Polkadot is Ready for a Big 2022 – The Motley Fool
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More It seems like Polkadot(DOT 0.46%) has been the forgotten cryptocurrency over the past few months as newer blockchains like Avalanche(CRYPTO: AVAX) and Terra(CRYPTO: LUNA) stole the show. While the ~300% return that Polkadot has posted year to date in 2021 is nothing to sneeze at, networks like Terra and Avalanche captured investors’ imagination with returns of 100x and 25x year-to-date, respectively. Polkadot’s DOT token is also down almost 50% from the all-time high set in November as it sold off with the broader crypto market. So why do I expect Polkadot to get its groove back and have a big year in 2022? Image Source: Getty Images. Cryptocurrencies often see surges in price and interest when investors see examples of tangible real-world adoption or when corporations announce coin purchases. Polkadot stands to receive a similar boost after news that Deutsche Telekom, Europe’s biggest telecom company, bought a “significant” amount of Polkadot’s DOT token as an investment. Furthermore, the telco giant’s T-Systems subsidiary will be actively participating in the Polkadot network by running several validators on it. In proof of stake blockchains, validators confirm transactions and are rewarded for this participation, in this case with more DOT. This growing involvement from the $90 billion telco shows that they believe in Polkadot’s technology and see it as a growing part of their business going forward. Polkadot can currently process 1,000 transactions per second, much faster than Ethereum, which currently processes about 30 transactions per second. But this is still slower than networks like Solana and Avalanche which process up to 65,000 and 6,500 transactions per second, respectively. But here’s the kicker: as Polkadot continues to develop, founder Gavin Wood believes the network should be able to support up to 1,000,000 transactions per second. It remains to be seen if Polkadot will be able to reach this throughput, but if it does, this speed would dwarf any current cryptocurrency or traditional financial network. The number of developers working on the Polkadot blockchain exploded over the last year, from about 2,600 twelve months ago to nearly 10,000 today. The number of lines of code written for Polkadot in 2021 dwarfs all previous years combined, with founder Gavin Wood estimating that 2 million lines of code have been written, compared to 600,000 at the start of 2021. Why does this matter? Developers are attracted to thriving ecosystems where they see value, and in turn they build new products and features that enhance the network. Essentially, having a robust developer community becomes a self-fulfilling prophecy. When investing in a crypto project, you want to invest in assets that implement improvements and new use cases, as opposed to coins that live on hype alone and inevitably fizzle out. Solana, which emerged from relative obscurity to post an almost 100X gain in 2021, becoming arguably the most prominent blockchain outside of Bitcoin and Ethereum, saw the number of developers working on the platform double the year before in 2020, so the quadrupling of Polkadot’s developer count bodes well for the year ahead. Polkadot got lost in the shuffle at the end of 2021 as newer assets like Solana and Terra came into the spotlight. Blazing speed, a robust and rapidly growing developer community working on the project, and increasing real-world adoption by corporations should all help make 2022 a banner year for Polkadot.
The Motley Fool owns and recommends Bitcoin, Ethereum, and Terra. Michael Byrne owns Bitcoin, Ethereum, Solana, and Polkadot. The Motley Fool has a disclosure policy. *Average returns of all recommendations since inception. Cost basis and return based on previous market day close. Market-beating stocks from our award-winning analyst team. Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022. Discounted offers are only available to new members. Stock Advisor list price is $199 per year. Calculated by Time-Weighted Return since 2002. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.
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