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Why Polkadot Tokens Are Soaring Today

By Anders Bylund – Sep 14, 2021 at 3:55PM

Key Points

  • The Polkadot network is preparing to launch business-grade cross-linking projects for the first time.
  • The pre-launch testing is not reporting any game-changing technical issues.
  • Sometimes, that’s all it takes to get investors excited about this innovative blockchain system.

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The blockchain network token is approaching an important technical event.

What happened

Polkadot (DOT -1.43%) tokens rose all the way to $38.51 on Tuesday morning, marking a 12.8% jump from the lowest prices of Monday afternoon. The blockchain protocol, designed to connect various blockchains and other asset types to form the basis of new applications and services, is gearing up for an important technical update at the end of 2021. Investors are getting excited about that event.

So what

The Polkadot network you see today is actually not the final production-grade version but a so-called "canary" system that's meant to suss out technical issues before the final product goes live. Well, that launch is scheduled to take place before the end of the year, when developers have approved the final technical design and completed auctions for the first handful of feature-complete Polkadot chains.

A green charting arrow rises upward against a backdrop of famous cryptocurrency names.

Image source: Getty Images.

Now what

This process has been moving forward all year long, and investors see the light at the end of the tunnel. As of Tuesday afternoon, Polkadot prices have gained roughly 30% in the last week, 65% since mid-August, and quadrupled from $9.30 per token at the start of the year.

The Polkadot project could play a significant part in the future of blockchain systems, providing an even more flexible smart contract platform than sector leader Ethereum. That being said, Polkadot has not yet completed its technical development and faces competition from a large number of alternative chain-linking systems not named Ethereum. It's an interesting blockchain project but also a risky and speculative one. I hold a few tokens myself, but I'd never bet the whole farm on Polkadot -- or any other particular cryptocurrency. Please be careful out there, dear reader.

Anders Bylund owns shares of Ethereum and Polkadot. The Motley Fool owns shares of and recommends Ethereum. The Motley Fool has a disclosure policy.

Stocks Mentioned

Polkadot Stock Quote
$5.52 (-1.43%) $0.08
Ethereum Stock Quote
$1,254.85 (-1.39%) $-17.66

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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