Polkadot (CCC:DOT-USD) is a “platform of platforms” created to upgrade Ethereum (CCC:ETH-USD) and overcome its many drawbacks, according to DOT-USD founders. Its goal is to provide better security, scalability, and innovation on the Ethereum blockchain network. There is a good chance the Polkadot network will succeed, which will push the price of DOT-USD much higher.
As of June 2, DOT-USD is down more than 45% at $26.40 from its peak of $47.946 on May 13. This implies that once the altcoin recovers, it could become a stellar performer.
Just moving back to its former peak alone would give the DOT crypto a gain of 81.9%. I believe there is a good chance this could happen before the end of the year.
Polkadot’s Standout Features
Polkadot is the eighth largest cryptocurrency in terms of market capitalization as of June 2 at $24.4 billion. Its price was at $9.232 as of Dec. 31, and so at today’s price of $26.40 it is up 185%, despite being off its mid-May peak.
Polkadot started in late 2016 when its white paper was written by one of the founders, Gavin Wood, who was also a co-founder of Ethereum. Later in 2017, on Oct. 27, the company closed an initial coin offering (ICO) raising 485,331 ETH (Ethereum). The ICO raised over $140 million when a company called the Web3 Foundation sold half of the 10 billion DOT tokens comprising the total supply. Since then the foundation raised more money in two sales of DOT tokens during 2019 and 2020.
Moreover, the DOT token has another unique feature. It is available for trading on a major crypto exchange, Coinbase (NASDAQ:COIN). This has been a major reason for its high market valuation. It helps sustain the crypto, as it is easier for consumers to buy and sell Polkadot via Coinbase.
Polkadot’s blockchain platform allows messages and monetary values to be transferred peer-to-peer. In addition, Polkadot uses a proof-of-stake (P0S) validation system. Anyone can nominate a validator, although typically PoS-as-a-service operators validate transactions.
In addition, Polkadot acts as a bridge across all other blockchains including private, public, and permissionless networks. It is a next-gen blockchain network whose aim is to connect multiple blockchains into one network.
Moreover, Polkadot holds auctions for a limited number of parachain slots it can give out to a limited number of auction bidders. They effectively lease out a slot for 2 years and earn fees.
Where This Leaves DOT-USD
In Aug. 2020 Polkadot did a reverse stock split. For every token held on Aug. 21, 2020, holders received 100 tokens. The supply rose from 10 million tokens to 1 billion tokens. This initially lowered the price by 100 times. But prices rose from that lower value, making the reverse split very successful.
Polkadot is starting to gain acceptance by operators in the decentralized finance (Defi) app arena, due to its ease of use and scalability.
For example, recently a Defi app called Acala that uses the Polkadot blockchain network signed a deal with a NY-based bank called Current. Their goal is to reach many of the “unbanked” who don’t have access to traditional banking products.
In addition, there are a good number of other projects using the Polkadot network. These include Parsiq, a “smart trigger” app that sends alerts to users, and Orion, an integration code used in Defi apps and NFTs (non-fungible tokens).
Therefore, as Polkadot becomes more popular as a platform of platforms, the DOT-USD token price is bound to rise as well. Look for it to rebound to its former heights by the end of the year, a potential gain of 82%.
However keep in mind that, as with most cryptocurrencies, that Polkadot is a highly speculative and volatile digital asset. As a result, most cautious investors will only invest a small portion of their total investable assets in a crypto like Polkadot.
On the date of publication, Mark R. Hake held a long position in Ethereum (ETH-USD). The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.