like most cryptocurrenciescurrencies, Polkadot (DOT -6.46%) was a volatile name last year. The basic token of the multi-chain blockchain development protocol has largely followed the ups and downs of cryptocurrency’s grandfather, bitcoin (BTC -0.45%), but each swing has been just a little bit wilder than bitcoin’s. Over the past 52 weeks, this action has resulted in a price drop of 43%, compared to 20% for bitcoin. For reference, the S&P 500 stock index (^GSPC 0.25%) has moved almost exactly sideways over the same period:
In early November, Polkadot rose to $55 per token. Curious investors want to know if the cryptocurrency can overshadow this temporary high and reach the $100 threshold in the near future.
I think this is a possible outcome. Some even call it probable, and just a stepping stone to much bigger profits. This is why.
The Web3 Connection
You may have heard of Web3 before. If not, you quickly get used to it because you see it everywhere. Also see: 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 the current online ones. experience.
In the current Web2 era, social media enables the publication and consumption of many different types of media. In Web3, creators 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 sees this cross-chain protocol as the beating heart of the entire Web3 vision. In fact, Polkadot was built from the ground up to operate the Web3 system.
If and when Web3 takes off in earnest, Polkadot will be a major cog in that machine, and the token’s value will skyrocket as people start using it in Web3 apps and services. The sixfold increase in Polkadot’s value should be the start of a much larger final value.
What does Polka Dot do?
This cryptocurrency and its blockchain network are not designed to do much alone. 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. Also see: Is the Shiba Inu crypto Metaverse real or a bluff? Our 2 big concerns† For example, a decentralized financial application built with Polkadot could rely on Bitcoin for storing long-term value, Ethereum for executing smart contracts and managing non-functioning tokens, and Chainlink (LINK -6.11%) for collecting real-world data such as stock prices or the value of other cryptocurrencies. Polkadot binds all these pieces together in a well-oiled system.
There is more than that of course. Polkadot also includes an advanced process for adding new features through so-called parachains, and Polkadot projects can receive financial support through auctions and crowd lending. You would expect nothing less from a system designed by the brains behind Ethereum, who abandoned that project to start over with a better system, learning from Ethereum’s mistakes.
Patience is a virtue, really
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 grown and the Web3 revolution is in full swing, which could take a year or two from today. On the same topic: Why is the price of Cardano (ADA) rising today?† I’m pretty sure $100 for a Polkadot token will seem very cheap at the time. Patience is rewarded in this explosive industry, especially when you invest in one of the essential components of the next-generation Internet.
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