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Forget Bitcoin and Ethereum: This Cryptocurrency Is About to Experience an Incredible Rise
Bitcoin and Ethereum are booming, but this powerful cryptocurrency has been sitting on the station until now. This blockchain project is about to power the future of the internet.
Cryptocurrencies are waking up after a long sleep. Ethereum (ETH -1.74%) has gained 92% over the past year, while Bitcoin (Bitcoin -0.79%) climbed 128%. From the introduction of new cryptocurrency-based investment vehicles to the upcoming Bitcoin Mining Rewards HalvingMany forces combined to thaw the last crypto winter.
But not all cryptocurrencies are invited to the party yet, even if their growth prospects seem at least as promising as those of Bitcoin or Ethereum. In particular, Peas (POINT -1.21%) seems undervalued and ready to move out of its comfort zone. The official blockchain network of the Web3 The Foundation does not get the respect it deserves in the market.
Polkadot’s low price sticks out like a freshly stubbed toe if you accept that a decentralized, personalized internet is the future.
I’m not saying you should sell all your Bitcoin and Ethereum to reinvest in Polkadot today. A diversified portfolio is always wisereven in the uncharted waters of the crypto industry.
But in case you haven’t considered adding Polkadot yet, let me explain why this token is in a prime position to beat the stock and crypto markets in the coming years.
Image source: Getty Images.
By the way, what is Polkadot?
Polkadot is a blockchain network designed to solve a fundamental problem in the crypto world: different blockchains can’t easily communicate with each other. Imagine a world where your Apple The iPhone was unable to connect directly to a Samsung Galaxy Device: This is the reality of old-school blockchain. Polkadot acts as a translator and bridge, allowing blockchains with different goals and designs to communicate and share data seamlessly.
Web3’s vision for the internet is based on decentralization and user control. Polkadot makes this possible by allowing custom blockchains (called “parachains”) to connect to its network. These parachains can be tailored for specific uses like gaming, finance, or social media, creating an interconnected ecosystem where value and information flow freely.
This programming ecosystem supports the rapid and easy development of applications and programs that leverage the best features of many different blockchains. Polkadot makes it easy to store monetary value in Bitcoin, run Ethereum smart contracts, collect real-world data from Chain link (LINK -2.72%), and more.
The DOT token (commonly known as Polkadot) is the lifeblood of this decentralized system, which allows for easy data transmission between different blockchain networks while ensuring the security of data transfers. In addition, its multi-chain design allows for rapid processing of many transactions, avoiding the bottlenecks of less scalable blockchains.
How the DOT blockchain makes money
Executing Transactions via Polkadot proof of stake ecosystem generates a small fee for the validator nodes that process each request. This toll for traveling on the next-generation information superhighway serves as an incentive to help the system function.
In this way, increased usage of the Polkadot network directly translates into increased demand for DOT tokens, as they are needed to pay transaction fees. As the ecosystem grows and more value flows through Polkadot, the underlying DOT token becomes more valuable.
The current reward rate for staking your Polkadot tokens is 17.3%. This is quite high, in order to motivate more DOT owners to stake their tokens and play a more active role in the system. Less than 53% of all DOT tokens are staked today, below the target rate of 60%. The reward rate could therefore change over time as the staked share increases or decreases. Staking also allows DOT holders to participate in the governance of the network, further influencing the value of their holdings.
Additionally, this is the gross reward rate for people who run their own nodes on the DOT network under ideal conditions. The rate will be lower if your chosen cryptocurrency trading service keeps part of the staking income for itself. For example, my Coinbase (PIECE OF MONEY -6.37%) currently shows a 6.9% win rate for staking DOT tokens.
These mechanisms ensure that the value of DOT is tied to the growth and success of the Polkadot network.
Polkadot Price data by Y cards.
Polkadot Has Room to Grow, But Many Market Makers Haven’t Noticed It Yet
DOT’s 14% gain over the past year pales in comparison to the returns of Bitcoin and Ethereum. Yet these crypto powerhouses operate in different, often less dynamic, market segments.
With its interoperability-driven approach, Polkadot is at the forefront of Web3 innovation. Market capitalizations are often imperfect measures in rapidly changing industries, and the DOT’s $10.5 billion market value is expected to grow significantly in 2024 and beyond.
This appears to be a gross undervaluation given Polkadot’s central role in the emergence of the decentralized internet. Savvy investors may view this mispricing as an opportunity to buy a leading Web3 infrastructure at a significant discount.
Anders Bylund has positions in Bitcoin, Coinbase Global, Ethereum, and Polkadot. The Motley Fool has positions in and recommends Apple, Bitcoin, Chainlink, Coinbase Global, and Ethereum. The Motley Fool has a disclosure policy.