The crypto market is exciting but fragmented with thousands of cryptocurrencies running on probably hundreds of different blockchains. Understandably, communication and compatibility between these systems isn’t smooth. Polkadot seeks to solve this particular challenge. Let us deep dive into what Polkadot is and why it has grown into the top cryptocurrency lists this year.
Polkadot is a protocol designed with the intent to converge multiple blockchains together on a singular network. It is an evolution of other blockchains such as Ethereum and Cardano in the sense that it enables everyone to build custom blockchains (unlike just custom tokens) on its platform, with the added advantage of seamless, quick and transparent data exchange between these blockchains.
Polkadot was launched in 2017 as an open-source project, by Parity Technologies. Like Cardano, Polkadot also boasts an Ethereum alumnus in its founding team. Dr Gavin Wood, co-founder of Ethereum and author of the Solidity programming language, is behind Polkadot.
There are already several live blockchains operating on the Polkadot network, from decentralized exchanges to security token platforms and even decentralized autonomous organizations (DAO).
The network’s native token is DOT. It can be used by holders to participate as network validators, nominators, collators and fishermen - all distinct roles on the blockchain that allow for transmission of data via relay chains, bridges and other concepts deployed to help operate the network. Polkadot uses a Nominated Proof-of-Stake (NPoS) consensus mechanism, rewarding users for locking up DOT tokens in a process known as staking.
Despite the fact that Polkadot is fairly new to the crypto scene, it’s already one of the best-performing altcoins. DOT has done exceedingly well in recent months and is currently among the top 10 cryptocurrencies in the world. It derives a market cap of over $50 billion from the total 990 million DOT tokens in circulation. Its token supply, however, is uncapped. DOT has had a phenomenal run since July 2021, going from $11 to over an all-time-high (ATH) of $50+ today.
Source: TradingView, Binance
On its run from $11 to $50+, DOT has respected technical levels exceedingly well, with bounces off crucial supports such as the golden pocket and nearly every other retracement line. These levels are likely to play as strong support should any bearishness emerge - with bearish scenarios pointing to supports at $49 and $43.
An extremely bearish scenario would have DOT revisit $36 levels. However, that remains exceedingly unlikely as DOT continues to put in new ATHs with the broader crypto market remaining bullish overall.
In the last three days, DOT has registered more than 20% gains in anticipation of Polkadot’s parachain auctions and deployment, enabling products to register parachains and seek crowdfunding on the platform. Analysts expect some price corrections post Nov 11.
DOT is fundamentally a strong product and is destined to do well leading into 2022. As this cycle plays out, DOT can possibly grow 3x and beyond from today’s prices ($150-170 per coin) in 2022.
Disclaimer:This article was authored by Giottus Cryptocurrency Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.