A young couple sitting on their bed with their dog and each shopping online with their laptop. Here are some of the reasons people see Polkadot as a potential “Ethereum killer”. To understand Polkadot (DOT), we must first understand the idea of programmable blockchains. They are ecosystems where applications and other cryptocurrencies can be built.
Bitcoin (BTC) was the first decentralized digital currency. The tamper-resistant ledger showed the world that it was possible to make payments without an intermediary to validate the transaction. Programmable blockchains have raised the bar. DOGE Dogecoin price has risen.
These blockchains contain tiny bits of self-executing code, so they do more than just track payments. They let us build all kinds of applications that don’t require third parties – not just payments. As such, they can take the middleman out of many everyday interactions. For example, we could program an insurance policy to pay out automatically when certain conditions are met.
It is still early for this technology. There is clearly the potential for blockchain to impact our lives and transform various industries, but the technology is still evolving. Different organizations compete to solve the technical problems and find business applications. Here are some reasons why Polkadot stands out.
1. Polkadot can talk to other networks
Ethereum (ETH) is currently the largest programmable blockchain in the cryptocurrency industry. According to State of the Dapps, more than 80% of decentralized applications (Dapps) are built on its network. Unfortunately, the Ethereum network has not kept up with its dramatic growth. Until it can upgrade to Ethereum 2.0 (Eth2), the system is slow, overloaded and expensive. In addition, it does not work well with other networks. Holo Chain price has fallen.
Polkadot is not only faster and more scalable, it is also designed to work with other networks. This would allow developers to build applications that use both the Ethereum and Bitcoin blockchain, for example.
2. Polkadot’s Parachains Reduce Congestion
We mentioned speed and congestion earlier. Polkadot uses parachains to solve these problems. Instead of pushing all applications over one network, each application has its own mini-blockchain – or parachain – that connects back to the main chain.
In practice, this means that if there is a strong demand for a particular application, it will not affect the performance of applications on the Polkadot blockchain. Think of it as side roads diverting traffic away from a busy arterial road.
3. It has gained more than 630% since launch
DOT was launched in August 2020 and initially traded at $2.76 per coin. At the time of writing, CoinMarketCap estimated its value at $20.21 – roughly a 630% increase in less than a year.
It hit a record high of $49.69 on May 15 before losing more than half of its value in the recent decline in crypto price. If you’re considering buying Polkadot, think about whether you think the coin has long-term potential. It could make huge profits next year, but it could also fall further. By investing for the long term, you can absorb any losses in the short term.
4. One of Polkadot’s founders was also a co-founder of Ethereum
Ethereum may have been the brainchild of Vitalik Buterin, but there were a number of people involved in launching the project. One of them was Dr. Gavin Wood, who was Ethereum’s Chief Technology Officer before co-founding Polkadot. The other two co-founders, Robert Habermeier and Peter Czaban, also have great crypto credentials and solid backgrounds in cryptography and distributed technology.
5. It has a fast growing pool of developers
The cryptocurrency market is so new that it can sometimes be difficult to compare projects and understand the basics. Market caps can be misleading. Coins use different validation methods, solve different problems and there is very little historical data.
One factor to look at is the management team. Another is how much time developers put into the project. A recent report from Electric Capital showed that Polkadot nearly doubled its development community from 197 people in 2019 to 388 in 2020. This is still a fraction of the number of developers working on Ethereum, but it is still an indication of the growth and Popularity of Polka Dot.
6. Polkadot still faces stiff competition
The five points above show whyPolkadot is an exciting project with a lot of potential. Anyway, there are several competing cryptocurrencies in this space. And so far, few cryptocurrencies have been able to hit Ethereum. If it can upgrade to Ethereum 2.0 before too many developers move to other blockchains, we can expect it to continue to dominate.
In the long run, there is almost certainly room for multiple players, but not all of them will succeed. It would only take one major security breach to diminish trust and put Polkadot — or any of the others — out of the game. Other movers worth checking out in the programmable blockchain market are:
Cardano also has a strong team and a well thought out concept, which is why both Polkadot and Cardano are regularly referred to as potential Ethereum killers.
If you are considering buying Polkadot, you can get it from most major US cryptocurrency exchanges. Keep in mind that all cryptocurrency investments come with risks. Prices can be extremely volatile, so it’s not a good idea to invest money that you can’t afford to lose. We don’t yet know how regulations will develop in the US, which could be a game-changer for the crypto industry as a whole.
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