My editors have requested me to cowl Polkadot (CCC:DOT-USD) at this time. It’s my first time discussing this cryptocurrency.
Proper off the bat, the very first thing I discover is that it’s the seventh-largest cryptocurrency by market capitalization at $14.88 billion.
Sadly, Polkadot’s market cap is $13 billion lower than Dogecoin (CCC:DOGE-USD), the sixth-largest crypto in accordance with CoinMarketCap.com.
Which makes me assume: Why ought to I even hassle contemplating DOT? It could’t even outdo a meme coin.
This text makes an attempt to reply that query.
Polkadot Is a So-Referred to as Ethereum Killer
We’re nonetheless early within the improvement of cryptocurrencies. As such, it seems virtually something that isn’t Ethereum (CCC:ETH-USD) is an “Ethereum Killer.” Is there a definition?
Google the phrases “Ethereum Killer,” and also you get 120,000 results. On the primary web page of searches alone, I get 5 totally different cryptocurrencies talked about in the identical breath as Ethereum Killer. Considered one of them being Polkadot.
I made a decision to do an InvestorPlace search to see what number of articles have Ethereum Killer within the headline. I discovered three on the primary web page by way of June 9: Algorand (CCC:ALGO-USD), Polkadot, and Cardano (CCC:ADA-USD).
Since I’m alleged to be discussing Polkadot, I’ll take a fast peek at David Moadel’s current article about this cryptocurrency.
In keeping with my colleague, Polkadot’s best profit is that it permits for “cross-chain communication and interoperability by bringing a number of blockchains into one community,” Moadel wrote on June 17.
Like most issues associated to blockchain expertise, the verbiage used to explain what’s what’s gobbledygook.
That’s not meant as a slight to my colleague however somewhat a criticism of the powers that be on the main cryptocurrencies. All of them do a horrible job explaining their benefits in a method even a 12-year-old may perceive.
Rubbish in. Rubbish out.
Finally, Moadel concludes that Polkadot’s best power is the power to attach totally different networks and platforms so they might talk with one another.
For that reason, he likens Polkadot to an “Web of blockchains” somewhat than an “Ethereum killer.”
Does that make you wish to run out and convert all of your DOGE to DOT? Possibly.
It Appears Like It’s Received a Lot of Utility
Each time I write a couple of cryptocurrency, I make it a degree to emphasise that utility is the whole lot within the combat for market cap. No utility. No trillion or billion-dollar valuation.
That’s as a result of, as a substitute of economic metrics and numbers you get with a monetary assertion, traders are pressured to guage cryptocurrencies based mostly on very subjective, qualitative info.
With shares, I’m a giant believer in free money movement (FCF) era. That’s why I’ve at all times had a comfortable spot for the Pacer US Money Cows 100 ETF (NYSEARCA:COWZ). It offers me with a ready-made record of FCF mills. Firms that I must personal for the lengthy haul.
I can’t try this with Polkadot. I can, nevertheless, assess its utility. From what my colleague’s written, it seems to offer loads of utility. However so does Cardano, which like Polkadot, was based by an Ethereum co-founder.
Polkadot already works the best way Eth2 ultimately will. The whole lot that makes Eth2 quick and environment friendly — Proof-of-Stake consensus, sharing, the Beacon Chain — is already in place in Polkadot. Which means initiatives are escaping from the 2 points that plague customers of Ethereum: bottlenecks and fuel charges.
The actual fact Polkadot has raised $200 million in DOT gross sales to fund its blockchain mission is a sign of how a lot potential exists for each its expertise and crypto token.
Ought to You Purchase DOT?
I’ll be sincere. I’ve but to purchase a single cryptocurrency, so I’m the incorrect man to ask.
What I might say is that it’s undoubtedly a cryptocurrency price attending to know. Possibly when you’ve performed that, you’ll really feel assured sufficient about its utility to really purchase some.
As is the case with most cryptos, time is NOT of the essence. So take your time to grasp Polkadot. I do know I’ll.
On the date of publication, Will Ashworth didn’t have (both instantly or not directly) any positions within the securities talked about on this article. The opinions expressed on this article are these of the author, topic to the InvestorPlace.com Publishing Tips.
Will Ashworth has written about investments full-time since 2008. Publications the place he’s appeared embrace InvestorPlace, The Motley Idiot Canada, Investopedia, Kiplinger, and several other others in each the U.S. and Canada. He notably enjoys creating mannequin portfolios that stand the take a look at of time. He lives in Halifax, Nova Scotia. On the time of this writing Will Ashworth didn’t maintain a place in any of the aforementioned securities.