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Polka dots (CCC:DOT-USD) just had the dubious accolade of being the biggest weekly loser in the top 30 altcoins when sorted by market cap. This sets the price of the DOT token to less than $ 16. In context, the altcoin hasn’t been that low since January.
You expect volatility when investing in cryptocurrency. However, if you’re the ninth highest altcoin by market cap, you’d be hoping for some more love from investors. Why does polkadot fall?
In the case of Polkadot, investors may have been waiting for a successful launch of the company’s parachains. In this scenario, Polkadot could process up to a million transactions per second. As comparison, Visa (NYSE:V.) processes around 4,800 per second.
However, with the company’s first successful launch in the rearview mirror (and others coming soon), Polkadot is delivering a compelling proof of concept that should push its DOT token higher.
The blockchain of blockchains
Polkadot is more than a blockchain-powered network (although it is). Rather, Polkadot is an ecosystem of connected blockchains. The central chain provides security for the entire network, while the side chains (known as parachains) make the Polkadot network more scalable than, for example, Ethereum (CCC:ETH-USD).
Speaking of Ethereum, one of Polkadot’s main goals is the ability to build “bridges” that allow Parachains to communicate with external networks such as Ethereum or Bitcoin (CCC:BTC-USD) blockchain.
The real benefit for this means that in a Polkadot future, smart contracts created on the Ethereum blockchain can interact with a blockchain that is geared towards a different type of information and the transactions can be processed in parallel.
If it sounds like I know what I’m talking about, I assure you that I am not doing polkadot justice. But that’s because I don’t see it yet. But as I was reminded, this was also the case when the internet was created.
Invest in the future of the internet
I recently spoke to someone about the usefulness or lack of altcoins. Since we were both of a certain age, this person asked me to think back to 1999. He said at the time that the internet was not what it is today. There were things we couldn’t see. But there was always something moving in the background, and those were the things investors were buying.
Did they all work? Of course not. Will all cryptos have a long-term future? Maybe not. But if I let that thought go, I think Polkadot has an above-average chance. And I’m not saying this out of a belief that it will replace Ethereum.
I see a lot of comments with people referring to Polkadot as the Ethereum killer. I think this is not only exaggerating Polkadot’s abilities, but its intent as well. The reality is that Polkadot and Ethereum coexist and will continue to exist. For many developers, Ethereum will remain the blockchain of choice.
Now is the time to buy DOT?
One concern I have is that Polkadot could be one of the newer “competitors” for Ethereum. But it’s not the only one. Far from it. In fact, an article in the Daily Hodl on June 26th advocated two obscure altcoins that could sell Ethereum and, among other things, Polkadot.
That’s the thing with the crypto sector right now. New coins hit the field almost every day. And many of the coins serve a similar purpose. As I see it, it invites you to a game of Whack-a-Mole. When a coin shows up, other coins are struck.
Right now, DOT is being beaten up. But when you look at altcoins that should survive the inevitable day of crypto settlement, Polkadot looks like one that will prove to be valuable.
At the time of this writing, Chris Markoch held positions (neither directly nor indirectly) in the securities discussed in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s posting guidelines.
Chris Markoch is a freelance financial writer who has covered the market for seven years. He has been writing for InvestorPlace since 2019.
The Launch of a Polkadot Parachain Is Good News first appeared on InvestorPlace.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.