Is Polkadot (DOT) Worth Buying in 2021?

Last Updated July 23rd 2021
9 Min Read

Have you been wondering if Polkadot (DOT) is worth investing in in 2021? Have you been asking why Polkadot is so popular today and looking at reasons why you should consider buying Polkadot?

In the year to date, Polkadot has had a great run and has been consistently listed among the fastest-growing cryptocurrencies. Experts are then confident that it will sustain this growth momentum moving forward - making it a must-have for any crypto investor.

It has even been given the tag “Ethereum Killer” because of the rate at which it is expanding not just its blockchain’s developer community but also growing the value of its digital currency.

Having started the year trading at around $9, Polkadot has almost doubled this value and currently trades around $17, with an all-time high of $49.69 set less than 2 months ago. Most analysts, therefore, expect DOT prices to rise again and possibly resume the early January - May 2021 rally.

But will it get back to these highs soon? In addition to the possible price rebound, why else would you consider buying DOT, and are there risks to Polkadot investments?

We answer all these here. First, though, we help you understand what Polkadot is and how it works.

Read on.

What is Polkadot (DOT)?

Polkadot is the blockchain for other blockchains. It is an open-sourced multi-chain protocol that facilitates the transfer and sharing of data between different blockchains. Put simply, Polkadot can be described as a bridge connecting different blockchains and facilitating data transfer therein.

It was created by the Web3 Foundation - a Swiss-based technology company - led by Dr Gavin Wood, a co-founder of the Ethereum blockchain. According to the foundation, Polkadot is aimed at helping different blockchains achieve interoperability through a community-driven and trustless platform.

It has been dubbed the ‘Ethereun Killer’ because it in so many ways works like Ethereum - providing a highly secure environment where smart contracts and any form of data can be shared between different parties.

But while Ethereum relies solely on a single blockchain to process all transactions initiated on the platform, Polkadot supports multiple chains that verify different transactions independently at the same time (often referred to as parachains). This then makes Polkadot more scalable, which means faster transaction processing, zero delays, and extremely low GAS fees.

Why Is Polkadot (DOT) So Popular Right Now?

For starters, the crypto community is drawn to the Polkadot blockchain of its innovativeness and solid repute - majorly derived from the fact that it has one of Ethereum blockchain co-founders as its co-founder and lead developer.

The ‘Ethereum Killer’ gimmick has also played a crucial role in eliciting media buzz that brings the much-needed attention, and ultimately, investment to the coin. But these aren’t the only reasons that earned DOT a position among the top 10 cryptocurrencies, others include:

Ethereum’s rigidity: Ethereum’s refusal to innovate by moving away from the Proof of Work (PoW) to the Proof of Stake (PoS) consensus mechanism and delayed launch of ETH 2.0 has inspired the creation of competing blockchains like Polkadot. It offers services similar to Ethereum, but is faster in transaction processing and maintains lower translation fees.

Appeal to developers: Polkadot’s popularity has also bulged because it appeals to developers. For the past 12 months, it had the fastest-growing blockchain developer pool, which translates to a high number of apps developed on the platform and an increased number of users.  

Appeal to speculative investors: DOT token prices are also rising at an unprecedented rate. For the 10 months that Polkadot has been around, for instance, the value of its tokens has appreciated by more than 500%. They also record significant daily price action. And these two make it popular with both speculative long-term investors and day traders.

But is soaring popularity and ascent to the top 10 largest cryptocurrencies enough reasons to invest in Polkadot? Should you consider buying Polkadot?

Should I Buy Polkadot (DOT)?

The decision to invest in Polkadot should be informed not by its popularity and snowballing developer pool but by your investment goals and DOT investment’s likelihood of bringing them to fruition.

Throughout the year, Polkadot has given crypto investors a reason to buy DOT tokens. It started with a wild rally that not only had the token set an all-time high but also rank highly among the fastest-growing altcoins in 2021. And even when the market crashed, and DOT prices came tumbling, it still remained profitable, setting a support level well above its January lows.

Looking at these statistics and listening to the investor analysis and commentaries about the altcoin’s eventual recovery, you may be feeling left out. Like right now is the best time to invest in DOT tokens. Don’t let this FOMO (Fear Of Missing Out) drive you into making a hasty investment decision.

What are you supposed to do then?

Take time to study Polkadot and the crypto market at large. Understand the factors that drive DIT token prices and determine the direction they are most likely to sway. If convinced DOT token prices are upwards bound, go on and buy Polkadot tokens.

What are current DOT investors and crypto experts saying?

They are convinced that Polkadot will be a profitable long-time buy, and now that it is stuck at the dip, maybe the best time to buy.

So, Is Polkadot (DOT) Worth Buying in 2021?

The truth is, no one can really tell if now is the right time to buy Polkadot. DOT prices, like most other cryptocurrency prices, are quite volatile and unpredictable. Nevertheless, crypto experts and crypt industry analysts are convinced that Polkadot token prices will rise from the current dip soon, effectively making it a good buy.

As it continues to onboard more developers, establish linkages with more blockchains, and have more protocols and oracles link to it, Polkadot prices will continue rising. Analysis by most crypto experts indicates that the token may recover its all-time high price before the end of the year or in the next few years.

More than two months after the market crash, they are convinced that Polkadot has set its support level. That, unless other external factors come to play and disrupt the market again, DOT prices have set a launchpad and can only go up from here.

Why You Should Buy Polkadot (DOT)

When it comes to crypto investing, understand that there are no clear-cut reasons as to why you should invest in a specific coin. They are all-volatile and have a myriad of both internal and external factors influencing their price action. And all these make forecasting their next move quite difficult. But if you are still looking for clearer reasons to invest in Polkadot, here are three:

Potential for growth: Polkadot is still a relatively new cryptocurrency, and the crypto market is convinced that it has what it takes to sustain an uptrend. They are convinced it will rise and possibly set a higher all-time best price within the next few years.

Double income: Polkadot uses the Proof of Stake (PoS) consensus mechanism. You can, therefore, buy and stake these tokens, effectively doubling your income by way of earning interest from staked tokens and value appreciation from increased Polkaot value.

Always uptrending: In the close to one year that Polkadot tokens have been around, they have maintained an uptrend. It is highly unlikely that the coin will ever drop below its listing price.

Risks Associated with Polkadot (DOT) Investment

Like any other investment - crypto and otherwise - Polkadot is dogged by its fair share of risks. Most are barely scathing, but some have the potent of sinking your DOT investment. The most imminent threats facing Polkadot today can be said to be:

  • Ethereum 2.0 upgrade: When Ethereum 2.0 eventually launches, it will speed up transaction processing speeds and lower GAS fees on the blockchain. It will have addressed some of the challenges that Polkadot seeks to solve. Experts, therefore, warn that you may expect the demand for Polkadot services to slump and reflect in its DOT token prices.  
  • Competition: There is a stiff and silent battle going on in the crypto universe as different blockchains fight Polkadot to be crowned the ultimate ‘Ethereum Killer.’ It is likely that when the market decides on the best Eth Killer, the rest will have to take a backseat, which may hurt their token value. At the moment, the fiercest contenders and Polkadot’s biggest competitors include Cardano, Binance Chain, Stellar, EOS, and Solana.

Conclusion: Is Polkadot (DOT) Worth Buying?

Well, Yes. Despite the recent DOT price crash and the FUD that has engulfed the crypto market recently, the fierce competition, and the altcoin’s unpredictability, we still feel like Polkadot will be a good and profitable long-term investment.

But don’t just take our word for it. Complement our views with your own research about Polkadot, and where possible - especially if you are a beginner crypto trader - engage a professional. Only if convinced that its likely price action fits your investment goals, and even then, only invest what you can afford to lose.

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