik Buterin (co-founder of Ethereum) suggested that the EIP 4448 upgrade and EIP 4490 be implemented to address the ongoing problem. This would allow for temporary fixes using a technique known as data sharding. This would reduce the cost of zk-Rollups on Ethereum.

It remains to be seen if the proposal will be approved by the network’s governance structure and if these upgrades will be effective in reducing gas prices.

Related: London’s Impact: Ethereum 2.0’s Staking Contract becomes the largest ETH holder

Solana network: DDoS attack and outage

Solana was launched in April 2019 and has rapidly grown to be one of the most popular blockchain networks with a total value locked of nearly $12 billion. SOL, the native token of Solana, has seen its price rise almost 130 times from its current $180 price. On Nov. 7, the token reached a record high of $260.06

The Solana network experienced a nearly six-hour-long outage on December 4, at 13:46 UTC. The mainnet beta cluster stopped producing blocks at slot 53180,900. This prevented new transactions from being confirmed by the blockchain. This outage was criticized by developers and traders, who took to Twitter for criticism.

Scott Lewis, cofounder of DeFi Pulse was one of those critics. He cited Serum’s order books data as proof of a lack “real customer orders”.

hey! Someone forgot to turn on “real customer orders” that are not bots for serum. Now that solana has been restored, it is possible. There have been no new trades within the last two hours. pic.twitter.com/fCJ6hqCjvn
— Ks (@scott_lew_is December 4, 2020

This was not the first time Solana had experienced an outage this year. In September, the network experienced a 17-hour outage from Sep. 14 to 15. This was due to a distributed-denial-of-service attack (DDoS), which targeted Grape Protocol’s first decentralized exchange offering. A DDoS attack is when a large number or botnet of coordinated devices overwhelm a network with fake traffic to try to take it offline.

The network was briefly congested by another DDoS attack Dec. 9, which caused a temporary outage on Dec. 4. However, it was able to remain online during the attack.

Related:Scalability and stability? Solana network outages indicate that work is still needed

Although the attack was attributed to Solana’s design fundamentals and its use of the proof-of-history consensus method, the developers still appear to believe in the network’s potential. Raj Gokal, co-founder of Solana, spoke out on Twitter about the DDoS attack.

If you aren’t helping @solana focus on these metrics, if your lies or perpetuating lies, and if it seems like you’re trying to win the hater’s ball with your tweet threads, you should save them until you’re ready for scaling crypto. Fuck off until then.
— Raj Gokalgm (@rajgokal) December 12, 2021

Solana’s efforts to develop on-chain code saw a significant increase in daily submissions to GitHub following the DDoS attack. The network was able to surpass Polkadot, Cardano and become the most advanced blockchain network between November 12 and December 13.

Binance Smart Chain network: Security exploits

Binance Smart Chain is the parallel to Binance Chain. Both blockchains are designed and maintained by cryptocurrency exchange Binance. BSC was launched in August 2020, shortly after its initial unveiling in April 2020.

The network has since grown to be the second most popular blockchain for decentralized applications deployments, after Ethereum. According to DefiLama, the TVL for DeFi protocols currently stands at almost $17 billion. On May 10, the TVL reached an all-time record high of $31.72 trillion, at the peak of the last bull run.

Since its inception, however, both the network and protocols that run on it have been highly vulnerable to security attacks. Here is a list below of DeFi protocols that were hacked or exploited on BSC.

PancakeBunny: 200 million was lost in a flash-loan exploitSpartan Protocol : Exploit led to a loss of $50 millionUranium Finance : $50 million stolenMeerkat finance: Rugpull led the loss of $31 millionpNetwork : Hacked with losses of $12.7 million and $12.7 million in BTCBogged Finance: Flash loan exploit drained $3 millionBurgerSwap : $7.2 million drained by security exploitBelt Finance : $6.3 million

Given that this list is not exhaustive, it’s safe to assume that hacks and security breaches have resulted in losses of hundreds of million of dollars over the period that the network was in operation. These security flaws were not the only ones that have occurred. There have also been phishing attacks against PancakeSwap, Cream Finance’s decentralized exchange.

Related: DeFi hacks to Binance Smart Chain increase as TVL and volume increases

The Binance ecosystem has several solutions to this problem. Project Shield is the latest initiative. This security audit program will provide additional protection to users who wish to expose themselves to ERC-20 and BEP-20 tokens on Binance.

There are many things to look forward too

These are just a few of the many disappointments that will be faced by the crypto community in 2021. However, it is clear that digital currency usage is growing faster than ever.

The cryptocurrency domain is capturing the next big thing in art, finance, and gaming with innovations such as GameFi, NFTs, and Metaverse. One innovation can change the landscape of these areas for the better.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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