A DeFi oligopoly would make the interoperable polkadot valuable
Dozens of altcoins try to become the spoofing altcoin Ethereum (CCC:ETH-USD) DeFi domination (decentralized finance). Could Polka dot coin (CCC:DOT-USD) be the first? Or, if this is not the only name that dominates, at least the one that is becoming a major force in the blockchain economy?
In terms of scalability and security, it is undeniable that its usefulness is in good faith. But what’s most appealing are its cross-chain capabilities. If the DeFi space ends up with many major players, a platform like this could end up being in high demand.
The problem? It will take time for things to unfold fully. Decentralized finance is perhaps increasingly popular. But critical mass is still years away. Add to that what appears to be a bear market in crypto, and it will be difficult for any name, including Polkadot, to start to really bounce back to its previous highs.
Even so, it doesn’t mean you should skip just yet. With its bottom just above $ 20, perhaps now is the time for patient investors to start buying it.
The potential of its interoperability
Take a look at the area of possible ‘Ethereum killers’, and overall their selling points seem similar. It’s more scalability, faster transaction times, less IT requirements, and lower costs. With such similarities, it’s hard to determine which emerging names will take off and which will drop.
Where does Polkadot Coin stand among these results? It can all be boiled down to the key feature of its blockchain, inter-chain communication. What is inter-chain communication? It is the ability of different blockchains to transact with each other. Without it, it will be difficult for DeFi to really disrupt the traditional financial services space.
By its use of relay chains, parachains, parathreads and bridges, Polkadot’s blockchain 3.0 platform could meet the growing need for greater interoperability. If DeFi ends up being an oligopoly, with many major players, a platform like this will be more than needed. This indicates a possible high use of it in the overall blockchain economy. This should increase the DOT value over time.
While this is good for the long term, this potential may not help it in the short term. But while it may languish at or near today’s prices, now may be the time to start considering a position.
Polkadot probably found his ground
The long-term outlook remains bright for Polkadot. But don’t expect the price of his coin to rise in the short term. Crypto as a whole is in a bear market. While the dust has settled on last month’s crash, a rebound is still a work in progress. Parts established as Bitcoin (CCC:BTC-USD) and Ether struggled to bounce back. This has been the case for altcoins from rising stars like Cardano (CCC:ADA-USD) and Polygon (CCC:MATIC-USD) as well as.
Granted, things heated up in crypto during the spring. While market players realize that the rise of DeFi / blockchain has been brewing for years, they are less willing to jump into names at all costs. They take a more ‘on the fence’ point of view and wait to see how things go.
In short, this will make it difficult for DOT-USD to rebound in the short term. This is a sign that you are ignoring it and going for more popular pieces. Yet for investors with a longer time horizon, diving today may not be such a bad decision.
Finding its bottom around $ 24, the downside risk from here may be minimal. As more and more developments arise about Polkadot and more people realize its potential to find a lucrative niche in what could become a multi-blockchain DeFi economy, it will eventually break out of its current rut and resume its upward trend towards higher price levels.
Buy Polkadot if you are patient
Polkadot could sit there for a while. That’s normal for the price right now as market participants try to figure out where the overall crypto market is heading next. Investors are also trying to determine which altcoins will give Ethereum a run for its money and which will collapse.
Again, this room’s interoperable platform may be in a unique (and advantageous) position. Even if competitors like Cardano, Polygon, and others eventually become more widely used in DeFi, it could find its niche. This indicates a continuous increase in its value over time.
While its outlook remains bright, the benefits are unlikely to be immediate. But as it finds its bottom at or around today’s prices, patient investors may consider that now is the time to start building a prudent position in Polkadot Coin.
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At the date of publication, Thomas Niel held long positions in Bitcoin and Ethereum. He had (directly or indirectly) no position on any other title mentioned in this article. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.
Thomas Niel, contributor for InvestorPlace.com, has been writing individual equity analysis for online publications since 2016.