Introducing the token for the day
The token I would love to make trades on today are the DOT tokens.
DOT is the official currency or native token of the Polkadot blockchain. Polka dot is a multi chain blockchain which compiles and unites a network of blockchain providing the ability for these blockchains to share data and scale properly. There are a number of blockchains today like Ethereum, Bitcoin, Solana, Avalanche etc and these blockchains are not comparatively with each other. Meaning, they were built to function on their own. Polka dot was created as a layer two solution to these blockchains. Which means it solve problems of interoperability and scalability off chain.
Earlier, I said polka dot is a multi chain blockchain, this simply means that there are separate chains built on the polka dot blockchain with shard technology (shard is the splitting of a blockchain into smaller chains). On the network, there are multiple chains called parachains which are connected and secured by a central chain called the relay chain.
Parachains: They are subnets which have their own functionalities and tokens. They report back to the relay chain.
Relay chain: This chain is responsible for the sharing security of the platform, cross-chain interoperability and the execution of polka dot’s consensus mechanism. It is the central chain of the blockchain.
Bridges: They serve as a connection between the parachains and other external blockchains like the Ethereum blockchain, Bitcoin, etc.
We can see that, polka dot helps to establish a connection between blockchain and also serves as a layer two scaling solution for POW blockchains.
Polka dot was founded in 2016 by a co founder of the Ethereum blockchain, Gavin wood and was built with the proof of stake consensus mechanism.
Why I am optimisic about the project today/Analyzing the Coin
Well, recently, I have been exploring projects out there and when I read on the polkadot blockchain, I got attracted. It really has great use cases. For now, I saw an entry point and decided to make a buy trade. For the analysis, I used my knowledge of support and resistance zones with indicators like the macD and the volume. The asset pair is DOT/BUSD while the timeframe I used is 5-minutes.
Looking at the chart, the price hit the support line and reversed, the macD line crossed the red signal line to the top. This normally signifies and uptrend and there was an appearance of the green histograms. This seemed a good position to place a buy trade.
I booked my trade at $20.85 to be sold with take profit at 21.03 and stop loss at 20.72
Unfortunately, my analysis failed me and the trend went bearish.
My Plan to Hold DOT long or Sell
Yes I actually plan to hold DOT for long. Some reasons for my decision are given below;
1.) Sharding technology
Sharding is the splitting of a blockchain into separate chains and it has been proven that this system maximizes scalability on networks. With this technology, polka dot will be a useful tool to blockchains with low transaction speeds. Blockchains that function on the POW consensus mechanism can utilize polka dot as their layer two scaling solution and this will increase the use case of the DOT token.
2.) Web3
The polkadot blockchain was built to foster the web3 technology. Web3 is the implementation of the world wide web using blockchain technology. For this to happen, there has to be interoperability between all blockchains and this is what polkadot tries to solve.
Would I recommend DOT to people
Definitely, I would recommend DOT, buy and hodl. Polkadot has a high usecase and a good future ahead of it. With the DOT token as its native token, there will be influx in its demand which will make the coin more valuable.
Conclusion
In today's post, I have written on the Polka dot blockchain and DOT. I have also done some analysis on the token and placed simple trades accordingly.
Thank you!
Cc:
@pelon53