What is Polkadot?
Polkadot is a scalable multi-chain service. It is, essentially, a network connecting existing blockchains. Acting as a secure peer-to-peer space between blockchains, the service aims to develop a decentralized Web3 ecosystem. Sometime in Polkadot became the fifth-largest blockchain as DOT reached ATH in mid-January 2021.
One of the biggest Ethereum blockchain rivals, Polkadot’s recent surge to another level has not seen since the network’s history, thereby raising DOT‘s market capitalization to a new level above Litecoin.
Polkadot was first conceptualized by Ethereum co-founder Gavin Wood in 2016. In 2017, the ICO was introduced as the flagship of the Web3 Foundation. As of May 2020, the Polkadot mainnet was launched, however, the DOT coin was introduced in August of the same year.
The Polkadot DOT
The native currency of the Polkadot platform is the DOT. It has three main functions within the network;
- Bonding and Payment
That’s just a theory, a game theory
The ecosystem has no miners, instead opting for a proof of stake algorithm. This allows holders to have control over exceptional events. The system also utilizes good behavior game theory (GBG.) Fairly self-explanatory, the system rewards good behavior and punishes bad behavior. This encourages self-regulation. Finally, the tokens allow users to create new parachains or remove non-active ones.
The redomination effect
During the initial ICO, a single coin was priced around $30 (USD) but was redominated at the official release to be around $6. It later suffered a crash which brought the value down to $2.81. However, during the redomination, a large number of new tokens were generated. This caused a sudden spike and Polkadot entered the top 10 cryptocurrency list almost immediately.
Pros of Investing
Well, as an up and coming rival to Ethereum, Polkadot is certainly is a strong contender. Despite being new, the team behind Polkadot are no rookies. As the brainchild of Ethereum king Gavin Wood, the tech absolutely blows Ethereum out of the water. As a scalable platform, utilizing a relay chain system, the crypto market is already wild for DOT. According to Outlier Ventures, the service saw active developer growth of 44% since its launch. This trend is unlikely to remain consistent, but it’s a strong start.
Friends and Allies
Investors are already touting some serious returns. Digital asset firm KR1 announced a 15 times return on investment. Polkadot is seeing some major high profile DeFi projects launch too. Most famously, Acala, Moonbeam, and the Polkadot DOT itself.
Cons of Investing
The Polkadot project has run into a few issues on the way. Firstly, the complexity of the tech. For users of BTC and ETH, they’re likely to find Polkadot’s new system difficult to grasp at first. However, the real issue is the interoperability between Polkadot and its rivals. To transfer Bitcoin or Ether, users will have to bridge to the chain, making the process a lot more complicated.
An issue with investing in the Polkadot DOT itself is also the lack of data, making it hard to predict. Whilst seeming stable now, the DOT is at the beginning of its life and it can be hard to make a prediction based on limited chart values.
Polkadot is also attempting to compete with Ethereum, this shouldn’t be understated as a big challenge. As the first to fill the gap in the market, Ethereum is already ahead of the curve as the favorite of many, not to mention the incoming release of Ethereum 2.0 which will massively improve the scalability of the platform. Scalability is, of course, Polkadot’s main selling feature. Polkadot may well find itself as the Pepsi to Ethereum’s Coke.
Let’s not forget, even though Coke is the more popular drink and has the largest market capitalization, Pepsi Co. is twice the size in terms of revenue.
Our long term price prediction for Ethereum suggests that ETH is difficult to predict but is likely to continue rising due to its adoption by mainstream industry and governments.
So can the Polkadot price compete?
Polkadot DOT price prediction
Short term price prediction
As of February 2021, the Polkadot DOT price is $15.41 USD but expected to rise to $20. It has a 24-hour trading volume of $2,766,239,549 USD.The current CoinMarketCap ranking is #4, with a market cap of $13,943,493,925 USD. It has a circulating supply of 904,776,443 DOT coins. Recent reports have shown Polkadot to show both bullish and bearish activity, however, the currency also sees low volatility.
Introduced in August, the Polkadot price reached an all time high (ATH) of $6.08 in the succeeding November. This was followed by a sharp decline in December. For a while, the price of Polkadot stabilized in the $4.5 and $5.5 range.
Going into 2021, the DOT has seen a massive bullish jump and has hit the $9.00 point. It can be difficult to predict how sustainable this jump is due to the limited data on the DOT. One may assume for the moment that the DOT will stabliize around $8.
Future Polkadot price prediction
Going into mid-2021, the Polkadot price is expected to gradually rise by around 20 – 25 percent. Setting it at a price somewhere between $8 to a high of $8.25. Going into late 2021, the DOT may even be valued at $20.
Beginning in 2022, the prediction was that the Polkadot price will likely carry through with a rough value between $8 to an optimistic $10. Assuming a continued gradual rise, the token will surpass $11 by the end of 2022. On the 12th of January, 2021, DOT found bullish support at the $7.50 level and initiated a bull rally that enabled the price to break above the $10.00 mark. The rally carried the price to the $17.50 mark.
Slow and steady wins the race?
Assuming a continued pattern, the data suggests that the DOT coin price are expected to value at $20 to $25 by the start of 2025. If Polkadot is successful at achieving this goal, they can expect to hit $35 by the middle of 2025. Closing out the year, the DOT would hit $40 to $42 if this pattern proves consistent.
Polkadot price prediction: A view from across the web
Coinpedia price prediction
Coinpedia’s Polkadot price prediction has forecast long term stability. Suggesting that the DOT price will gradually rise with little resistance over the coming years.
Wallet Investor price prediction
The AI lead Wallet Investor predicts doom and gloom for the Polkadot DOT price, showing immediate bearish trends followed by a sudden and devastating crash. Bizarrely, any day now we should expect the DOT to crash to $0.2 before the end of 2020. This could be a result of the limited data on the cryptocurrency due to its newness. Therefore, this price forecast doesn’t seem reliable.
Digital Coin price prediction
Digital Coin’s Polkadot price prediction suggests an upwards trajectory. They predict that the price could be nearly doubled by the end of 2021 at $9.02. Somewhat less ambitious, they expect the value of the coins to hit $25.09 by the end of 2027. They also state that investment in Polkadot will be a valuable asset in the years to come.
Will Polkadot takedown Ethereum? It’s a tough road ahead but it’s very possible. Transactions on Polkadot are already a staple in blockchain tech. The astronomical rise of the Polkadot project suggests a bright future for the DOT price.
Polkadot can process transactions across multiple chains simultaneously. This parallel processing capability gives Polkadot scalability that other chains lack. Polkadot allows the creation of custom chains that can quickly connect to the network. The apps developed by these custom chains can interact with each other. Interoperability has been a big desire for makers of decentralised apps. This is because for true blockchain independence and flexibility to happen, different chains must interact.
The future of blockchain is all about tailor-made chains interacting with each other and not one blockchain to rule them all. Polkadot’s Ecosystem project will facilitate interoperability among independent chains.Vanrijmenam
Polkadot is not the only platform focused on blockchain interoperability. There is also Cosmos, but Polkadot has gained more attention because Polkadot’s Substrate Framework offers more versatility and makes it very simple to launch a new blockchain.
A bumpy ride
Traders should expect Polkadot price to rise to retest the $19.00 resistance level as the price moves upwards. The positive technical indicators and the rising trade volume suggests a bullish breakout above the level towards the $20.00 mark.
On 28th January, the two technical analyses show divergence and suggest that the Polkadot price may not recover soon and instead fall below the $15.00 mark. If DOT falls below the $15.00 mark, the next support level is located at the $12.50 level.
Latest news is on the first-ever Polkadot (DOT) ETP, or exchange-traded product, was launched on the Swiss Stock Exchange (SIX exchange) by 21Shares, a Switzerland-based crypto-assets investment provider. This is quite big news for the Polkadot ecosystem, as such a product will enable institutional access to the crypto. The DOT ETP launching was on 4th Feb 2021.
Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.