Hot cryptocurrency Solana soared more than 11,000% last year. So, you might be hesitating to invest in a player that's made such great gains. But with thousands of cryptocurrencies out there, you can easily invest in one that hasn't yet skyrocketed -- and potentially benefit from a big increase in the future.
One player to consider is Polkadot (CRYPTO: DOT). Polkadot climbed 278% last year. That's a pretty decent increase. But it clearly could move higher -- especially considering its prospects and gains by Solana and other rivals. Polkadot is a newish player. It launched in May 2020. And it recently rolled out a key element meant to power its growth. That's one of the reasons why this cryptocurrency makes a good buy now. Let's check out the full story.
All about interoperability
Polkadot stands out from the crowd for one particular reason. This blockchain is all about interoperability. Usually, in the cryptocurrency world, business takes place on one blockchain -- and data or tokens can't be transferred to various other blockchains. Polkadot solves that problem. The network has a main chain -- the relay chain -- that handles validation of transactions, security, and the coordination of the whole system.
Now, here's the exciting part: Polkadot also has parachains that actually are a series of parallel blockchains. Here, developers can build whatever they'd like -- so they can actually build their very own blockchain with a focus on decentralized applications (dApps), for example. And building blockchains is made easy. Developers can use Polkadot's development framework. It allows them to select pre-designed components -- and that makes the whole building process much quicker than starting from scratch.
Bridges allow parachains and another similar component -- parathreads -- to communicate with other outside blockchains. Like, the world's second-biggest blockchain, Ethereum, for example. Polkadot completed the parachains launch in December. So, we may expect more and more growth ahead for Polkadot.
More good news: Developers are flocking to this growing blockchain. Electric Capital's recent developer report shows an increase in developers on Polkadot from December 2020 to December of last year -- the number rose from 840 to 1,400. The report also showed Polkadot has been growing faster than Ethereum at certain key points in its history. Increases in the number of developers is a positive sign as it means more and more people are actually using the network -- so this adds to the idea that Polkadot has plenty of real-world utility.
Polkadot's structure also allows for transaction speed. And that's another important factor for a blockchain that aims to be among the future winners. Today, the network processes 1,000 transactions per second. But eventually, it may process as many as one million.
We've just started to see what Polkadot can do. But there's a lot more to come. The focus on interoperability could be big. The future of cryptocurrency may involve many winners, after all -- and having a blockchain that can connect them could be crucial for the success of each one. Polkadot's transaction speed adds another bright spot to the picture.
All of this means Polkadot may have what it takes carve out a spot in this market. So, for aggressive investors, it could be a great buy right now.
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Adria Cimino owns Ethereum. The Motley Fool owns and recommends Ethereum. The Motley Fool has a disclosure policy.
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