The cryptocurrency market started 2023 in fine form but has calmed down recently. There have been some drops and jumps along the way, but Bitcoin is trading at prices that would have sounded familiar in March. Crypto investors are missing out on the stock market's wholesome gains, as the S&P 500 index rose 15% over the same span.
But I'm not here to talk about Bitcoin, as tempting as that idea might be. Instead, let's take a peek at a cryptocurrency that's lost 30% since March 17. This digital token looks spring-loaded for a terrific recovery, driven by the Web3 model of online interaction and content management. I'm talking about Polkadot (DOT 1.48%) -- the official blockchain token of the Web3 vision.
This crypto is going places in the long run. At the same time, Polkadot is on fire sale right now. So let me show you why I think Polkadot is the best cryptocurrency to buy in September.
What is Polkadot?
Polkadot is a decentralized blockchain network, designed and managed by the Web3 Foundation. Its technical directors include Gavin Wood, a co-founder of the massive Ethereum cryptocurrency.
Together with an integrated app development platform, the token makes it easy to connect an app to many different blockchain systems and take advantage of each token's strengths. Polkadot provides high-performance linking across different blockchains, using parachains, which are parallel blockchains that can be connected to the Polkadot network.
This ultra-flexible blockchain network plays several roles in Web3. Its decentralized design and wide-ranging features are a perfect match for the design goals of Web3. The Polkadot token, more properly known as DOT, carries information across the network and provides tight security with a modified version of the proof-of-stake blockchain system.
The Polkadot community has a firm long-term plan. New parachains become available every week, with 45 parachain projects available so far.
Why is Polkadot so cheap right now?
The DOT token has underperformed the crypto sector in general this year, and the Polkadot bears have a few concerns about the token:
- Web3 most certainly hasn't replaced the social media architecture of Web2 yet, and many Polkadot investors are losing patience with its slow progress.
- 45 parachains haven't added value to the DOT blockchain. Parachains are supposed to spark game-changing innovations and powerful apps in the spirit of Web3. Again, investors are impatient about the lack of instant gratification.
- Polkadot's parachains and app development projects rely on dollar-based investments. That well is running dry amid a shaky economy and the long-running battle against inflation. Hence, this cryptocurrency is arguably more sensitive than most to the health of the non-crypto economy.
While each of these factors on its own might not have a substantial impact, collectively they create a challenging environment of investor impatience.
It's a perfect storm of sorts as the slow rollout of Web3 and high-impact parachains coincide with an unsteady economy. Of course, one could argue that these problems go hand in hand, as the lower investor interest also limits the funds available to support new and existing technology improvements.
Image source: Getty Images.
Polkadot looks like a no-brainer buy for long-term investors
The three issues listed above suggest that Polkadot's low price chiefly rests on impatience. The Web3 sea change and the development of useful real-world applications, with features enabled by Polkadot and its parachains, are two naturally slow-moving projects. The soft economy puts more speed bumps in front of these developments, as much-needed project funding is hard to find.
There's an old rule of thumb in project management that speaks volumes about Polkadot's conundrum: Good, fast, or cheap -- pick two.
The Polkadot community is being forced to settle for good and cheap in this case. When the economy gets back on its feet and investors feel ready to supply project funding in this ecosystem, the community will shift to good and fast, instead. That's a prescription for higher token prices in the long run.
That should open the floodgates for Web3 progress and active development of Polkadot-powered decentralized finance and content management systems. As a result, the DOT token will see rising real-world use and gain value.
And that's why Polkadot looks like a fantastic cryptocurrency to buy in September 2023. The coin is poised for several types of long-term wins if only the global economy can get over the inflation flu.
