Is Polkadot A Good Investment?

Polkadot: Worth The Investment?

Polkadot is a cryptocurrency that also serves as a blockchain platform. It has recently created quite a buzz for itself. Although popular cryptocurrencies like Bitcoin, Ethereum, Tether, and others still maintain their position at the top of preferred currencies, Polkadot is emerging as a viable threat for them. Read on to find out what makes Polkadot so popular and if it is worth the investment.

An Overview

Polkadot, also referred to as the ‘Ethereum Killer,’ was created by the co-founder of Ethereum, Gavin Wood. Despite its relatively new entry, Polkadot’s most significant selling point is its high interoperability. It can interact with two or more different blockchains, and while many networks claim to have the same feature, Polkadot leads the game in this aspect.

How Does Polkadot Work?

Polkadot is created as a blockchain, a technology that stores data and information to ensure the creation of permanent timelines and accurate record-keeping. It also maintains transparency and a decentralized status that any single entity cannot control.

Another significant offering of Polkadot is its ‘parachains’ (parallel chains), a sequence of connected blockchains. These chains are formulated to help speed up transactions and run parallel to each other. This aspect also reduces the chances of network overload or congestion.

Reasons For Polkadot’s Rise

Several factors have contributed to the rise of Polkadot. Let’s have a look at some of them –

The BTC Drop

Polkadot’s native utility coin, DOT, has increased in value due to the BTC price movement. Dividing BTC in 2021 resulted in the slowing down of bitcoins and, in turn, has led to many crypto assets like Polkadot and Ethereum experiencing a spike in value.

Polkadot’s Technology

Polkadot, being new, heads the game when it comes to technology. Where Bitcoin offers basic abilities, Polkadot offers newer functions and more technological benefits. And even though Ethereum can manage quite a few complicated tasks, Polkadot is much more efficient, as stated below.

Decentralized Finance (DeFi)

Polkadot’s DeFi sector has undoubtedly pushed the blockchain cum cryptocurrency to the forefront. Polkadot’s decentralization is encouraging an increasing number of technology enthusiasts to migrate to the platform and launch their crypto-based projects.

Interactive Element

Polkadot is more interactive than its competitors. Here, developers have the chance to experiment and link blockchains to the Polkadot network or even create new blockchains. And investors tend to buy assets that capture the attention of developers.

Parachains

Polkadot’s ‘parachains’ directly address Ethereum’s significant flaws – transaction speed, costs that add up, and network overload. As mentioned above, Polkadot’s parachains help in faster transactions (1000 transactions per second) and minimizes network load, further enhancing the scalability of transactions.

Affordability

There is no doubt about Bitcoin’s value in the market as it is the OG cryptocurrency. However, the same popularity has increased their price so much that investors often buy fractions of these coins. This is where alternatives for Bitcoin come into play.

In Polkadot’s case, in addition to the new technology it brings, it is also much more affordable currently, thereby making it much more appealing to buy.

Market Recurrences

Cryptocurrency is growing to be more popular each day, and historically speaking, it is not a strange occurrence for an obscure crypto asset to become popular with investors in a short period. A famous example of this phenomenon is Ethereum’s growth compared to Bitcoin’s last year, where the former grew by 171%.

Experts and empirical evidence suggest that upstarts such as Polkadot may split and take some of the market shares that popular assets like Bitcoin and Ethereum enjoy. When you factor in Polkadot’s advanced technology, it is easy to conclude why.

Investor Contributions

The Polkadot platform has a foundation set up to reward investors who hold DOT. They are given governance rights and can vote on the parachains’ creation or removal, network fees, and upgrades.

It also has a system to zero in on and remove bad investors by retrieving their DOT tokens back into the ecosystem.

Are There Risks Involved?

Well, yes. Investing, in general, poses certain risks. The regular risks associated with cryptocurrencies, such as their volatile nature, not being backed by a tangible asset or the fact that any government regulation can limit or restrict the use of these assets, and other factors apply and affect Polkadot as well.

Besides these, Polkadot has existed for only a couple of years. There is no record to compare and predict its performance.

Is Polkadot A Good/Worthwhile Investment?

Polkadot has been around for a short time, which is why it poses significant risks. After a rough tumble, the currency dropped to around $9 in the early days of June. However, if you are willing to risk it, you may find the asset a worthwhile investment in the long run. Alternatively, if a more sophisticated technology enters the market, there are chances of it occupying or overtaking Polkadot’s spot.

It’ll take time to see how Polkadot performs since it is still very new. However, it has already managed to accrue monetary value. If you’d like to invest in Polkadot, it is available on most popular crypto exchanges. We’d advise you to understand all the risks involved and decide after careful consideration.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect those of Geek Vibes Nation. This article is for educational purposes only.