Polkadot Could Power the Next Internet

There are many compelling arguments for why investors should consider Polkadot (CCC:DOT-USD) right now. The broader crypto market remains significantly lower than it was before things went south in early May.

Polkadot altcoin logo on pink background

Source: shutterstock.com/nurionstd

But cryptocurrency is established now, and many believe a rebound will occur. Cryptocurrencies with real prospects including Polkadot have little to worry about in the long term. The DOT token has spent the past several days roughly between $15 and $17. If it can retrace its price history and get back into the $30s and $40s, it’s going to make a lot of investors happy. 

So cryptocurrency enthusiasts who establish a position now while prices are momentarily low could be making a wise and profitable decision. Here are three reasons that could be used to catalyze such a decision. 

Polkadot on Coinbase

DOT was listed on Coinbase (NASDAQ:COIN) back in mid-June. Despite the fact that Coinbase’s IPO has disappointed one thing is clear: Coinbase is a great place to be for cryptocurrencies in the U.S. Investopedia calls it “the leading mainstream cryptocurrency exchange” in the U.S. Its popularity, intuitive user interface and high liquidity mean that crypto investors are going to continue to use it extensively.

Although DOT has moved down in price since being added to Coinbase, it is a clear positive. Coinbase regularly shares new info about DOT and other cryptocurrencies it supports on social media, making that a solid choice for those looking to keep up with changes.

Polkadot and the “Next Web”

With discussion of how the blockchain could become the new basis for the internet, Polkadot is clearly strategizing how to integrate itself into it in a major way. Admittedly, I’m not an expert on blockchain technology or cryptocurrency; I’m often bewildered by what I read about projects in the space.

But while there are almost certainly pyramid schemes and scams being perpetrated under the guise of blockchain technology, we cannot afford to dismiss it wholesale. The blockchain has the capability to democratize our world in a revolutionary way. 

Network protocols with the most utility across possible blockchain use cases will be incredibly valuable. That’s why it makes so much sense to pay attention and try to understand Polkadot right now. 

Polkadot bills itself as “a scalable, interoperable & secure network protocol for the next web.”

So as laypeople, what should we understand about Polkadot and the DOT token?

Data Transmission is Key

Polkadot emphasizes that it is interoperable. The ability to transfer information across disparate networks is powerful. That’s part of the beauty of the internet.

Polkadot allows data and tokens to be transferred across blockchains. This means that data can be sent via Polkadot across both public and private blockchains. Theoretically, this will allow applications to be built utilizing disparate sources of data, thereby multiplying utility overall.

I can’t claim to fully understand it without a background in computer science. There are, however, clear parallels between what Polkadot is doing and efforts to build internet interoperability decades ago. It’s opaque at times, but it also makes you realize that the opportunity is potentially as important.

Relay Chain

Polkadot’s cross-chain interoperability functions through its relay chain. I liken this to the hub and spoke model utilized by airports. The vivid image of spokes — the airlines — coming into an airport hub from all directions is analogous to the disparate blockchains that connect to Polkadot’s relay chain.

If the company succeeds in becoming the dominant relay between blockchains, it should become massively more valuable.

For now, things like liquidity and accessibility will make DOT move in price. The bigger picture, though, is its technology and what it promises to do.

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On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

Article printed from InvestorPlace Media, https://investorplace.com/2021/07/polkadot-offers-the-possibility-of-a-new-approach-to-the-internet/.

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