This 'Ethereum Killer' Gained 552% in 2021. Should You Buy?
Polkadot is a unique solution that shuttles all kinds of data -- not just cryptos -- across all kinds of blockchains and non-blockchain networks. It's also discounted 59% from its peak.
- Polkadot (DOT) is more than just "digital money," it's a novel solution that seamlessly moves data and information across virtually any network -- whether blockchain-based or not.
- That's going to be increasingly important as adoption and utility grows for non-fungible tokens (NFTs) and the metaverse in coming months and years.
- DOT is dubbed an "Ethereum killer" because ETH requires applications and other networks to conform to its standards, while DOT is a leading standard that enables that very thing as well as cross-chain connections with other infrastructure plays.
- DOT jumped more than 550% last year and is now trading nearly 60% from that top -- it might be worth a look for someone interested in a solid project at a discounted price.
The media loves to knock down good 'ole fashioned success stories. Sure we first love to build them up, but when they get dull, boring, or stumble around a bit -- we'll just as soon tear them down. It's kind of our thing.
Within the cryptocurrency sector, one of those success stories that catches a disproportionate amount of flame and flack is Ethereum (ETH), which happens to be the second-largest crypto project by market capitalization. Don't believe me? ETH is the only asset in the entire crypto-universe -- currently comprising more than 10,000 projects -- that has a hit squad metaphorically gunning for it. That pack of asset assassins has been affectionately dubbed by the media "Ethereum killers."
Those "killers" are collectively supposed to take out ETH because they can handle more transactions per second than the Ethereum network, and at a lower processing fee than the current average Ethereum cost of about $30 per transaction. The list of usual suspects that the media tends to promote as the most likely ETH slayers are: Cardano, Solana, EOS, and Polkadot.
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While I don't believe Ethereum is going to be permanently put down by any of those competing projects individually or collectively, there is one of them that is best-in-class and worth a look -- and that's Polkadot (DOT).
What is Polkadot (DOT) and why is it dubbed an ETH killer?
Polkadot is a multi-function programming platform that serves as a kind of blockchain-based "app store" for application developers including smart contracts. It's also a solution that shuttles all kinds of data across all kinds of blockchains, and it's also a cryptocurrency -- so it serves as a store of value, medium of exchange, and unit of account. While I'm a fan and owner of Ethereum, I'll readily admit that DOT does what ETH can do BUT Polkadot's interoperability allows it to exploit the best benefits of every network to which it's connected -- private, public, blockchain-based or otherwise -- and that includes the Ethereum blockchain.
DOT addresses one of the biggest blockchain challenges
One of the greatest strengths of blockchain technology is its decentralized, distributed network. But the greatest weakness of that design is that all of these secure, immutable, encrypted networks operate in isolation of each other.
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Polkadot links all of those data fiefdoms together safely and securely using its proprietary tech, which enables all kinds of data transfers -- not just crypto tokens and coins -- to occur to drive speed, utility, and benefit across any connected platform.
This interoperability solution is a gamechanger for developers who can start to build next-gen applications that get permissioned data from a private blockchain and use it on a public blockchain. Right now, Ethereum can't come close to doing that. While Polkadot is not an "Ethereum killer" it's definitely a unique disruptor within the crypto-sphere.
Is Polkadot a good buy now?
As of this writing, DOT is trading at $22.07 per coin, which is a 59% discount from it's all-time high of $53.88 back on Nov. 3 of last year according to CoinMarketCap.com. That same website currently shows DOT's market cap is more than $21.8 billion, putting it just outside of the top-10 crypto projects at the No. 11 spot of crypto rankings by total market value. Given its unique utility and technological advances, it's reasonable to expect this project's price to increase 10-20 times as mass adoption of the metaverse takes off in coming years.
Of course, this is only an opinion and not financial advice, and you should always do your own research before investing a dime anywhere. Having said that, Polkadot has a lot of potential and is a project that will almost certainly play a big role in how the virtual world develops and evolves online in the future. A future that will likely include both DOT and ETH.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Tor Constantino owns Ethereum.