Polkadot Is Aggressively Competing With XRP

In less than a year of operation, Polkadot has become the 5th biggest crypto by market cap. On January 16, Polkadot had a huge run to it’s all time peak of $19.4, hitting a $16 billion market capitalization and positioning itself as the 4th biggest digital asset as per coinmarketcap. XRP gained more than 50% market capital this weekend and reclaimed 4th place.

Polkadot (DOT) is a network protocol that allows arbitrary data to be transferred across blockchains. In the last few week it is up 47% with its market capitalization has solidified its position as the biggest crypto asset after Bitcoin, Ethereum, Tether and XRP. As of now Polkadot is trading around $16.53 with a market cap of below $15 billion and XRP on $0.46 with $21,42 billion as market cap.

Source: Coinmarketcap

In terms of technology, Polkadot is considered a contender to Ethereum in the sense that it allows smart contracts to run in an ecosystem of smaller blockchains called parachains. With parachains and a network of various blockchains, Polkadot is able to process data more efficiently enabling large decentralized applications to run without scalability issues.

Polkadot is essentially a multi-chain protocol which has a number of ‘parachains’ (shards in Ethereum) and works on its own technology called ‘Substrate’, which is a blockchain framework. The platform is fully interoperable, allowing other blockchains to connect to the network as a sidechain. The blockchain protocol has the ability to process thousands of transactions per second, leading it to be dubbed the latest ‘Ethereum killer’.

Earlier XRP came down to fifth position conversely has managed a loss of -12% over the past couple of weeks, which has not been enough to take the cross-border transfer token above $0.30.  XRP, after peaking at $0.78, has lost over 40% of its worth since November 24, 2020. When SEC sued Ripple, the digital asset crashed, claiming that the firm had sold illegitimate shares to customers. The XRP price plummeted to $0.173 on December 29, 2020, but it managed to rebound and is currently trading at $0.46.

Contrary to XRP, Polkadot has gained from the latest bitcoin price surge, along with most other big cryptocurrencies, crypto watchers say its rally means Polkadot is going to clash steadily with Ethereum, the blockchain on which most DeFi protocols work.

Polkadot’s price and market cap wasn’t helped exclusively by redenomination, but also by the fact that it has only been tradeable for just a few months. Big exchanges such as Binance, Kraken, and Bitfinex have listed it, so it’s only now that the vast majority of traders have been able to buy a stake in it. As such, Polkadot looks set to become an important platform within the crypto ecosystem.

Given DOT’s technological potential, it could continue holding its own for some time to come. So keep your eyes on it!

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Image: Gerd Altmann 

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