Like most of crypto-currencies, Polkadot (DOT -6.46%) has been a volatile name over the past year. The multi-chain blockchain development protocol’s base token largely followed the ups and downs of cryptocurrency’s grandfather, bitcoin (BTC -0.45%), but each swing was just a bit wilder. than that of bitcoin. Over the past 52 weeks, this action has resulted in a 43% drop in price, compared to 20% for bitcoin. For reference, the S&P 500 stock index (^GSPC 0.25%) moved almost exactly sideways over the same period:
In early November, Polkadot soared to $55 per token. Curious investors want to know if the cryptocurrency can eclipse this temporary high and reach the $100 threshold in the near future.
I think this is a possible outcome. Some might even call it likely, and just a stepping stone on the road to much greater gains. Here’s why.
The Web3 connection
You may have heard of Web3 before. If not, you will soon get used to it because you will see it everywhere. See also: Are Institutional Investors Dumping Bitcoin Amid Cryptocurrency Market Crash?. This term was coined by crypto veteran, Web3 Foundation Chairman and co-founder of Ethereum (ETH -0.33%) Gavin Wood to describe a future where decentralized applications built on blockchain platforms take over from the current online experience.
In today’s Web2 era, social media enables the publication and consumption of many different types of media. In Web3, creators will have more control and better monetization tools at their fingertips, while creating more interactive experiences for their consumers. All of these next-gen features will be built on blockchain platforms, while fees and payments will be managed by cryptocurrencies.
Gavin Wood is also a co-founder of Polkadot, and he sees this cross-chain protocol as the beating heart of the entire Web3 vision. In fact, Polkadot was built from the ground up to serve the Web3 system.
If and when Web3 kicks off in earnest, Polkadot will be an important cog in that machinery, and the token’s value will skyrocket when people start using it in Web3 apps and services. The six-fold increase in Polkadot’s value should be the start of a much larger final value.
What does Polkadot do?
This cryptocurrency and its blockchain network were not designed to do much on their own. Instead, they provide a development platform with connections to other blockchains and cryptocurrencies, allowing developers and users to take full advantage of each cryptocurrency’s strengths. See also: Is the Shiba Inu crypto Metaverse real or a bluff? Our 2 major concerns. For example, a decentralized finance application built with Polkadot could rely on Bitcoin for storing long-term value, Ethereum for executing smart contracts and managing non-fungible tokens, and Chainlink ( LINK -6.11%) for collecting real-world data such as stock prices or the value of other cryptocurrencies. Polkadot ties all of these pieces together in a well-oiled system.
There is more than that, of course. Polkadot also contains a sophisticated process for adding new features through so-called parachains, and Polkadot projects can get financial support through auctions and crowdloans. You wouldn’t expect anything less from a system designed by the mastermind behind Ethereum, who left that project to start over with a better system, learning from Ethereum’s mistakes.
Patience is a virtue, for real
Polkadot has only been around since the summer of 2020, and the ecosystem is still under construction as parachains are added weekly. Come back when Polkadot is fully mature and the Web3 revolution is in full swing, which could take a year or two from today. On the same subject : Why is the price of Cardano (ADA) rising today?. I’m pretty sure $100 for a Polkadot token will seem really cheap at that point. Patience will be rewarded in this explosive industry, especially when you invest in one of the essential components of the next-generation Internet.
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