Is Polkadot a good investment in 2024? Before you decide if you should buy DOT, you must first get some idea about the cryptocurrency if you decide to invest in DOT in 2024.
April 7, 2021 | AtoZ Markets – Bitcoin's great success paved the way for hundreds of alternative cryptocurrencies, and today there is a sea of different cryptocurrencies like Polkadot (DOT).
Polkadot was first introduced by its founder, Gavin Wood, in 2016 via a whitepaper. However, the cryptocurrency was launched in August 2020 with a value of $2.69. Like all cryptocurrencies and networks, DOT has performed very well having gained more than 1,200% in February 2021.
Evidently, Polkadot hit an all-time high in the process with a trading price of $46.81 on April 6 but has since dropped in value. At the time of writing, the price of Polkadot is just over $39.24. This growth is enticing to investors looking to see a return on their investment.
What is Polkadot (DOT)?
The Polkadot token is an open-source project powered by the Web3 Foundation. Polkadot is technically a multi-chain application environment that enables cross-chain interoperability at a level that has previously been unthinkable. Specifically, this means that Polkadot allows users to send more than just tokens across blockchains. Polkadot allows these networks to communicate actual data.
With this technology, Polkadot is trying to tackle one of the most pressing issues facing the blockchain sector, namely interoperability. Currently, it is the market in a state of extreme division. Blockchains act as separate islands of data with very little way to exploit the information that the other networks have.
Want to trade Polkadot with a reliable exchange? Open a free account with AtoZ Markets approved crypto exchanges:
Polkadot removes precisely these concerns through integrations of a variety of technologies. In particular, Polkadot is even able to communicate information from private blockchains to public networks and vice versa. That is why Polkadot has become a well-known and very popular cryptocurrency right from the start.
Therefore, you can use Polkadot as a cryptocurrency in the same way as Bitcoin and Ethereum. In addition, many of the new cryptocurrencies coming onto the market are using Polkadot's application to build their own cryptocurrency.
Can Polkadot be mined? How do you get Polkadot?
You can purchase Polkadot from cryptocurrency exchanges like Coinbase and Binance. However, Polkadot cannot be mined as it is different from Bitcoin. BTC is a Proof of Work (PoW) network, whereas Polkadot is a Proof of State (PoS) network, which means that in order to earn coins on the blockchain, you have to hold a certain amount of DOT and stake it.
Basically, holders will be rewarded for staking their DOT in the protocol in exchange for risking their holdings for the validation of the network.
Polkadot utilizes Nominated Proof of Stake (NPoS) as its algorithm for validation. And, DOT holders have the option to participate in this essential network operation. This also serves as a disincentive for bad actors to participate in the network, as they are likely to lose their stake if they ‘misbehave’.
The requirement for participating largely depends on the staking duration and the total number of tokens staked.
Want to learn more about staking? Kindly watch the video below:
What affects the price of Polkadot?
As with many other cryptocurrencies, Polkadot is at its highest level in late 2020 and into early 2021. We have seen many cryptocurrencies cost far less than they were previously worth during the last bull run in 2017/2018, and subsequently have a long way to go to hit the same level as before when they came crashing down. But Polkadot, which has been launched later than 2018, has had an extremely good start.
In general, the original cryptocurrency, Bitcoin, still has a large influence on the broader cryptocurrency market and Polkadot is also still being pulled up or down with the rest of the larger cryptocurrencies. But as I will also discuss in the next section, the media and scandals about the currency can have a major impact on confidence in the development of the currency. If scandals occur such as a board member quitting due to poor organization in the organization, it can affect the price and demand will likely fall among investors.
In addition, of course, demand is also of great importance. The more companies and people use Polkadot, the greater the demand and it drives the price up. The same will happen if ETC loses popularity and demand thus falls, driving prices down.
Likewise, availability on different currency exchanges has an impact on the price as it makes it more accessible for investors to invest in ETC. Therefore, it is a good sign for Polkadot when they are listed on several cryptocurrency exchanges. Easy access for investors helps influence demand.
Want to trade Cryptocurrencies with a reliable exchange? Open a live account with AtoZ Markets approved crypto exchanges:
Is Polkadot a good investment in 2024?
Looking at the current crypto market, where nearly all the cryptocurrencies, including Polkadot, are rising to staggering heights, it is easy to believe that this bullish trend will continue like this forever.
However, no one person can accurately predict what 2024 holds for Polkadot.
But as always, there are both optimists and pessimists. Some believe that the whole market will hit rock bottom again at some point, while others believe it is better to invest now than never.
In reality, it is individually about you as an investor and whether you can tolerate having an asset with great volatility in your portfolio. If you can, Polkadot may be a good investment for you.
The most important thing is just to remember that although cryptocurrencies and Polkadot can increase in value very quickly, they can decrease just as quickly. This is what makes them so volatile, because one day they can be extremely valuable and the next day almost nothing.
Should you invest in Polkadot?
It is difficult to give a clear answer if you should invest in Polkadot or not. The cryptocurrency is still young and it will take some time for this new cryptocurrency to see true success.
However, there are many indications that DOT can be a good investment this year. One of the reasons is because the team behind DOT has many projects in the pipeline close to 253, from Polka Defi to bridges linking Polka to other chains like Bitcoin, etc.
The good news at the moment is that Polkadot already has monetary value in crypto exchanges, making it a stock worthy of investment.
Moreover, some investors are optimistic about Polkadot as cryptocurrencies are constantly becoming available in several trading markets and you can use them in several places.
Still, it is always difficult to predict the future accurately when it comes to investing in DOT. But if you believe in cryptocurrency and the Blockchain technology behind it, it may be a good idea to have Polkadot as part of your portfolio and then constantly keep an eye on developments.
It is difficult to predict whether the same good development that we see at the moment will continue in the future, as it is largely about where the crypto market is moving.
Investing in Polkadot - Conclusion
Polkadot is currently one of the most innovative projects in the cryptocurrency market. The solutions they provide certainly allow the entire crypto market to grow faster and in a much more sophisticated way.
What is more, Polkadot allows users to have an active voice in the network. Decentralization is definitely a key part of this blockchain network and users know about it. Users of Polkadot know about it and can easily start participating in the network through staking and other activities.
Polkadot represents a novel way in which blockchain networks can cooperate with each other. Conclusively, it also shows it is possible to offer blockchain solutions that are scalable, easy to improve and implement and that can be adapted to different protocols.
Should you trade cryptocurrencies on your own at all?
Before you start trading cryptocurrencies, you'll want to read this.
Our in-house trading expert Dr Yury Safronau, PhD in Economic Sciences, gives you daily his best forex, metals, and cryptocurrencies to buy and sell signals right now.
His trading strategies which are based on non-linear dynamic models have achieved more than 65 000 pips of profits since 2015. And right now there are some very strong buy and sell signals across several markets you don't want to miss.
Want to see which ones?