Polkadots: Are They A Good Investment?
Polkadot is one of the newest cryptocurrencies that is rapidly gaining popularity. At the moment, Bitcoin remains the top cryptocurrency and is not at risk of losing its position. But polkadot is inching upwards and threatens Ethereum, a high-ranking cryptocurrency.
Cryptocurrency Polkadot is the native token of its blockchain. Similar to a database, blockchains store information. A permanent timeline is created using Blockchain technology without the need to purge data.
Transparency and visibility for everyone, with uneditable records. One bank or entity does not control a decentralized currency.
How Blockchains Differ From Banks
In contrast to a banking network where the central bank oversees all the banks farther down the network, blockchain is decentralized – no central bank is involved.
Governments also heavily regulate banks. On the other hand, blockchains are primarily unregulated, making them vulnerable to exploitation by criminals. Despite the centralized network of banks, your money is generally safe in a bank.
A fraudulent transfer is a loss the bank is responsible for under the Electronic Fund Transfer Act. Because cryptocurrency transactions are anonymous and irreversible, it’s unlikely to recover your cryptocurrency if you lose it.
Your cryptocurrency wallet does not provide such protection. Blockchain transactions can be completed in less than an hour, whereas bank transactions can take days or weeks.
How Is Polkadot Different Than the Competition?
Compared to other popular cryptocurrencies, Polkadot is relatively new. Bitcoin was the first digital currency to emerge. Compared with Ethereum, the second-most popular cryptocurrency, it can only accomplish basic tasks.
Ethereum charges each task, so more complex transactions can quickly add cost. A significant upgrade to the Ethereum blockchain is expected to reduce network congestion due to its single ‘lane’ for transactions.
In Polkadot, there are parallel chains, which are linked chains. Thus, Polkadot is a ‘multichain’ which allows for speedy transactions by running blockchains side by side.
Transactions can be completed faster if there are multiple lanes available. Polkadot also allows for interaction with other blockchains. The flexibility of its blockchain network allows it to deliver more specialized services.
Polkadot’s first fully operational parachain, Moonbeam, was launched in January. Polkadot supporters contributed $1.4 million in its token DOT to help the innovative contract platform win a parachain auction in October.
Over 80 projects will be deployed by Moonbeam using its protocol. The auctions also won four more parachains. CoinDesk reports that Deutsch Telekom, Europe’s largest telecommunications company, has expressed interest in Polkadot.
A subsidiary of T-Systems Multimedia Solutions, which has acquired DOT, will provide infrastructure so users will be able to stake assets on Polkadot and verify transactions.
Why Are Investors Choosing Polkadot?
As a result of its interactive nature, Polkadot is gaining investors’ interest. A developer can connect blockchains to Polkadot or even create an entirely new blockchain from scratch.
New technology attracts investors when developers flock to it. Bitcoin and Ethereum are often bought in fractional parts based on their value. Polkadot trades for $6.39, making it more affordable.
A new cryptocurrency opportunity is a great investment opportunity for investors, albeit one with a higher risk. Polkadot last traded at $2.69 in August 2020. According to the most recent data, it has reached over $6.
Its current price represents a nearly 140% increase over last November’s highest price of $53.98. An investment return of this sort is appealing to investors. Some investors believe Polkadot to be an inevitable step forward for cryptocurrencies.
The technology represents a significant step forward in blockchain development. It’s a business model that can overgrow. Polderdot’s developers just unveiled a plan to improve scalability, para-chain development, cross-chain communication, and other operations to spur growth. Growth is a sign of value for investors.
A foundation also rewards DOT holders. A token holder has governance rights over a cryptocurrency platform, including voting rights on network fees, establishing or removing parachains, and upgrading the blockchain.
With Polkadot’s DOT tokens, bad investors are weeded out. It leaves Polkadot open for serious investors who can improve its services.
Risks Of Investing
In 2016, Ethereum founder Gavin Wood revealed Polkadot’s whitepaper. Due to its inexperience as a new currency, it is significantly riskier. Furthermore, cryptocurrency prices could fluctuate wildly, coins are not backed by a tangible asset, and government regulations could limit their usage.
Despite its youth, Polkadot has a lot to offer. Risky investments could pay off big in the long run if you’re willing to take them. But Polkadot could also fail if a newer, better technology overtakes it.
Despite Polkadot’s many projects in the pipeline, its cryptocurrency is yet to prove its worth. It has already gained monetary value in exchanges, making crypto worth monitoring.
edited and proofread by nikita sharma
