DOT/USD Technical Analysis
About Polkadot (DOT)
In the world of cryptocurrencies, Polkadot is one of the most recent entrants but its popularity catapulted almost immediately after its launch, making it the sixth most popular cryptocurrency based on market cap as of March 2021. While in terms of value, it remains far lower than the most popular digital currencies like Bitcoin and Ethereum, what's interesting is that the Polkadot price has posted a year-to-date gain of over 250%.
The proof-of-stake blockchain project aims to allow for seamless interoperability between different kinds of blockchains, an interesting concept that is likely to keep it popular at least until the next innovation in this area comes along. A heterogenous blockchain that has the functionality to integrate various other types of blockchain projects and let them process transactions in parallel and exchange data with each other without impinging on security, Polkadot holds much promise towards helping boost the mainstream adoption of blockchain technology and crypto-based initiatives.
While some analysts tout Polkadot as one of the most important launches the cryptocurrency market has seen in recent times, others have criticized the project as well, especially concerning its "rocky history". The parent firm behind Polkadot, Parity, has faced several issues in the past in addition to other challenges that the developers behind DOT need to address before it can be considered at par with other cross-chain competitors.
Polkadot is a protocol based on blockchain technology that makes it possible for various kinds of blockchains to operate on a single network - its biggest strengths are interoperability and scalability. As it is built on Ethereum - the world's second most popular cryptocurrency and the backbone of the world of DeFi, it is of great interest as it can offer more use cases that require cross-chain communication.
Polkadot's design permits it to operate two kinds of blockchain - a main network, also known as a relay chain, with permanent transactions, and user-created networks or parachains which can process interactions in parallel, allowing for greater scalability. In addition, it supports the option of spreading out transactions across the chains so that a higher number of transactions can be processed within the same duration of time, making the overall ecosystem far more efficient.
Unlike proof-of-work or proof-of-stake blockchain networks that need to build a significant community to improve security, Polkadot allows various blockchains to pool together their security, offering a safer and more secure network overall with the power of this aggregation, right from the initial stages. Its developers are expected to roll out several features in 2021 that would make Polkadot more secure, scalable and innovative, including the launch of numerous parachains and potentially drive the DOT price higher in turn.Polkadot Price Prediction
The Polkadot protocol was created by Gavin Wood, a co-founder of Ethereum, along with Robert Habermeier and Peter Czaban, with the launch of its whitepaper in late 2016, followed by the first token sale about a year later, in October 2017, which helped its founders raise more than 485k ETH.
The year 2018 saw the development of Polkadot's Proof of Concept (PoC) 1 and a successful on-chain upgrade of the governance protocol from PoC-1 to PoC-2. Later in the year, the BBC Birch testnet was launched, which provided the feature of building and deploying a Web Assembly smart contracts chain with Substrate - the software development framework used by Polkadot developers that allows for speedy creation of parachains.
The PoC-3 milestone was achieved in January 2019, which brought with it better governance as well as a novel consensus finality gadget. In May 2020, the Genesis block of the Relay Chain of the Polkadot network was launched as a Proof of Authority (PoA) network. The transition from PoA to Nominated Proof of Stake (NPoS) took place in June 2020, and in August 2020, the DOT token was redenominated with the value of 1 old DOT = 100 new DOT.Polkadot Price Chart History
Polkadot Price Factors
The DOT price - the native token used on the Polkadot network can vary depending on how users choose to use the Polkadot ecosystem. The generation of more use cases with every development launched going forward and increased adoption of the technology can drive higher transactions in DOT tokens, which could potentially propel its price upwards. On the other hand, the launch of a formidable rival technology that could take the sheen away from Polkadot and drive users away from it could send the Polkadot rate lower.
The DOT rate can also fluctuate based on how the overall crypto market performs as well. When more investors move towards trading cryptocurrencies, it generates greater interest among the community for all digital currencies, increasing the potential for the Polkadot price to make further gains as well.
Trading PolkadotNumerous digital exchanges offer DOT as an asset to trade, with most of them letting you trade it against other cryptocurrencies. Only a few exchanges may allow you to trade Polkadot's token against fiat currencies directly. To start with, you need to select a reputed exchange or crypto trader that supports trading of Polkadot (DOT) and create an account.
You can then convert your trading capital into DOT and trade it against other available options on the exchange. If you choose to go with a broker, then you can leverage their ideas based on expected fluctuations in the Polkadot rate and try to generate profits.
If you are going it alone and trying to trade DOT without the help of a broker, you need to do ample research to help you analyse the Polkadot chart to come up with your own trade ideas. Pay close attention not only to technical analysis but also fundamental drivers that can specifically impact the DOT rate as well as the overall crypto market before entering into trades in this digital asset.
In case you are completely new to the world of cryptocurrencies, you will also need access to a digital wallet that can store your DOT tokens securely. You can choose from web wallets, desktop wallets and hardware wallets, depending on the level of security and convenience that suits you.Polkadot News
DOT/USD - FAQs
Polkadot is a next-generation blockchain network that offers support for interoperability between different kinds of blockchain networks. Polkadot's network allows transaction of not just tokens but also various kinds of data, enabling several use cases for the technology behind cryptocurrencies - blockchain. The native token used for transactions within Polkadot is DOT.
You can trade DOT by opening an account with a reputed crypto exchange or a broker that supports this particular token. Convert your capital into DOT tokens and start trading these tokens against other cryptocurrencies and fiat currencies.
You can choose a digital wallet that supports storing of DOT tokens. There are various kinds of wallets you can choose from, based on the level of security and convenience you require, such as web wallets that can be accessed online from any device, desktop wallet that can only be accessible from a single device or hardware wallets that allow for offline storage of your DOT tokens with the added benefit of physical security.
As a relatively new entrant in the crypto market, currently DOT can only be used within the Polkadot network for participating in governance, facilitating the consensus mechanism, and in order to acquire a parachain slot.
Most countries around the world allow their citizens to buy, sell and trade cryptocurrencies, including DOT. However, in some parts of the world such as Algeria, Bolivia, Ecuador, Bangladesh, Nepal and Macedonia, cryptocurrencies are still considered illegal.
The UK government is yet to introduce formal regulations exclusively for cryptocurrencies such as DOT. However, starting earlier in 2021, the FCA - UK's regulatory authority did impose a ban on the sale of crypto derivatives and ETNs.
It is still unclear if the inflation model will impact the percentage holdings and impact the value of the DOT token, especially among passive holders who do not actively participate within the Polkadot network. As more DOT tokens are mined, it is possible that the value of their holdings could dilute significantly. In addition, the crypto space is largely unregulated, and any regulations by governments that challenge the status of DOT adversely could make it a risky asset to trade or invest in.