Why Polkadot (DOT) Is The Next Big Thing

Last Updated January 14th 2022
6 Min Read

With over 16,500 cryptocurrencies listed on CoinMarketCap, how do you know the best cryptocurrency for investment? Is Polkadot the next big thing in cryptocurrencies, or are there other cryptos that are better?

Polkadot is a flagship project by the Swiss Web3 Foundation. In 2016, Gavin Wood, former co-founder and CTO of the Ethereum network founded Polkadot.

Polkadot has a unique, open-source, sharding multi-chain protocol that allows other blockchains to interlink operations by creating parallel chains from bonding. The unique technology can facilitate cross-chain transfers of an asset or data type, not just crypto tokens. This technology is unique to Polkadot.

The Swiss Web3 foundation's mission is to 'facilitate a fully functional and user-friendly decentralised web.' Top class developers, researchers and partners want to create 'a superlative realisation of Web3'. Therefore, Polkadot is at the core of Web3 development.

Contents

What Makes A Cryptocurrency Good For Investment?

Not all cryptocurrencies are created equal, and many have limited utility or purpose. So how do you determine what makes crypto suitable for investment?

Choosing a crypto isn't as simple as liking a logo or because the price of a token is low. However, some dog-themed meme coins, such as Dogecoin (DOGE) and Shiba Inu (SHIB), rapidly gained massive popularity, forming loyal communities of enthusiast followers and sending the tokens into the top ten listed cryptocurrencies on CoinMarketCap.

Whether meme coins have long-term sustainability remains to be seen, but Polkadot has unique protocols making it scalable and offering significant potential for growth.

Investing in cryptocurrencies is not dissimilar to investing in stocks or any financial instrument. Buying blindly, without research, is a recipe for disaster. Uneducated investors are still chasing Bitcoin, believing it is the best investment because of the crazy high prices and the many Bitcoin millionaires. Still, there are many other second or third-generation cryptocurrencies with extraordinary potential at a fraction of the cost, and Polkadot is one such coin.

New cryptocurrencies emerge daily. On average, CoinMarketCap lists one hundred cryptos a day. Third and fourth-generation cryptocurrencies learn from the mistakes of first and second-generation cryptos. They launch onto the crypto market with exciting, innovative and disruptive technology that can influence the world.

When choosing a cryptocurrency for investment, follow the below checklist:

  1. Scalability - does the crypto network have the potential for scalability? If not, growth potential could be limited.
  2. Consensus Mechanism - Bitcoin uses a proof of work (PoW) consensus mechanism, which is costly, energy-consuming, and environmentally unsustainable for the future.
    Polkadot uses a hybrid consensus protocol, a combination that helps to avoid the drawbacks of typical mechanisms and reduces the probabilities of "stalling" (not producing new blocks). Polkadot can produce new blocks quickly without impeding transaction speeds.
  3. Utility - How disruptive is the crypto project? What purpose does it serve, and how is the crypto project better than others? Does it have the utility to challenge mainframe systems, and can other cryptocurrencies piggyback on the blockchain – for building Smart contracts, for instance?
  4. The founders and Team - what is the background of the founders? Do they have a clear mission for the growth of the project? Is the information on the website transparent and each team member's experience highlighted?
  5. Community - a loyal community of followers can support a cryptocurrency during development teething issues. They share the benefits of a project and can help to encourage interest in the cryptocurrency.
  6. Vision & Mission - What is the vision for the project? Is the mission clear from the information on the website? A vision culture encourages loyalty, creativity and innovation within a team. Followers also align with the vision and mission.
  7. Social Media - is the cryptocurrency project active on social media? Many cryptos have several social media channels to aid in project exposure. Some cryptocurrency networks are better at marketing than others, but those that gain the most exposure appear to do better than projects with little media coverage.

When assessing Polkadot (DOT) with the above checklist, it's clear that the project has a good score. Scalability is unprecedented as the Web3 Foundation continues with the project's development. Polkadot has a loyal and growing community across several social media platforms, and it has a strong team behind the project. It is one of a few cryptocurrency projects with true interoperability as the parachain launch is now live.

Quick Polkadot Checklist Reminder:

  1. Scalability - unprecedented scalability with the support of the Web3 Foundation.
  2. Consensus Mechanism - Hybrid - efficient and superior to many other cryptos.
  3. Utility - Impressive utility.
  4. Community - Yes, across multiple social media platforms.
  5. Founders & Team – Polkadot has a highly experienced team.
  6. Utility - unquestionable interoperability.
  7. Vision - pioneering, with an immense vision for the future of Polkadot.

Read Also: Polkadot Price Predictions

What Makes Polkadot (DOT) Unique?

Polkadot has many distinctive advantages over other cryptocurrencies. When you consider what Polkadot has to offer, it's no surprise to see how well Polkadot has performed on the cryptocurrency market and why it is so popular with developers and crypto investors.

"Groundbreaking Technology - Polkadot is solving many of the problems that have held back blockchain technology so far — all in one place, without compromising." – Polkadot website.

What Makes Polkadot a Good Crypto for Investment?

  1. True interoperability - Polkadot enables cross-blockchain transfers of data or assets of any type, not just tokens. Polkadot enables interoperability with a wide variety of blockchains in the Polkadot network.
  2. Economic & transactional scalability - unprecedented because of a standard set of validators that secure multiple blockchains. Polkadot spreads transactions across numerous blockchains, thus providing transactional scalability.
  3. Accessible blockchain innovation - Polkadot uses the Substrate framework, the foundation for the entire Polkadot ecosystem. Substrate is the modular blockchain framework on which Kusama and Edgeware are built.
    Substrate enables developers to quickly create and launch a blockchain with various feature options available for a vast range of project needs. Developers can create a custom blockchain super-fast, a matter of minutes and connect the chain to Polkadot for security and interoperability.
    Because of the ease of use, Polkadot has grown in popularity with developers, crypto enthusiasts and crypto investors.
  4. Forkless and future-proof - Polkadot requires no hard forks for upgrades, which means that Polkadot can adapt easily to changes, fix bugs quickly and can upgrade to improved technologies as they become available.
  5. Security for everyone - Polkadot's validity scheme and novel data availability enable chains to interact with each other "in a meaningful way." Chains are united in security but remain independent in their governance.

"A scalable, interoperable & secure network protocol for the next web." – Polkadot website.

Polkadot is versatile. It can transfer any data type, including arbitrary data (not just tokens), across any blockchain. As a true multi-chain application environment, cross-chain computation and cross-chain registries are possible. Polkadot can transfer between open, public, permissionless blockchains and private, permissioned blockchains and interlink between public and permissioned records.

What Is a Permissioned Blockchain?

"Permissioned blockchains can be seen as an additional blockchain security system, as they maintain an access control layer to allow certain actions to be performed only by certain identifiable participants. For this reason, these blockchains differ from public and private blockchains." (Source: Investopedia)

Three areas further differentiate Polkadot (DOT) from other blockchains:

  1. Governance – Polkadot (DOT) token holders have privileges and total control over the protocol.
  2. Staking – Good actors help secure the Polkadot network. And game theory incentivizes DOT token holders, which encourages honest practices. Bad actors are in danger of losing their DOT stakes.
  3. Bonding – new parachains are added by bonding tokens. Out of date tokens are removed and burned.

Don't Miss: Is Polkadot (DOT) Worth Buying?

Recap Of Why Polkadaot (DOT) Is The Next Big Thing

Is Polkadot (DOT) the next big thing? Could Polkadot be better than Bitcoin or Ethereum? The fact is Polkadot is incomparable to Bitcoin or Ethereum. It's like comparing a cheese sandwich to a five-course meal in a five-star restaurant. Not that we're saying Bitcoin is a cheese sandwich, far from it, but Polkadot has such distinctive properties, it truly is a stand-alone blockchain. 

The one thing that many first-generation cryptocurrencies lack is scalability, but it's not an issue for Polkadot as the network has infinite scalability and true interoperability.

When considering what crypto could be the next big thing, weigh up measurables that can enhance potential growth, factor in disruptive and future-proof technology, and ease-of-use for developers. Polkadot has real-world-use potential because it solves crucial pain points that few other blockchains can offer.

Polkadot (DOT) continues to make steady progress as a cryptocurrency. The DOT token remains in the top twenty listed cryptocurrencies of multiple thousands of other coins. As of January 2022, DOT is #10, pushing aside Dogecoin (DOGE) and Shiba Inu (SHIB) from the top ten cryptos.

Trading or investing in financial instruments such as cryptos may not be suitable for all investors. It does involve risk and the possibility of a loss of capital. There are no guarantees for profiting from cryptocurrencies, and it's advisable only to risk what you can comfortably afford to lose.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Trading Education.

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Does Polkadot have a social media presence?

Yes, Polkadot has the following social media channels: 

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