Like most encryption-Currency, Polkadot (DOT -6.46%) has been a volatile name over the past year. The underlying token of the multi-chain blockchain development protocol largely follows the ups and downs of the cryptocurrency’s forefather, Bitcoin (BTC -0.45%), but each swing has been a little more brutal than Bitcoin. Over the past 52 weeks, this action has caused the price to drop by 43%, compared to 20% for bitcoin. For reference, the S&P 500 stock index (^GSPC 0.25%) moved roughly sideways over the same period:
In early November, Polkadot rose to $55 per token. Curious investors want to know if the cryptocurrency can break this temporary rally and reach the $100 threshold in the near future.
I think this is a possible outcome. Some would call it a possibility, and it’s just a stepping stone on the road to much bigger gains. Here’s why.
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 Ditching Bitcoin Amid Crypto Market Crash?. The term was coined by crypto veteran, Web3 Foundation president and co-founder of Ethereum (ETH -0.33%) Gavin Wood to describe a future in which decentralized applications built on blockchain platforms take over the current online experience.
In today’s Web2 era, social media allows for 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 clients. All of these next-generation features will be built on the 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 serve the Web3 system.
If Web3 gets started in earnest, Polkadot will be an important cog in that machine, and the value of the token will rise when people start using it in Web3 apps and services. The sixfold increase in Polkadot’s value should be the start of a much larger bottom line.
What does Polkadot do?
This cryptocurrency and its blockchain network are not designed to do much on their own. Instead, it provides a development platform with connections to blockchain and other cryptocurrencies, allowing developers and users to take full advantage of the strengths of each cryptocurrency. See also: Is Shiba Inu Metaverse cipher real or a hoax? 2 Our main interests. For example, a decentralized finance application built with Polkadot could rely on Bitcoin to store long-term value, Ethereum to implement smart contracts and manage non-fungible tokens, and Chainlink (LINK -6.11%) to collect real-world data such as stock prices or The value of other cryptocurrencies. Polkadot ties all of these pieces together into a well-equipped system.
There is more than that of course. Polkadot also has a complex process for adding new features through so-called parachains, and Polkadot projects can get financial support through auctions and group offers. You wouldn’t expect anything less from a system designed by the mastermind behind Ethereum, who left this project to start over with a better system, and to learn from Ethereum’s mistakes.
Patience is a true virtue
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 topic: Why is Cardano (ADA) Price Rising Today?. I’m sure $100 for a Polkadot token would look really cheap at that point. Patience will be rewarded in this explosive industry, especially when you invest in an essential component of the next generation of the internet.
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