Last week, I reached out to some professional crypto fund managers I know in Russia to give me their best crypto investments so I can get in on the action. One of the names that popped up had also been mentioned by other people I hadn’t spoken to before, but everyone seemed to be on the same page: Polkadot (DOT) was the new altcoin that everyone liked. He had all the right moves.
It is often said that the “blockchain of blockchains” of Swiss origin is an Ethereum killer. Ethereum (ETH) is the most traded cryptocurrency after Bitcoin.
But the little-known Polkadot has been steaming it over the past month in terms of earnings, up more than 88% from Ethereum’s 50%.
Ethereum still appears to be Bitcoin’s only true altcoin. No one stole his thunder. Can Polkadot take part of it?
“Yes. Definitely. I think Polkadot is in a privileged position to take over the altcoin space currently occupied by Ethereum,” says Denko mancheki, CEO and co-founder of Reef Finance. They are integrated with Polkadot. “This is due to the slow pace of development within the Ethereum blockchain, “he said, adding words only serious, full-time crypto investors and developers are familiar with, such as” sharding “and” staking. ”
Delays continued to weigh on Ethereum, the most beloved blockchain developers created by Vitalik Buterin, a Russian-born programmer living in Canada. He started Ethereum in 2014 after dropping out of the University of Waterloo.
Polkadot was founded by the Web3 Foundation in Switzerland and is a decentralized, open-source website created by former Ethereum CTO Gavin Wood, Robert Habermeier and Peter Czaban.
What makes it different from Ethereum?
If you think Bitcoin only knows how to transfer value between its participants, then Ethereum knows how to do it too, but they also know how to perform complex computational tasks to run a program that will perform different functions. It is the Bitcoin of the geek computer programmer.
The problem with Ethereum is that it runs on something called GAS. Because you have to pay GAS for each calculation task and the more complex it is, the more expensive it is. Ethereum can be expensive for developers. If Ethereum is like a highway, then the programs developers create on that highway have to pay a price for natural gas, which is essentially a traffic congestion tax.
Sticking to the freeway analogy, Polkadot is like having multiple freeways, each of which can be built to serve a specific purpose for specific applications.
Polkadot serves as a protocol for protocols or as a blockchain for blockchains, industry experts tell me. There is also the possibility to interact with other blockchains that are part of the Polkadot ecosystem. This saves money and resources, but it also allows developers to access the Polkadot community instead of starting their own community to promote new coin-funded projects. Polkadot simplifies the innovation process and eliminates the need to build everything from scratch.
“Most of Polkadot users are developers. These are people who are excited about it, ”says Derek Yoo, CEO of PureStake and founder of the Moonbeam Project, also on Polkadot now. “They’re building new blockchains or new decentralized applications and finding ways to connect existing chains to the new Polkadot way of doing things,” he says.
The underlying appeal for developers is the more expressive and wider canvas they can paint on with Substrate, the Polkadot development system, compared to Ethereum.
If developers flock there, so do investors.
Polkadot has been trading for less than a year. It was not launched in its original state until May, amid a global pandemic. It’s not correlated to anything yet, so it’s not the cheapest ETH, so to speak.
“It’s better to make investment decisions based on other factors,” says Daniel Wolfe, Managing Director of Halcyon Portfolio Management in Moscow. He manages their Simoleon Long-Term Value fund.
“DOT and ETH have similar ambitions, both aiming to be the primary platform for smart contracts,” he says. DOT has many elements designed to address the perceived weaknesses of ETH. But ETH is an established platform with many existing projects already working on it. “DOT is something that we have and that we monitor carefully,” he says. “There is reason to believe it will be a better network, but we will need to see sustainable adoption. If this happens, investors will want to switch from their ETH positions to DOT. “
Ethereum has many elements that make it a favorite hold for institutional investors who have bought crypto in the past couple of years. It is of course much more liquid and you can buy ETH futures from this month.
For many investors, too, ETH is the coin they buy when they start to diversify outside of Bitcoin. “Institutional adoption is the main driver of crypto valuations today, so it makes sense to have a larger position in ETH than in DOT at the moment,” says Wolfe.
Many retail crypto investors prefer to buy whole coins rather than fractions, so they are the ones who run the altcoin market. Better to have 100 DOTs than a quarter of ETH if that’s all you’re willing to play on Coinbase or Bitpay. Some traders like to have the whole room. I am one of those guys.
Coinbase doesn’t have Polkadot, but Kraken and others do. I am on Coinbase.
“Almost all cryptocurrencies are still tightly tied to Bitcoin’s movements anyway,” Sleeveski says. “There had been a lot of talk about decoupling and the evolution of ETH in a different way, but the bear markets that followed showed how much the market is tied to Bitcoin price movements. I don’t see this changing in the near future. Polkadot’s market cycle would largely follow Bitcoin’s. “
Sometimes rooms just need a wacky lift. Something viral. Maybe TikTok teens who love the Disney + Miraculous: Tales of Ladybug and Cat Noir children’s show can find a friend in Polkadot. Looking at their website, it’s a bit lackluster, unfortunately. Maybe she needs to kiss the ladybug. Go for red and white and black instead of pink, white and black. Just a suggestion.
For now, the latest hot crypto has risen exactly 1055% since its inception and is selling for $ 31.12 a coin. Ethereum, all seven years old, is up 274,991.9% and is approaching $ 2,000. Last year at this time it was $ 265.
Everyone looks at Polkadot the same way – hoping it follows a similar trajectory as Buterin’s Ethereum.
“Most of the projects being built on Polkadot today will have some correlation with DOT,” says Sleeves. “Polkadot will become a market engine.”
Yoo thinks the same, that’s why he settled on it. “A bet on Polkadot is a bet on a multi-channel future,” he says. “The market recognizes that this is the reality we are heading into.”