The cryptocurrency industry has a wide range of products. Every digital coin has a unique background, fundamental purpose, and peculiarities that distinguish it from the hundreds of other tokens on the market.
But it’s not just about ruthless rivalry. On a worldwide scale, a few blockchain networks are providing the digital glue that binds multiple currencies. In addition, are services into a unified computing platform. Polkadot (DOT), the ninth-largest cryptocurrency by market capitalization, is the most prominent of them.
Polkadot is a wonderful investment right now, isn’t it? This basic inquiry elicited two very different responses from two Fool.com authors. Check out the rest of this article to determine if Polkadot is a good fit for your personal financial portfolio.
A Bearish Polka Face
Munarriz Rick: Polkadot has gone a long way in a short amount of time, and it’s simple to see why the crypto community loves wearing it. The platform’s capacity to host many blockchains independently within a single network is attracting attention. Polkadot is one of the greatest stars in the Web3 revolution. As this point, it is a cool vision of the future where web services are managed by open protocols rather than businesses. It’s a fantastic narrative, but once we swan dive into the danger pool, things start to become tricky.
Polkadot didn’t go live until the spring of last year. As a result, and the fresh crypto scent brings with it a sense of unease. Among the cryptocurrencies with the greatest market capitalisation, Polkadot has been impacted the hardest. In the 30 days ending on December 5, Polkadot lost over half of its worth. Polkadot’s use cases aren’t half as lucrative as they were a month ago. This is rather seen as a buying opportunity. But, it might be a warning sign about the added dangers and volatility that crypto investors are taking on with the coin.
Polkadot Bulls
Things might deteriorate further. Polkadot is undergoing some exciting developments. However, this does not necessarily imply that the cryptocurrency’s price would rise as a result. Polkadot’s parachains, or bespoke blockchains tethered to its relay chain and are generating a lot of excitement. The first Polkadot parachain auction took place in early November. It was previously in the discussion how the cryptocurrency’s value slashed by nearly half in the last month. Bulls are looking forward to further movements. This includes one that will raise its capacity by a factor of 100. At any critical rate, it can presently only process 1,000 transactions per second. Polkadot is a riskier digital currency in a turbulent market because of “sell on the news” sell-offs.
An Itsy-bitsy, Teenie-weenie Polkadot with Big Dreams
Anders Bylund: It’s no secret that cryptocurrencies are prone to price fluctuations. Polkadot has moved between a 52-week low of $4.55 to a 52-week high of $55. Polkadot’s price swings have mostly been an amplification of the Bitcoin (CRYPTO:BTC) trend. Throughout 2021. Polkadot’s daily connection with Bitcoin price movements has been tighter than the price-change link between the Dow Jones Industrial Average (DJINDICES:DJI) and the Nasdaq Composite (NASDAQINDEX:IXIC) indexes.
My argument is that Polkadot does not receive the treatment as the unique development platform it is. Rather, the price tends to follow the larger cryptocurrency market’s mood. At this point, with little respect for what’s going on within the Polkadot community. That is a mistake that will pave the way for tremendous long-term returns when Polkadot’s entire business model takes shape.
In my opinion, the world of cryptocurrencies and blockchain platforms has tremendous real-world usefulness, This is since distinct tokens carve out unique niche functionalities. As a result, may subsequently join to construct a global computing system.
Example of One cryptocurrency network: One token may manage a decentralized banking system. Another token manages payment transactions and a third incorporates smart contracts for each transaction.
Polkadot plays a critical part in this goal. In either case integrating these disparate networks in a system that is simple for app developers to utilize and much easier for end-users to consume.
DOT at Present
Polkadot’s entire market value is currently less than 3% that of one-trick pony Bitcoin. The interconnection network’s market cap overtakes Bitcoin’s anytime soon. Being said that, this ludicrous mismatch should eventually even out. Polkadot’s early investors might see a market-beating total return. This happens if Bitcoin returns to its past high-octane growth while Polkadot gains a greater share of the global cryptocurrency market. The slew of parachain launches planned for next year should start the celebration.
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