Is Polkadot (DOT) Cryptocurrency A Buy Right Now?

Last Updated May 23rd 2022

4 Min Read

Planning to invest in DOT? Here’s everything you need to know about the Polkadot ecosystem.

While Bitcoin remains on top of the cryptocurrency market, other upcoming coins are challenging its supremacy. Polkadot, a relatively new coin, is carving its niche in this industry. But what is Polkadot, and how does it work?

Polkadot is a bit different from its predecessor Ethereum, which has only one avenue for transactions, such that only one transaction can happen simultaneously. However, Polkadot operates on parallel chains or parachains that are a series of interconnected blockchains. The parachains allow more transactions on the Polkadot blockchain, making it cheaper than carrying out these transactions on Ethereum.

Polkadot developers have also made the platform flexible enough to connect to other blockchains easily. This ability allows it to serve specific requirements. It makes the platform more interactive as compared to Ethereum.

So is DOT a buy, hold or sell right now? Read on to find out.

A Market-Beating Cryptocurrency — But For How Much Longer?

Become a part of the growing Polkadot community by buying DOT today.

Polkadot is a multichain network that can process transactions across parallel chains or parachains. Over 100 chains are linked to the network, allowing 1,000,000 transactions per second. The network is verified through a proof-of-stake system. Those connected to the network can verify transactions to receive freshly minted tokens.

Most chains can still act independently, choosing to run the decentralized applications (dApps) and code they wish. DOT is a governance token, allowing users to vote on new protocols and the future of the technology. The amount of votes is based on the number of tokens owned.

Unlike Bitcoin and other blockchain-based networks, Polkadot consumes less computational power as all parachains are fueled by a central source. It is a more eco-friendly alternative to other blockchains. For these reasons and more, DOT is likely to surge to new heights in the near future.

Check Out: Will Polkadot (DOT) Make Me Rich?

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

The Road Ahead For Polkadot

A few aspects of Polkadot’s work are currently making headlines and grabbing the attention of global investors.

Unique Architecture

The Polkadot project enables external user-created blockchains to run on a single relay chain. It has a main network that powers and operates multiple external networks called parachains. Different parachains can communicate via the relay chain or the main network.

This multi-chain structure allows different parachains to be created for various uses. The Polkadot network has three types of blockchains: the Relay Chain, Parachains, and Bridges. Bridges enable the Polkadot network to build bridges and communicate with other blockchains like Ethereum and Bitcoin.

Polkadot transactions are carried out in the same way as Ethereum or Bitcoin. However, Polkadot uses the proof-of-stake (PoS) protocol as a consensus mechanism to validate transactions.

Governance and Tokenomics

Polkadot communities can govern their networks as they please and hold a say in the governance mechanism of the Polkadot ecosystem. Projects can customize and optimize their protocols’ or blockchains’ governance as per the requirements. They can also swap in pre-built modules of Polkadot for quick deployment of logic and test innovative ideas. Furthermore, teams can improve and upgrade their blockchain governance model as they grow.

DOT, the native cryptocurrency of the Polkadot network, enables token holders to stake DOT to vote on several decisions related to code changes. Once voters reach a consensus, the changes are automatically upgraded across the network. Additionally, token holders can participate in the network’s Nominated Proof of Stake (NPoS) consensus mechanism to help secure the network. Furthermore, projects and teams can lock their DOT tokens to bid on the auction process of parachain slots.

Allows for Customization and Specialization

There is no one-size-fits-all when it comes to the blockchain framework. Each blockchain has different functionalities and features. On the Polkadot Substrate development framework, all blockchains can have a novel design customized to fit a particular use case. It means projects can offer efficient services without compromising security by leaving out insignificant code.

GRANDPA Consensus

Polkadot takes a different approach to consensus mechanisms. The platform introduced a new consensus mechanism known as GRANDPA (GHOST-based Recursive Ancestor Deriving Prefix Agreement), which provides Polkadot with a more secure and resilient network. Specifically, it allows networks to pool security. The added protections are then aggregated and applied to all.

GRANDPA is incredibly scalable when compared to earlier generation cryptocurrencies such as Ethereum.

Is Polkadot A Buy, Hold Or Sell?

With solid fundamentals in place, experts believe DOT will surge shortly.

Like all cryptocurrencies, Polkadot is a highly volatile investment, which means you might see high gains, but you could also see losses. That said, Polkadot has some solid fundamentals. It has an experienced management team and a dedicated community of developers. Most importantly, its technology could solve a key crypto problem: interoperability.

For these reasons, experts believe DOT will soar and reach all-time high prices in 2022.

Don't Miss: Polkadot (DOT) Price Prediction

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

A Cryptocurrency Under Close Watch — Now And Always

Invest in the future of blockchain interoperability by investing in DOT.

Polkadot has established its position as the blockchain for other blockchains by offering interlink through which all blockchains can share data seamlessly. The network is also highly scalable than the proposed ETH 2.0, giving investors a good reason to buy DOT now.