The DOT cryptocurrency, the native token of the Polkadot network, traded at a record high on 4 November, ahead of the launch of cross-blockchain auctions next week.
The DOT price has climbed since a brief September sell-off in cryptocurrencies, after the auctions were announced in mid-October.With no signs of delay to the auction process or technical issues, the price has surpassed the previous all-time high set in the May crypto rally, reaching the key $55 level.
What is Polkadot and what are the parachains it’s auctioning?
In this overview of the cryptocurrency network, we check out the project’s latest developments and the outlook for the DOT crypto price.
Polkadot aims for blockchain interoperability
The Polkadot network was created in 2016 by Gavin Wood, co-founder of Ethereum.The project is being developed by the Switzerland-based Web3 Foundation, which aims to facilitate a fully decentralised web.Web3 refers to the next-generation internet, where decentralised platforms give users control over their privacy and personal data, rather than large corporations.
According to the project website, “researchers from Inria Paris and ETH Zurich, developers from Parity Technologies, and capital partners from crypto-funds such as Polychain Capital are all working together to develop a superlative realisation of Web3, with Polkadot at its core.”
What is Polkadot’s coin? The DOT cryptocurrency is the digital token the network uses for staking, bonding and governance.Staking is the process of receiving cryptocurrency as a reward for holding funds in a digital wallet to support operations of the blockchain.Bonding involves locking in a certain number of tokens for a specified period.Tokens are used by the Polkadot community for governance to vote on changes to the network.
Unlike networks such as Bitcoin, Polkadot can be upgraded to fix bugs or introduce new features without requiring a hard fork , making it easier to adapt.
The first block of the project’s Relay Chain launched in May 2020 and the Polkadot coin was rolled out in a phased process.
Polkadot runs alongside the Kusama network, which was released as an initial version of the same underlying code to act as a live pre-production environment to test new features.There are also use cases for Kusama as a standalone network for early-stage startups, while Polkadot focuses on enterprise and business-to-business financial applications that require bank-level security and stability.They are based on the same multichain architecture, but the networks are expected to evolve independently.
The Polkadot development team said in a blog post that the project “was designed as an underlying infrastructure to realize the kind of scalability, interoperability, and security needed to enable the multichain future, allowing diverse layer-1 parachains to interact and communicate with each other within the ecosystem.”
Polkadot allows parachains (parallelisable chains, which are a simpler form of blockchain) and networks like Bitcoin or Ethereum to interoperate via bridges.
A bridge creates a compatible connection that allows users to securely transfer tokens or data between blockchains, whether they are public or belong to private enterprises.
Several such bridges have been developed or are in development to connect Polkadot with other blockchains and the development is committed to connecting communities, aiming “to provide reusable development components that make it effortless to build and deploy bridges to other blockchains,” the post said.
Polkadot prepares for parachain auctions
In the latest Polkadot news, founders Gavin Wood and Robert Habermeier announced on 13 October that the network is ready to support its first parachains, the final stage of its multi-phase process that started on 26 May with the launch of the initial proof-of-authority version of the Polkadot Relay Chain.
The first parachain auction will be held on 11 November.On 20 October, Polkadot’s on-chain governance approved a series of auctions to be held weekly until 3 March 2022.
Parachains have been running on the Kusama network since the launch of Statemine – it’s first full feature parachain – on 3 June, with a series of auctions resulting in 12 live parachains.
“These parachain teams have conducted several ‘forkless’ upgrades on the network and processed several million transactions.In conjunction with Kusama parachain auctions, over 2.4 million KSM has been contributed to crowdloans by more than 49k unique addresses, demonstrating significant community participation in the parachain launch process,” according to the announcement.
“The fact that such activity has been taking place on Kusama for over four months without significant issues is an important factor in considering parachains ready for launch on Polkadot.”
With Polkadot on its way to a full commercial launch, the DOT token price has soared.Polkadot chart analysis shows that after the cryptocurrency markets bottomed in July with DOT falling to $10.42, its lowest level since January, the price climbed to $38.68 on 14 September.
DOT slipped back to $25.56 on 21 September, but has since rallied, reaching its new high of $55 on 4 November with other coins such as ether (ETH) and solana (SOL) also hitting fresh highs.
The Polkadot token price has gained as much as 92% since the start of October and 492% since the start of the year.
Keep in mind that the past price performance is no guarantee of future returns.
So, what is the outlook for the coin? Will the price continue to rise?
Polkadot crypto price prediction: will the coin climb to new highs?
At the time of writing (5 November), Polkadot technical analysis from CoinCodex showed that sentiment is bullish, with 21 indicators giving buy signals compared with six bearish.However, it predicted that the DOT price could drop to $48.81 by 10 November.
The DOT coin price prediction from Wallet Investor was bearish for the short-term, predicting that the price could fall to average $48.38 by the end of 2021.
However, looking further ahead, it expected the price to rise, climbing to average $77.38 by the end of 2020 and $162.713 by the end of 2025.
DigitalCoin ’s Polkadot prediction estimated that the coin price could average $93.93 in 2022 and rise to $111.08 in 2023 and $159.59 in 2025.
By 2028, DigitalCoin predicted DOT could trade at an average price of $235.2, with a peak at $256.55.
The Polkadot crypto forecast from Price Prediction put the coin at an average price of $81.54 in 2022, $125.57 in 2023 and $267.71 in 2025.By 2030, it expected the price to jump to an average of $1,985.90.
It’s important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict what a coin’s price will be in a few hours, and even harder to give long-term estimates.As such, analysts and forecasting websites can and do get their predictions wrong.
We recommend that you always do your own research, and consider the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decision.You should also be aware that the past price performance is no guarantee of future returns and never invest more than you can afford to lose.
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FAQs
Whether DOT is a suitable fit for your investment portfolio depends on your personal financial circumstances and goals.
Cryptocurrencies are highly volatile investments, making them riskier to invest in than other asset classes.
You should do your own research and evaluate the level of risk you are prepared to accept before investing.
The future of the coin will likely depend on cryptocurrency market sentiment and the adoption of the Polkadot protocol, among other factors.While forecasting sites predicted that the DOT price could move higher over the long term, it is important to keep in mind that the high volatility on cryptocurrency markets makes it difficult to predict prices, and forecasters can and do get it wrong.
Having surpassed $50, the next level to watch for the Polkadot cryptocurrency is $100.Forecasts predicted the DOT price could reach $100 in 2023.Whether you believe those predictions is a decision only you can make.Keep in mind that analysts and forecasting websites can and do get their predictions wrong.
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