Polkadot (DOT) is a blockchain network that looks to provide scalability, security, and interoperability. It boldly aims to make different forms of data transmissible between other blockchains; currently, coins can transmit data that is related to the value they hold, but expanding to other data types and forms is very limited. Ultimately, you can think of Polkadot as a platform developing with the vision of reaching new levels of connectivity and interoperability in the blockchain space.
Many market speculators believe that Polkadot still has the potential to increase in market value as it is one of the few platforms that hasn’t really pumped as of yet. It currently sits as the eleventh biggest asset on the market, and many believe this could easily rise to a top five.
This article will tell you everything you need to know about this protocol, where you can buy it, how you can buy it, and advise if now is the time to buy-in.
Best Way To Invest in Polkadot in 2023
Polkadot is an extremely popular token in today’s market, so for this reason there are a host of different ways in which you can invest in it.
What Is Polkadot - Quick Overview
Name and ticker Polkadot (DOT)
Date launched May, 2020
Circulating supply | max supply: 987,579,314.96 | uncapped
Blockchain network Polkadot parachains
Creators Gavin Wood
Use-cases Blockchain linking, interoperability device, blockchain communication device
What Is Polkadot – Explained
Polkadot is certainly one of the more interesting projects out there, and also has a fantastic founder who is widely known and respected throughout the blockchain community. Gavin Wood, co-founder of Ethereum, founder of Parity Technologies, creator of the Solidity smart contract language, and founder of Polkadot has one of the most impressive resumes in the game.
The original split of the Ethereum team has created some of the most successful projects in space today, and Polkadot is no exception. In 2017 Wood founded the Web 3.0 foundation, a non-profit foundation based out of Switzerland, and this name surely resonates more with audiences now in 2023; this foundation would go on to be the support network for Polkadot. Wood then launched the ICO in the midst of the 2017 crypto boom and raised a huge $145 million. The team then went on to choose Parity to help develop what is known today and the Polkadot network.
There was however a slight issue with this partnership, specifically involving the funds raised in the initial ICO. Famously, over $150 million worth of ICO funds stored in a Parity wallet were burned and locked away, along with a predicted 500,000 ETH marking one of the biggest losses in the capital the space had ever seen. Polkadot still went on to meet its development milestones and even conducted another private sale in 2020 raising a further $45 million.
Polkadot incorporates all of the buzzwords that you see with many new blockchain networks: Ethereum killer, community governance, interoperability. But Polkadot surely stands out from the rest, not only due to its team but because of some of the intricacies and use cases this protocol has.
Essentially, it wants to be able to link together with other blockchain networks. The actual content or purpose these chains have wouldn't even be of that much importance, it is the fact of linking them together, and designing a truly interoperable network, that Polkadot is concerned with. Not only does it want to begin connecting the dots between blockchains but also to provide scalability. Clearly, scalability is one of the most pressing problems blockchains face, illustrated by the hunger for Ethereum 2.0 and more scalable blockchain networks like Solana. This need has emerged due to the sheer demand blockchain networks have faced over the past few years, of which the technology has struggled to keep up with, leaving it bloated and slow.
We also have to mention Polkadot’s governance protocols because it is such an integral part of the brand. They have ensured that transparent governance runs through the entire network to prevent any disputes within the community or delays with software updates.
Due to the nature of Polkadot being a place to develop and build interoperable blockchains, its market performance is usually directly correlated to some of the networks that have been built on top of it. For this reason, it is important to stay aware of these projects and how they perform on the market. If there is generally good performance from some of these tokens you may see a correlation in the market trend of DOT itself.
How To Buy Polkadot
To buy any token you will need an interface. There are a host of different options for you, but most will require you to verify your identity and create an account with some sort of platform. Here we have laid out your options.
You can buy DOT using any of the following platforms:
Brokerages: DOT is available on a good range of brokerages compared with other cryptocurrencies - this includes eToro and Libertex.
Exchanges: Almost all exchanges will list DOT because they offer a good range of variety and it's one of the popular tokens to trade on the market; exchanges provide slightly lower fees than most brokerages but can be more complicated.
Decentralized Exchange (DEX): These operate in the same way as a traditional exchange, but are unregulated and are not owned/operated by a singular entity. DEXs usually have a great range of coins for users to choose from as they are a key part of the blockchain metaverse and have almost no restrictions.
P2P: Person-to-person exchanges offer great rates due to the lack of a middle man; it's best to think of this as swapping rather than trading.
How To Sell Polkadot
You can sell your DOT using any of the methods we have shown above under How To Buy Polkadot. Again, most platforms will require you to verify your identity and create an account; additionally, you will need to own the token directly or via a derivative.
With some platforms, like an exchange, you are able to transfer any holding of DOT you may already have to that platform and then sell it there. Whereas with something like eToro you will first need to buy DOT on the platform, and then also sell it there.
We advise that you first check the fees you may incur when transferring crypto assets from platform to platform as it can be quite costly.
Alternative Ways to Invest in Polkadot
Due to Polkadot’s popularity, we are now seeing this token becoming available for purchase in the form of more traditional financial products like derivatives. The crypto space is now beginning to merge with these traditional products and we are seeing a wide range of the most popular coins expanding how investors can own their assets.
Here is a breakdown of some of the alternative ways you can invest in Polkadot:
Contracts For Difference
You can use brokerages to buy DOT CFDs; CFDs are a contract you agree to when you complete your purchase. They pay you rewards if the asset price rises or you incur losses if it goes down. You do not own or hold the asset with derivatives.
Exchange Traded Fund
An ETF is best thought of as a collection of different assets relating to a specific product. For example, an ETF could include stocks, commodities, bonds, or a mixture of them. It is an alternative type of security that tracks the asset in a different way than just buying it outright.
Polkadot has an ETP (Exchange Traded Product) called 21shares Polkadot ETP.
ETNs are somewhat complex; they are types of unsecured debt securities that track an underlying index of securities. They are similar to bonds but do not include payments of periodic interest. You can trade ETNs on stock exchanges. There is now a VanEck Vectors Polkadot ETN that some will be able to interact with.
Trusts are essentially a pot of managed assets of funds. They are legally managed by a legal entity that has the right to manage these assets for the benefit of a third party. Osprey now offers the Osprey Polkadot Trust and Valkyrie offers the Valkyrie Polkadot Trust.
Is It Safe to Invest in Polkadot Right Now?
Crypto markets are extremely volatile and carry huge risks, so we advise you to always be careful with these assets and your own due diligence. The same especially applies to CFDs; 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Polkadot is definitely crypto worth watching. It is a coin based around meaningful functionality that targets to actively guide the future development of the ways blockchains interact with one another.
Currently, Polkadot is most likely undervalued at $18 which marks an opportunity to buy-in. It has performed steadily over the past year with highs of $50 and lows of $12. However, many speculators note that Polkadot is yet to really experience a meaningful pump and could very well be next in line. It sits as the 11th largest cryptocurrency by market cap which shows there is still some room to grow into. Clearly, there are a few competitors above it that try to do a similar job, so these projects should also be watched and analyzed alongside Polkadot.
We advise you to always be careful with these assets as they carry extreme risk, but Polkadot offers a reasonable price for a coin with great functionality and a fantastic team behind it.