Here is another coin that is the brainchild of one of Ethereum’s co-founders. Gavin Wood is the man behind the Polkadot network. Founded in 2016, the Polkadot network is already progressing towards incentivizing the global network of computers, enabling users to create and operate their blockchains.
What is Polkadot (DOT)?
Polkadot is an open-source blockchain technology, completely focused and driven to create a decentralized web that will be completely transparent and fully public yet functional and user-friendly. Their primary focus is breaking down centralized services and making room for innovation. Beginning of 2020, Polkadot came up with multiple crypto-based software solutions for the banking industry. Since it was developed by one of Ethereum’s co-founders, it is often addressed as the “Ethereum Killer.”
Polkadot is a reasonably young crypto asset, and DOT is the utility token of the network. However, it was swift in basking popularity in the crypto space in 2021 and 2022. The consensus of Polkadot is very promising, and experts predict that soon Polkadot can be positioned near high-ranking cryptos like BNB, Ethereum, etc. Polkadot’s interoperability across various blockchains is a significant plus in every aspect. While many networks plan to offer similar concepts, only Polkadot has brought its vision to reality.
Polkadot network allows blockchains to upgrade without the need to fork the chain. It enables several transactions to be conducted simultaneously and is open to more innovations and collaborations with other blockchains.
The purpose of DOT
DOT, the utility token of the Polkadot network, has these primary objectives:
- Staking: Storing funds in a digital wallet can fetch its users more DOT tokens by running operations on the blockchain.
- Governance: DOT holders have full control over the Polkadot protocol. They have the freedom to decide the events that can take place, through voting.
- Bonding: DOT holders have the liberty to block a certain number of tokens for a specific time.
Reasons behind Polkadot (DOT) price increase
This soaring value of DOT has caught the investor’s and traders’ attention. Here are a few possibilities for the price hike:
The development of the Polkadot network
Development of the Polkadot blockchain has largely contributed to the hike in DOTs value. Its DeFi protocol has been the most significant development milestone for the network. Polkadot has been successful in captivating investor and developer attention. Many tech-savvy users are migrating to the network and coming up with crypto-based projects. The Polkadot network’s growth towards the para chain has successfully provided solutions to Ethereum’s drawbacks, including speed, transaction fees, and scalability.
BTC price drop
Price movement of Bitcoin (BTC) plays a significant role in the rise of DOT values. In early 2021, the halving of Bitcoins was one of the many causes of the slowdown of BTC and the rise of other crypto assets like DOT. However, Polkadot follows the market trend. When the market is bearish, the crypto asset loses its value, and when the market is bullish, it gains momentum.
Polkadot Price Trajectory
When we look at stock market investment or crypto market investment, the idea behind the motive stays the same. It is to minimise risk and maximise returns. To fulfil their objective, investors go through price charts, growth trajectories, information, and other factors that drive the asset price. The DOT token was launched in the latter half of 2020 at $2.79, and the price moved sideways for six months. Sideways, meaning there was no significant change. However, in January 2021, the price soared a whopping 208% from its opening price, peaking at $8.62.
The bullish trend continued, skyrocketing the price to $39.70 within a month, giving a 360% surge. After this, the price took a sharply negative turn, hitting the $32 mark and moving sideways again for a few months. However, with the launch of parachains in mid-2021, which was the final launch of the multi-phase process, DOT prices hit an all-time high of $47.95. 2021 was indeed an eventful year for DOT, creating all-time highs and witnessing tremendous lows. The summer of 2021 was no different, as DOT fell as low as $10.42 due to a node failure.
The DOT price was again in the news by November 2021 for creating an all-time high from its July lows, surging over 400% in touching $55. Following its trend, DOT closed the year at $26.72. Things went downhill in 2022 owing to a series of crashes and the collapse of FTX. In December 2022, the coin closed at $5.
The year 2023 had witnessed a comeback so far, when DOT moved past the $5 mark and is currently trading at $6, with a very high 24-hour trading volume. When put on a chart, the price trajectory will depict some very sharp positive and negative turns. However, with the positive news surrounding the network, it is expected to come back in the following years.
Is Polkadot a good investment?
The crypto market is highly volatile, which is pretty clear from DOT’s price history. Before investing, it is essential to undergo proper research and analysis for any coin or token. It is difficult to predict if DOT will be a wise investment for your portfolio because it depends on your risk-taking capacity, the duration of your investment, and the intention behind it. If you are a short-term investor, this may not be for you because it is difficult to predict how the market will perform soon.
However, you must also remember that while past performance is the basis for our investment, it is not a guarantee for future performance or returns. You must go through with this only if you can afford to lose, as the prices may also experience sharp falls. You can also check our guide on Top 10 Cryptos and The Things every Crypto Investor must Remember as the basis for your research and enhance your knowledge database.