Polkadot was considered one of the most exciting projects on the crypto market last year. With the goal of its own blockchain internet, the project in 2021 gave hope to enhance the connection of different blockchains with each other. Is this vision still alive in 2022 and can Polkadot crypto take hold over the next few months?
What is the Polkadot Crypto?
Polkadot is a blockchain project launched in 2017 by the Swiss non-profit organization Web3 Foundation. The inventor of the project is Dr. Gavin Wood, one of the co-founders of Ethereum and one of the developers of the Solidity programming language for smart contracts. The ICO in 2017 raised $145 million at the time.
When the company was founded, 10 million DOTs were issued as network tokens. The number of DOT increased to a number of 1 billion in August 2020 for the sake of simplicity. The project is still in ongoing development. However, a large part of the desired functions of the network has now been implemented.
How does Polkadot Work?
Polkadot is intended to form a blockchain network that connects other different blockchains with each other and thus creates a so-called “Internet of blockchains”. In other contexts, there is also talk of Web 3.0. The unique selling point is the so-called parachain, which connects and communicates with different blockchains. As a consensus mechanism, Polkadot uses NPoS (Nominated Proof of Stake) protocol.
The network token DOT has several roles at Polkadot:
- Network Management: Token holders can control changes to the platform, such as setting network fees, scheduling events, updates and fixes.
- Staking: The active token holders ensure the functionality of the platform by validating transactions through staking.
- Adding Parachains: As new parachains are added, DOT tokens are bound. Should these parachains be useless and removed, the DOT tokens will become freely available again.
Is Polkadot a good investment in 2022?
As previously mentioned, the Polkadot Network is still evolving in 2022. The development of a coherent network of all blockchains is an extremely ambitious goal. After a lot of hype at the beginning of the fourth quarter of 2021, Polkadot has calmed down a bit. A major milestone was the “Parachain auction” of the Polkadot Blockchain and its “little brother” Kusama in November last year.
More recently, Polkadot made the news when the network raised millions of dollars in donations for Ukraine to aid in the war against Russia. This shows that Polkadot can have real-world uses beyond the potential formation of Web 3.0.
Polkadot Price Prediction – will DOT perform in 2022?
Polkadot’s DOT token, like many other cryptocurrencies, experienced a steep rise in 2021. However, the DOT also lost significantly in the last 3 months as the market went through a severe correction. At the beginning of March 2022, DOT price is around $18 (as of 03/09/2022), which is 12th place among all cryptocurrencies by market capitalization. This is almost 70% lower than the all-time high of $55 on November 04, 2021.
As seen in figure 1, the current price of DOT is sitting at the strong support price of $16. If the entire crypto market continues to recover upwards, many traders expect prices of DOT to reach $23 as a first target, then $30 as a second target. This will yield around 50% if we buy around today’s price.
On the other hand, a sensible stop-loss would be right below $16, depending on the risk tolerance of each investor. Placing tight stop-losses can be quite disappointing, especially in volatile times.
Conclusion – is Polkadot Good in 2022?
The Polkadot project continues to be extremely ambitious and is pursuing its vision of the internet of blockchains. The successful parachain auctions in November 2021 were the first step in this direction. However, there are similarly exciting projects at the moment such as the growth of the Terra ecosystem and the upcoming basho development stage at Cardano.
In the current market correction, enthusiasm for the Polkadot project and the idea of Web 3.0 has waned somewhat. If the developers of Polkadot can implement their visions of increasing connectivity of all major blockchains in the next few years, the DOT token could still increase in value massively in these years.
You can purchase Polkadot’s DOT token in 2022 on crypto exchanges Coinbase and Kraken .
