Bitcoin is trading at $ 50,000 again, the price of ether is also falling massively, and Dogecoin millionaire Glauber Contessoto is going “all in” with Coin Ada on the Cardano blockchain (cash reported). But crypto fans already have their eyes on the next rally.
The focus of interest is Polkadot with the Coin Dot (ticker symbol ‘DOT’). Its price has risen 23 percent to $ 33.05 within a week. The rate almost doubled within the month. The coin, which like other cryptocurrencies had experienced a massive soar from the end of 2020, peaked in May at $ 47.95.
A center for blockchains
Behind the price increase is not only a reawakened interest in the cryptocurrency, but also in the underlying technology. Polkadot is a heterogeneous multichain and is known as the “Internet of the Blockchain”.
In the form of its “relay chain”, the Polkadot blockchain functions as a kind of coordination point or center for other blockchains. Different blockchains can interact and exchange data on the network. Polkadot sees itself as an alternative to Ethereum, which is praised for the many possible applications via smart contracts. Behind Polkadot are the Switzerland-domiciled Web3 Foundation and the computer scientist Gavin Wood, one of the co-founders of Ethereum.
The parachain auction is supposed to propel the course
So far, blockchains have worked like their own worlds – Polkadot wants to change this and focuses on interoperability. Running blockchains side by side also has the advantage that transactions on a single chain become slow too quickly due to the high number of applications. Some in the crypto universe are disappointed with their expectations that Ethereum would solve the problem of high transaction fees and the high network load with the “London upgrade” at the beginning of August.
This is another reason why Polkadot is being looked at more again on the crypto market. Polkadot’s Relay Chain also aims to increase security in general and give small applications such as newly designed blockchains a good start.
– CryptoMando (@CryptoMandalor) August 31, 2021
The high expectations of Polkadot and Dot-Coin are based on the one hand on the strong interest in new applications that should run on the system. On the other hand, there is also a parachain auction.
The parachains are those blockchains that are connected to the Polkadot chain. To initiate a new blockchain, the coin dot is used as a token. When Polkadot launched in 2016, dots were issued to investors as part of the Initial Coin Offering (ICO). The amount is expected to grow by 10 percent year on year. Dots are given to users as part of a proof-of-stake process, who also validate the network in this way.
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At the auction, which is expected soon, new places will now be allocated, via which new blockchain projects can be launched. Because dots are required for this, the demand for the coin is increasing. Bidders in such an auction can use their own dots or obtain them from the crypto market via a crowdload. Since the bidders are not allowed to resell their coins, there is a shortage in the circulation of the cryptocurrency, which can have a price-driving effect. As the site cointelegraph.com writes, the trading volume of Dot has increased by 300 percent this week.
Kusama, or KSM, a “cousin” of Polkadot, has recently held successful auctions. At Kusama, which users like to use as a kind of test network for Polkadot, the coin has also doubled its price within the past 30 days.