The cryptocurrency market is still in a slump -- down 14% to $1.9 trillion, year to date. But with assets trading at a massive discount to previous highs, now could be a great time to bet on the opportunity. The Sandbox (SAND -0.33%) and Polkadot (DOT -0.27%) are two unique cryptos that could help power a rebound.
Let's dig deeper.
1. The Sandbox
Defined as an interconnected virtual world where users can interact through games and other content, the metaverse is taking the tech world by storm. The Sandbox is betting this opportunity. And its growing mainstream acceptance and relatively affordable valuation could set it up for long-term growth.
Image source: Getty Images.
According to research from Bloomberg, the metaverse industry could be worth $800 billion by 2024. The Sandbox plans to capture a slice of the pie through its virtual world designed to help users trade virtual real estate and monetize gaming experiences.
The Sandbox's real-world partnerships are an exciting vote of confidence in the project. In March, banking giant HSBC bought virtual land in The Sandbox to create "innovative brand experiences for new and existing customers," according to an executive at the bank. This deal follows earlier partnerships with fashion house Gucci and Warner Music Group, which plans to create a virtual concert hall within The Sandbox metaverse.
Without revenue or earnings, cryptocurrency projects are hard to value. But with a market cap of just $3.5 billion, the Sandbox is cheap compared with the most popular assets like Bitcoin and Ethereum, worth $807 billion and $361 billion, respectively at the time of writing. Its small size could give it more room to grow as the metaverse opportunity expands.
2. Polkadot
With a market cap of $18.5 billion, Polkadot is significantly larger than The Sandbox. But its technical prowess and unique take on decentralized application (dApp) development (these are self-executing programs that run on the blockchain) could mean its long-term growth is just getting started.
Polkadot can handle 1,000 transactions per second, making it faster than its largest rival, Ethereum, which can only manage up to 30 transactions per second.
The platform achieves its speed through a consensus mechanism called proof of stake, in which miners use existing coins to verify transactions. This process is faster than the cumbersome proof-of-work system (used by Ethereum), in which miners solve computational problems to update the blockchain.
But Polkadot has another innovation up its sleeve: sharding.
According to Polkadot's developers, sharding breaks down the Polkadot blockchain into an undisclosed number of miniature blockchains called shards that can process transactions separately to prevent bottlenecks. The platform also allows developers to build dApps on the shards, giving projects more autonomy. This competitive edge could help it attract developers over the long term.
Undiscovered champions?
With market caps of $3.6 billion and $19 billion, respectively, The Sandbox and Polkadot are tiny compared with industry leaders. But they could surge as they explore opportunities in blockchain-based metaverse and dApp development.
Investors shouldn't let the current cryptocurrency slump overshadow these assets' long-term potential.
