Cryptocurrencies are notoriously known for being highly volatile. The volatility of cryptocurrencies is what makes it such an attractive proposition for the masses. As the rule says, the higher the risk the higher the returns. But in the hopes of higher returns, investors may get carried away and ignore the risks. Polkadot – like any other digital asset – is highly volatile and in-depth research is a must before investing in it.
There are steps that investors can take in terms of research to minimize risks in the crypto space. The cryptocurrency market has been flooded with digital assets each with their own unique offerings so it becomes a hard task to filter out projects that actually have potential. Polkadot’s ICO was held in 2017 while the cryptocurrency was launched in 2020. Polkadot is, hence, a fairly new project in the crypto space but it has garnered a huge following in its short timeframe since its inception.
What is Polkadot?
Polkadot is a programmable blockchain like Ethereum and Cardano which allows developers to build decentralized apps. It is known as the blockchain of blockchains because of its multichain network. Blockchain technology can still be considered in its inception stage as there is a lot to be discovered yet. One of the major problems that the blockchain space face is known is interoperability.
Each blockchain is a universe of its own. It has its own tokenomics, governance, and native tokens. This, while an advantage, poses problems in the form of a disconnect between blockchains. Each blockchain has its own unique proposition which sometimes does not work well in isolation and needs other blockchains to function well. This has also led to the concept of Blockchain-As-A-Service.
Polkadot jumps in with its offering of interoperability. It is a multichain network which facilitates cross-chain transfers of assets or data. The multichain mechanism divides the network into four integral parts:
- Relay Chain: The major chain responsible for interoperability, security, and consensus
- Parachains: They run parallel to the Relay Chain but are independent with their own native tokens
- Parathread: These are Parachains but with more connectivity
- Bridges: They connect Parachains and Parathreads
The four integral components of Polkadot creates a blockchain of blockchains – connecting the crypto space. It is also the
Future outlook
Polkadot stands at a price level of $21.07. The cryptocurrency established its all-time high in May at $49.96. DOT coin saw a growth of 300% in the yearly timeframe. Polkadot is the ninth largest cryptocurrency in the market with a capitalization of $20 billion. Wallet Investor predicts that the token will be operating at a price level of $47.17 in a year’s time while the five-year forecast shows a price of $157.49. Digital Coin Price is also bullish on the cryptocurrency with estimates of $32.44 by the end of 2021 which is expected to reach towards $73.83 by 2026.
Polkadot’s unique proposition is what gave it the nickname of “Ethereum Killer”. With strong fundamentals and technicals, the cryptocurrency can be considered one of the best bets in the market.
