Last week, I reached out to some professional crypto fund managers I know in Russia to give me their top crypto investments so I could get in on the action. One of the names that came up had also been mentioned by others I have not spoken to before, but everyone seemed to be on the same page: Polkadot (DOT) was the new altcoin everyone loved. It had all the right moves.
The Swiss-born “blockchain of blockchains” is often said to be an Ethereum killer. Ethereum (ETH) is the most highly traded cryptocurrency after Bitcoin.
But little known Polkadot has steamrolled it over the last month in terms of gains, up over 88% to Ethereum’s 50%.
Ethereum still seems to be the one true altcoin to Bitcoin. No one has stolen its thunder. Can Polkadot take some of that?
“Yes. Definitely. I believe Polkadot is in prime position to take over the altcoin space currently occupied by Ethereum,” says Denko Mancheski, CEO & Co-Founder of Reef Finance. They are integrated into Polkadot. “This is because of the slow pace of development within the Ethereum blockchain,” he says adding in words that only serious, full-time crypto investors and developers know, like “sharding” and “staking”.
Delays have continued to weigh on Ethereum, the blockchain developers love most created by Vitalik Buterin, a Russian-born programmer living in Canada. He launched Ethereum in 2014 after dropping out of the University of Waterloo.
Polkadot was founded by the Web3 Foundation in Switzerland and is an open-sourced, decentralized web created by ex-Ethereum CTO Gavin Wood, Robert Habermeier and Peter Czaban.
What makes it different than Ethereum?
If you think that Bitcoin only knows how to transfer value between its participants, then Ethereum knows how to do it too, but they also know how to run complex computational tasks to run a program that will execute different functions. It’s the computer programmer geek’s Bitcoin.
The problem with Ethereum is that it runs on something called GAS. Because you need to pay GAS for every computational task and the more complex it is, the more expensive it is. Ethereum can get expensive for developers. If Ethereum is like a highway, then the programs that developers create on that highway have to pay a GAS price, which is basically a traffic congestion charge.
Sticking with the highway analogy, Polkadot is like having multiple highways, each can be built to serve a specific purpose for specific applications.
Polkadot serves as a protocol for protocols or a blockchain for blockchains, industry experts tell me. There is also the option to interact with other blockchains that are part of the Polkadot ecosystem. That saves money and resources, but it also gives developers access to the Polkadot community instead of building their own community to hype up new coin-funded projects. Polkadot simplifies the innovation process and takes the burden off having to build everything from scratch.
“Most of the people using Polkadot are developers. They’re people who are enthusiastic about it,” says Derek Yoo, CEO of PureStake and Founder of the Moonbeam Project, also on Polkadot now. “They are building new blockchains or new decentralized applications and finding ways to link existing chains to Polkadot’s new way of doing things,” he says.
The underlying appeal to developers is the more expressive and broader canvas they can paint on with Substrate, the Polkadot development system, compared to Ethereum.
If developers are flocking to it, so are investors.
Polkadot has been trading for…