Is Polkadot the So-Called Ethereum Killer?

For years, cryptocurrency upstarts have been searching for a so-called Ethereum (CCC:ETH-USD) killer. Among the most promising candidates is Polkadot (CCC:DOT-USD) as Polkadot was designed to upgrade Ethereum and to overcome its drawbacks.

I'm not promising that this, or any other cryptocurrency, will actually "kill" Ethereum. Nor am I bearish on Ethereum in particular.

Besides, the two cryptocurrencies will always have a connection. Specifically, Polkadot was launched in May of 2020 by Gavin Wood, a co-founder of Ethereum.

Still, there are traders who feel that ETH-USD is pricey and DOT-USD is a cheap and interesting alternative -- and after a recent price correction, it's as good a time as any to start a position.

Analyzing the Polkadot Price

Just for comparison, as of June 13, Ethereum was at $2,363 while Polkadot was just $20 and change.

So it's certainly true that DOT-USD is much more affordable on a per-token basis than ETH-USD. Plus, there's a big difference in terms of upside potential.

Let me explain. Consider what would need to happen in order for Ethereum to double in price. It would have to reach $4,700 -- certainly a possibility, but quite a feat.

Meanwhile, to double in price Polkadot would only need to get into the $40's. This isn't impossible -- indeed, it already happened in April and then again in May.

As recently as May 15, the buyers threatened to take out the $50 level, but then a sharp correction ensued.

So, you might want to grab some DOT-USD in the $20's if you have an opportunity to do so.

The Internet of Blockchains

As I alluded to earlier, Polkadot has been called an Ethereum killer, though that nickname might be an exaggeration.

Another nickname floating around in regard to Polkadot is “platform of platforms.” Alternatively, it's been called an "ecosystem of connected blockchains." But what exactly do these monikers mean?

Within the Polkadot ecosystem, there is a relay chain, which is a central chain which provides security for the entire network. DOT-USD then uses side chains to increase the network's capacity, and these are called parachains.

There are other parts of the ecosystem that help it function. For instance, the relay chain also serves as the main communication hub between parachains.

Through this complex ecosystem, Polkadot enables different blockchains to seamlessly communicate with each other. Perhaps, then, the best nickname of all would be "Internet of blockchains."

That's the ultimate innovation with Polkadot: cross-chain communication and interoperability, all made possible by bringing multiple blockchains into one network.

Enhanced Scalability

We've already identified a feature of Polkadot which Ethereum doesn't have: inter-chain operability.

To that, we can also add enhanced scalability. The Polkadot white paper specifically cited scalability as a failure of the currently available technology stacks:

"[A] problem to be deployed on Polkadot may be substantially parallelised -- scaled out -- over a large number of parachains. Since all aspects of each parachain may be conducted in parallel by a different segment of the Polkadot network, the system has some ability to scale."

To put it another way, Polkadot's parachains run and produce their blocks in parallel (hence the name). This feature allows the network to run quickly and smoothly.

The Bottom Line

As we've discovered, Polkadot has distinct advantages over Ethereum.

It enables communication between platforms that can't normally communicate, and it offers a comparatively high level of scalability.

But as I've argued, "Ethereum killer" might not be the best nickname. Personally, I feel that "Internet of blockchains" is more appropriate.

In the final analysis, there's no need to get hung up on nicknames. Instead, you can take a closer look at Polkadot and consider adding it to your low-priced crypto collection.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content - and crossed the occasional line - on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.