DOT first launched publicly just over a year ago, yet this relatively unknown coin has found a place amongst the top 10 crypto heavyweights—a testament to DOT’s appeal, utility and technological prowess. This year alone, polkadot has risen from about US$8.50 to its peak of just under US$54 on Nov. 4, ringing up a staggering 500% gain. To put it in dollar terms, if you’d bought $1,000 worth of DOT on Jan. 1, 2021, your investment would be worth $5,000 as of Nov. 4, 2021.
No doubt, the coin’s dramatic rise to the cryptoverse’s higher echelons is captivating—but is DOT still a promising investment? Let’s take a closer look at its features, its potential and how to invest in it through a crypto trading platform such as CoinSmart.
What is polkadot and why is it in the news?
Each cryptocurrency has its own decentralized ledger system, known as a blockchain. Some crypto coins share their name with their blockchain, such as bitcoin, while native coins of some blockchains have their unique name. For instance, the native coin of the cardano blockchain is called ADA.
Polkadot is a new breed of blockchain protocol that connects different blockchains into a single unified network. Unlike rival blockchains that operate on their own, polkadot is designed to serve as a connecting bridge between blockchain networks, making them interoperable. In essence, the polkadot network works as a blockchain of blockchains.
“Interoperability between different blockchain protocols has been a challenge for the industry for many years,” says Gaby Hui, director at Merkle Science, a predictive blockchain monitoring and investigative platform that helps crypto companies, financial institutions and government entities prevent illegal activities using cryptocurrency.
This is exactly the problem polkadot solves by creating an internet of interoperable blockchains and building a decentralized web, she adds.
In addition to digital tokens, polkadot also allows data to be transferred across blockchains. This makes polkadot “a true multi-chain application environment where things like cross-chain registries or cross-chain computation are possible,” Hui notes.
The polkadot blockchain was created by ethereum co-founder Gavin Wood, who teamed up with Peter Czaban to create the Switzerland-based Web3 Foundation, a non-profit entity that supports the research and development of polkadot.