When Ethereum introduced itself in the crypto market, it brought a whole new view on blockchain technology. With smart contracts, users were finally able to create their own decentralized projects within a blockchain and provide various services, whether that is gaming, databases, Decentralized Finance (DeFi), etc. Come as it may, the co-founder of Ethereum left the team and went off to create a new cryptocurrency that would attempt to be even better than Ethereum. Such a cryptocurrency would need to solve some scalability issues and provide interoperability, something that most other networks had not offered yet at that time. This new cryptocurrency was Polkadot.
Polkadot has become one of the biggest cryptocurrencies of all time, and its success over the recent years showcases that it may still be at its beginning phases. As it has already climbed in the top 10 cryptocurrency rankings, Polkadot has been a reliable investment for both day traders and swing traders. This article focuses on how much the price of Polkadot can increase based on its price factors. But first, let’s look at some of the basics of Polkadot so that you have a better idea of this promising cryptocurrency
Fundamental Analysis Of Polkadot
Gavin Wood was the co-founder of Ethereum together with Vitalik Buterin. After leaving the Ethereum project, Gavin Wood worked with Robert Habermeier and Peter Czaban to lay the foundations for Web3 Foundation, a Swiss project focusing on the decentralized web. Polkadot was founded by those three and their Web3 Foundation. In terms of credibility, Woods had already become a positive figure in crypto communities with his contribution to Ethereum since he is the creator of the programming language of Solidity, which is the language used on Ethereum’s smart contracts. Both Habermeier and Czaban were previously involved in the research and development of various blockchain projects. All in all, the three managed to create Polkadot in a way that differentiates it from the rest of the crypto market. The Polkadot whitepaper was released in 2016
Also read: What Is Ethereum? A Step-By-Step Guide
The first solution that Polkadot offered in the market is scalability. Big cryptocurrencies such as Bitcoin may take a longer time to process transactions, and this can lead to higher costs. Ethereum is considerably more scalable than Bitcoin, but it may still be a little slow for day traders who need transactions to be verified instantly. Polkadot, on the other hand, is one of the best cryptocurrencies when it comes to scalability, where transactions are faster and cheaper.
Another problem that Polkadot resolves is interoperability. Previously, it was not possible to use BTC tokens on the Ethereum network or vice-versa. To illustrate, some users may have wanted to use their BTC tokens for DeFi services offered in the Ethereum network. Polkadot changed this as it is one of the very few cryptocurrencies that offer interoperability of different blockchains at the same time. So how exactly does Polkadot achieve this?
Four main features of Polkadot achieve this efficiency in the Polkadot network: Relay Chain, Parachains, Parathreads, and Bridges.
The relay chain is also known as “Polkadot’s heart” due to its importance in the network. The relay chain is responsible for verifying transactions in the network. The relay chain is also responsible for the nomination process of the consensus nodes that secure the Polkadot network. Furthermore, the relay chain is also important for maintaining all the data in the network. Lastly, the relay chain serves as a system responsible for keeping the network steady, identifying malfunctions, making important changes to keep the network healthy, etc. All these functions showcase how important the relay chain is to Polkadot. That’s why many refer to it as the heart of the network.
Parachain is the second key feature that enables Polkadot to be scalable and offer interoperability. If the relay chain is the main chain of functions in the Polkadot network, the parachain is a chain within the relay chain. Using parachain technology, the Polkadot can host various blockchains within its network where each serves as a parachain. To illustrate, even Ethereum and Bitcoin can be within Polkadot as a parachain. Since they would be parallel and connected, each parachain can communicate information to one another. This would enable transactions between such blockchains within Polkadot, making it technically possible for BTC to be used in Ethereum within the Polkadot network. This is achieved through Cross-Chain Message Passing, which is also known as XCMP.
Parachain makes such blockchains in Polkadot even safer than they are now. While it would be technically impossible for a hacker to control 51% of the nodes in the Bitcoin network, using parachain would mean a much bigger network and less possibility of a 51% attack from occurring.
The only downside of parachain is that only around 100 parachains can be supported by the Polkadot network.
In simple terms, parathreads are similar to parachains, but the difference is that parathreads are more temporary. Parachains require up-front payments while parathreads are a “pay as you go basis.” A parachain would be expensive to be maintained by a startup cryptocurrency project. Because of this, the Polkadot network offers parathreads as a testing version of the parachain. Both a parachain and a parathread have similar functions, but the parathreads are more adequate for smaller cryptocurrencies that want to test how working in the Polkadot network would be.
Last but not least, bridges are another key feature of the Polkadot network that enables interoperability. As the name suggests, the function of the bridges technology is to connect different blockchains within Polkadot. While using parachains, bridges allow the direct communication of two different blockchains, such as Bitcoin and Ethereum. If you would want to use your BTC to purchase NFTs in Ethereum, you could do that thanks to bridges. This feature gives users more liberty, options, and diversity, while still maintaining scalability.
Polkadot uses Nominated Proof-of-Stake (NPoS) as a consensus mechanism. The NPoS requires that some nodes are nominated for securing the network. This is done through staking DOT tokens, which require that users lock their tokens for a period and receive rewards after the staking period is over. Each user can nominate themselves and other nodes for validating transactions. Up to 16 validators can be nominated by a user. So if you wish to simply stake without being a validator, you can nominate other nodes to ‘represent’ you.
In terms of tokenomics, Polkadot has a total supply of around 1 Billion DOT tokens. There are around 958 million DOT tokens in circulation as of July 2021. Polkadot underwent a redenomination in August of 2020, which was known as the “New DOT.” When the DOT token was launched after the redenomination, the price of DOT was around $2.7. In May of 2021, DOT reached its highest of all time at $49.69 but now has dipped at $17 as of July of this year. With this price and a circulating supply of 958 million DOT tokens, the market cap of Polkadot is around $16.1 Billion, placing Polkadot at number 9 in crypto market rankings. The fully diluted market cap is around $18.1 Billion.
Polkadot Price Prediction 2021
Wallet Investor predicts that Polkadot may reach the $47 price target in December, therefore, approaching the all-time high of $49 DOT had reached in May 2021. This might be influenced by Bitcoin itself if the latter’s price increases again in the upcoming months.
Previsioni Bitcoin also predicts an increase in the price of Polkadot in the remaining months of 2021. They predict that the price of DOT may get very close to $80 by the end of this year.
YouTuber Sheldon Evans also predicted an increase in the price of DOT back in January of this year, stating that the price of DOT may easily exceed $100 within a year. This comes due to the fact that Polkadot solves many problems in today’s cryptocurrency market, which can simultaneously attract more investors in the short term. So far, Evans’ predictions have accurately described how DOT would increase in the bullish run of the first quarter of 2021. Perhaps, his projection for the next 12 months might also be on point.
Another YouTuber BitBoy Crypto predicts that Polkadot can have a huge increase in its price in the remaining months of 2021, potentially exceeding $300 because of all the features that can increase its demand in the short run.
Polkadot Price Prediction 2022
Wallet Investor predicts that the price of DOT can keep increasing in 2022. They predict that DOT can double its highest of all time by the end of 2022, possibly exceeding at least $90. In terms of hitting the $100 milestone, Previsioni Bitcoin predicts that DOT may exceed $100 midway through 2022, possibly reaching even more than that.
Price Prediction For The Next 5 Years
As for the next five years, Wallet Investor predicts that Polkadot can increase even more, potentially exceeding $200 and reaching close to $250. Such an increase in the price of DOT would mean that the market cap of Polkadot can exceed $200 Billion. In today’s market, that would place Polkadot in the top three cryptocurrencies, behind Bitcoin and Ethereum. Since some refer to Polkadot as an “Ethereum killer,” the success of Polkadot could potentially have negative impacts on Ethereum. However, a lot of developers suggest that the two should not be compared since they offer different functions and can work together for even more success.
YouTuber Invest Answers gives a careful analysis on Polkadot and looks at its price predictions based on many experts (both bullish and bearish), and he gives a verdict of his own as to whether DOT can increase in the long term. He estimates that the average price of DOT can exceed $300 in the next five years.
Our Polkadot Prediction
Because of the supply and demand factor, interoperability, scalability, and much more, we at Crypto Academy predict that the price of DOT can only keep increasing in both the short run and the long run. It is undoubtedly clear that Polkadot offers so much more than the majority of other blockchains, and its potential has still not been reached despite being in the top 10 crypto rankings.
Due to all the price factors of Polkadot, we predict that DOT can reach a price of $122 in the remaining months of 2021 and up to $231 in 2022
As for the long term, we predict that DOT may potentially exceed $600 in the years to come. Whether DOT can hit a market cap of $1 Trillion depends on cryptocurrencies in general and their increase in popularity over the next 10 years. Nevertheless, the future of Polkadot looks bright.
How to Buy Polkadot?
- First, you need to find a trusted cryptocurrency exchange such as Binance.
- After doing so, you need to create or log in to your account. There you have the option to Buy Crypto, where you need to choose a payment method such as debit or credit card.
- Once you do that, you select the desired amount of DOT tokens in the Coin menu.
- Once you press the Buy DOT option, you need to verify yourself by filling out private information and uploading a verification document such as a passport. You also need to take a picture of yourself so that Binance matches your ID with your face.
- After the verification is completed and the DOT tokens are purchased, they go to your Binance wallet. It is safer if you transfer those tokens into a safe cryptocurrency wallet.
Is Polkadot a good investment?
Yes, Polkadot is a good investment since its price is predicted to increase in the future.
Can Polkadot price ever reach $100?
Polkadot can easily exceed $100 in the coming months because of an increase in demand and due to the fact that it is one of the most promising project in crypto world.
Is Polkadot worth buying in 2021?
Yes, Polkadot is worth buying in 2021, especially after the current price dip after the bullish run in the first quarter.
Can Polkadot price increase?
The price of Polkadot can increase in both the short run and the long run because many investors are shifting their interests in it due to all the problems that it solves (scalability, governance, interoperability, etc.)
Where to store Polkadot?
- Polkadot is a cryptocurrency that solves salability, interoperability, and governance issues in a network.
- As an NPoS network, Polkadot has four main features that make it so efficient: Relay Chain, Parachain, Parathreads, and Bridges.
- Polkadot has had quite the success of the months.
- The price of DOT is predicted to increase in both the short run and the long run.
- To buy DOT tokens, you can use cryptocurrency exchanges such as Binance.