The Polkadot (DOT 3.57%) project is not like any other cryptocurrency or blockchain network. Polkadot is building a cross-chain lattice of functionality to lay the groundwork for the next generation of online business and communications. More than a cryptocurrency, Polkadot offers an ambitious vision with decades of game-changing growth ahead of it.
Let me explain why that makes Polkadot uniquely valuable, especially for long-term investors.
Why choose one when they can all work together? Image source: Getty Images.
What Polkadot isn't
Many cryptocurrencies specialize in a single function. For example, Bitcoin is the closest thing to digital gold for long-term value storage nowadays. The smart contracts that run on the Ethereum (ETH 2.46%) platform make up the backbone of the decentralized-finance, non-fungible tokens (NFT), and blockchain gaming markets so far. Ripple was designed to facilitate border-crossing money transfers at low cost.
At the moment, they look like invulnerable fortresses, and early investors would love to see them stay on top forever. However, challengers are emerging all around them with different technical solutions to the same issues.
One of these days, one of the so-called Ethereum killers might actually push the smart-contracts patriarch off the throne to build a more efficient and successful decentralized computing system. Maybe a less energy-intensive proof-of-stake system eventually will overthrow Bitcoin on the basis of a more eco-friendly approach. And a future version of Ethereum could very well execute international money transfers just as efficiently as Ripple.
Nothing is written in stone in the rapidly evolving cryptocurrency sector. Any project may be one stumble away from being replaced by a better solution.
But Polkadot doesn't play that game.
What Polkadot is
Polkadot's place in the crypto universe is to be the glue that makes all the other blockchain protocols work together. This way, developers can build incredibly sophisticated applications that take full advantage of each token's unique strengths. If Ethereum is the platform of choice for decentralized computing, then Polkadot takes the concept of decentralized processing to the next level. It's Ethereum on steroids.
Here's one thought experiment. If you want to build a blockchain-based system that runs banking services on a global platform, Polkadot makes it easy to lean on Ripple for fluid money transfers with an Ethereum layer to process smart contracts along the way. And if Ethereum ever falls out of favor, Polkadot already offers access to fully Ethereum-compatible replacements.
The Clover parachain already offers smart contracts through the Solana and Tron networks, for example. The same plug-and-play idea applies to every part of your Polkadot-based app -- if a better method comes along, you'll probably soon find a Polkadot parachain that lets you use it.
Those parachains are more than a system for adding functionality to Polkadot, by the way. Through a refined auction process, the parachain-approval procedure lets Polkadot investors fund their favorite project candidates through crowdloans. The same system also provides a voting platform for steering the Polkadot ecosystem's future direction.
Long story short, Polkadot can do a lot. In particular, I love that the network is set up to continue and thrive as pieces of the technical puzzle evolve and improve -- or struggle and perish.
Where Polkadot is going
This system is going places in the long run. I's more than the simple decentralized finance and blockchain gaming projects we've seen so far.
Polkadot is an important component of the next generation of social media and content publishing on the internet, commonly known as Web3 or Web 3.0. In fact, the Polkadot foundation bills itself as the "decentralized Web 3.0 blockchain interoperability platform" and "the flagship project by Web3 Foundation."
If and when the blockchain-based Web 3.0 revolution gets the inner lane on the current collection of content publishing and social media platforms, Polkadot will stand at the heart of it.
This cross-chain system was built for longevity, and I plan to hold my Polkadot tokens for a long, long time.
