Polkadot is a next-generation blockchain protocol connecting multiple specialized blockchains into one unified network.
This is a multi-chain technology, similar to Cosmos. It aims to improve the connectivity and scalability of blockchains linked to its “Relay Chain”.
Many modern coins have been created using blockchain technologies to solve specific problems. On the other hand, Polkadot was founded with hopes of solving the blockchain problem itself.
Polkadot uses a relay chain. It serves as a hub for parachutes to link and arrange consensus and for the exchange of messages and data between parachutes. Users can use the tokens to install or remove new parachutes.
The network and the approved blockchains will both be linked to the system. The possibility is that the chains will be separated from the rest of the system and that the data can be transferred to other structures and the network security can be strengthened.
At some point in time, Polkadot rose to recognition by becoming the fifth largest blockchain when DOT hit ATH. It occurred in the middle of January 2021.
Gavin Wood, who is a co-founder of Ethereum, first introduced Polkadot to the market in 2016.
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How does Polkadot (DOT) work?
The mechanism of game theory for good behaviour (GBG), which Polkadot uses works by rewarding good behaviour and sanctioning a bad one. Thus, it makes the experience more easier to comprehend. This is an important element that helps to promote autonomy within the network.
Because there are no miners in the ecosystem, it works by selecting a certain algorithm. This allows the owners to keep a better eye on special events and reduces the likelihood of headaches.
A few significant updates have been revealed to be made later on the platform. Interestingly, one of them involves a decision to alter the design of the chain.
The Polkadot digital currency (DOT)
The native currency of the Polkadot digital currency platform is the DOT. This cryptocurrency excels in its ability to offer solutions to issues within the network:
- Parachain: Short name for “parallel chains”. These separate blockchains will work through the Polkadot network, in parallel.
- Relay circuit: All individual blockchains will be connected to this main Polkadot circuit.
- Chain Bridge: Chain bridges are specifically developed to make the Polkadot ecosystem compatible with other blockchains such as Bitcoin, Ethereum, and others.
The course is very dynamic
During the first ICO, a single coin was valued at about $30 but later the price moved up at around $6 when the digital currency found itself being issued formally. Later along the road, it experienced a sudden fall that ended up lowering its value to $2.81. Nevertheless, a large number of new tokens were produced during the redomination period. This fact ended up causing Polkadot to formally introduce itself to the top 10 cryptocurrency chart as the redomination period ended up triggering a sudden jump in its price.
There are key elements that are considered to play a major role in favour of cryptocurrency. The Polkadot protocol scales at a steady constant pace and as such, it doesn’t directly compete with Ethereum, which as a result can solve the problem with the high fees of Ethereum.
In recent weeks, in terms of projects and price, DOT has experienced a major increase, so to speak. Data that was collected from PolkaProject indicates that the Polkadot ecosystem boasts about 197 projects in its network. Another very important fact is that Polkadot, as far as smart contracts go, it has established itself as one of the best developers in this field.
What are the Advantages and Disadvantages of Investing in Polkadot?
Well, as cryptocurrency trends are seeing major shifts in respect to new digital currencies. It offers better performance compared to the older ones, Polkadot is definitely noted as an astonishing part of the competition. People who are looking to invest in other well-known cryptocurrencies on the market such as BTC or ETH, can still benefit from DOT as a very valuable substitute.
Gavin Wood excelled with his idea behind the currency. He made sure that its technology stands its own ground against major competitors such as Ethereum. And frankly, it proves to be so much better. Being a scalable network that depends on a relay chain system, DOT saw the crypto market increasingly getting more and more interested in the coin.
When considering the major advantages, there are still some important disadvantages that you should be aware of…
Polkadot, as a new up-and-coming project was met with some significant struggles along its path to stardom. One of them is definitely the fact that its technology is considerably more sophisticated which made the DOT framework harder to understand at first for users who came upon the technology of ETH or BTC. However, perhaps the toughest challenge is making Polkadot interoperable with other competitors in the cryptocurrency market. In order to pass Bitcoin or Ethereum, users must build a bridge to the chain. It complicates an otherwise simple transaction.
The lack of data on Polkadot is another significant problem as it makes the process of price predictions almost impossible to be carried out due to the volatility. Even though DOT is regarded as stable at the moment, it could prove very difficult to predict the prices because of these minimal graph information as the digital coin is still in its early days.
Polkadot (DOT) 2021 price predictions
According to Coinmarketcap Polkadot price at the moment is $9.36. 2020 has been a great year for Polkadot as cryptocurrency has experienced a significant increase. Forecasters are optimistic when predicting the Polkadot price for 2021. According to Digitalcoin Polkadot may reach as high as $260.61.
Polkadot price prediction chart for 2021. Source: Digitalcoin
Longforecast is optimistic also predicting that the Polkadot price may reach as high as $248.57 in 2021.
Walletinvestor also has a positive approach when forecasting the Polkadot price for 2021.
Polkadot 2022, 2023, 2024, 2025 and 2028 price predictions
According to forecasts, Polkadot is expected to increase in price in the following years. Digitalcoin predicts that Polkadot may reach as high as $471.12 in 2022. Longforecast has a more conservative approach when predicting Polkadot price in long term.
Digitalcoin is even more optimistic when making its prediction for 2025 forecasting that the DOT price may reach up to $125.38. Moreover, according to Digitalcoin, Polkadot may experience an increase all the way to $1974 in 2028.
Moreover, experts are mostly assuming that in the near future the DOT token will hit a high price. Spartan Black, a major Asian crypto fund, thinks that Polkadot (DOT) already has an opportunity for revenue and will soon be seeing itself as one of the top three cryptocurrencies by market capitalization.
There are also “overly optimistic” predictions such as the one from the famous Crypto Youtuber BitboyCrypto who predicts that Polkadot price may hit $326 in this bull cycle in 2021.
Should You Invest in Polkadot? – Final Thoughts
Ultimately, you may ask, is investing in DOT worthwhile? In the DeFi and cryptocurrency sectors, Polkadot is increasingly gaining momentum. Polkadot ventures rapidly achieve high value due to fast integration and broad aggregation. Polkadot has a dedicated team behind and a clear vision for its future goals. Moreover, according to the forecast mentioned above, Polkadot is expected to increase in price in 2022 and in the coming years. It makes a good investment option.
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