Is Polygon (MATIC) a Good Crypto Investment?

Originally known as the Matic Network, Polygon was created to scale Ethereum and improve the infrastructure. It is an India-based project aiming to make transactions cheaper and quicker on the Ethereum blockchain.

What Is Polygon (MATIC)?

Think of Polygon as an express train. It is on the same track as all other trains but moves faster and makes fewer stops along the way. In this example, the track is Ethereum, where Polygon does a quicker job of fulfilling transactions than the Ethereum blockchain.

Polygon is also the name of the native cryptocurrency used on the Polygon network. The coins trade under the MATIC ticker.

The platform uses a proof-of-stake, or POS, consensus to secure the network, verify transactions and create new currency. Polygon has a market cap of $5.282 billion as of May 31, and there are 7.96 billion polygon coins in circulating supply.

Does that mean polygon cryptocurrency is a safe investment? In this guide, you will learn the basics of Polygon, how it works and whether or not you should invest in its native currency.

How Does It Work?

Anyone who has ever traded on the Ethereum blockchain would be familiar with the high transaction fees and slow fulfillment times on the network. Polygon solves these problems by providing a decentralized platform that facilitates low-cost transactions.

The network describes itself as a layer two scaling solution. Its unique transaction fulfillment technology allows up to 65,000 transactions per second on each side chain. The system uses proof-of-stake checkpoints that could, in the future, allow millions of transactions on the blockchain.

In addition, Polygon’s side chains have been designed to support decentralized finance protocols within the Ethereum ecosystem.

Polygon Tokens in Circulation

The developers release the token every month. The maximum supply of polygon tokens is 10,000,000,000, all of which will have been released by the end of the year. Currently, 7.96 billion, or 80%, are in circulation, according to CoinMarketCap. Polygon has burned, or removed from circulation, 650,000 coins since a January upgrade on its mainnet.

Sixteen percent of the tokens are team tokens. Advisors hold 4% of tokens, 12% are network tokens and 23.33% are in the ecosystem. The remaining 21.86% are foundation tokens.

How Much Does Polygon Cryptocurrency Cost?

As of May 31, the polygon cryptocurrency price is $0.664, according to CoinMarketCap.

It has a market cap of $5,282,562,750 and a 24-hour volume of $534,062,533.

Should You Invest in Polygon?

Since the Polygon platform has many uses — the NFL recently used it to release a non-fungible token themed around its upcoming draft, for example — the polygon coin has become popular among investors. But if you are a beginner or do not know much about polygon tokens, it is vital to be familiar with cryptocurrency before investing in it.

Here are some things you must know.

Framework for Blockchain Networks

In the future, Polygon wants to offer a framework for blockchain networks that would allow users to create interconnecting blockchain networks — an “internet of blockchains,” if you will. The network is designed so that upgrades can be implemented without disruption to the existing ecosystem.

If this new framework comes to pass, developers will have a lot of liberty for network creation. They will be able to develop standalone, flexible and scalable blockchains.

Considering Polygon’s ambitious plans, it is quite possible that the currency will be on the rise in the future.

Ethereum Virtual Machine Compatibility

Many developers use the user-friendly Ethereum Virtual Machine to build decentralized apps.

With its EVM compatibility, Polygon makes it easier for developers to create decentralized apps and port them. By the end of last year, developers had deployed over 7,000 decentralized apps onto Polygon, including SushiSwap and Aave.

Other Similar Networks

Before you invest in polygon cryptocurrency, it is essential to determine if it could face any roadblocks in the future. The primary concern for the platform is the presence of other Web 3.0 blockchain network projects, like Avalanche and Polkadot.

These projects may crowd the playing field in the coming years, leaving less room for Polygon to be hyped up. Moreover, Ethereum is in the process of upgrading its platform. That upgrade — initially called Etherium 2.0 and now referred to as The Merge — will result in a transition from the current proof-of-work chain to a new proof-of-stake chain. Once the merge is complete, it could lower Polygon’s popularity.

Polygon Crypto Price Increased by 13,000%

Polygon experienced incredible gains in 2021, increasing 13,000%, from less than 2 cents to $2.68, between January and May of that year. After a brief stumble, Polygon rose again, hitting an all-time high of $2.8768 in December 2021.

However, this higher price did not last for long. Polygon, like most popular cryptocurrencies, went into a freefall in late December 2021, and it appears to still be trending downward. As of May 31, polygon is trading for $0.664. Take this as an example of the market’s volatility and how careful you need to be when investing.

Is It a Safe Investment?

Regardless of the cryptocurrency you want to invest in, it is imperative to note that these currencies are volatile investments. You should be comfortable with a dramatic swing in price without going into panic mode.

The Plus Side of Polygon

As for polygon, some might consider it a safe investment while others do not. For instance, Mark Cuban, the cryptocurrency-enthusiast billionaire, invested in polygon. As of February, Polygon had raised $450 million in a new venture financing round, TechCrunch reported.

One plus point for the platform is that more than 7,000 decentralized apps are running on it. The sheer volume of dApps it supports should keep the platform relevant for a long time to come.

Negatives Associated with Polygon

The downside of Polygon is its attachment to Ethereum. The network is not only competing with other blockchains but also with Ethereum itself, which it also depends on.

Polygon developers argue with this, saying their network will remain relevant even if Ethereum 2.0/The Merge comes to fruition because Polygon offers speedier transactions and allows Ethereum’s communication with other networks.

However, another programmable blockchain might take Ethereum’s spot in the future, sending Polygon down with it.

Where To Buy

You can buy polygon coins from several cryptocurrency exchanges, including:

• Binance

• BiONE

• UniSwap

• WhiteBIT

• ZebPay

• Coinbase Pro

• Huobi Global

• Hotbit

• KuCoin

• Uphold

• Gate.io

• BitYard

Is Polygon (MATIC) a Good Long-Term Investment?

Polygon is just as volatile as you would expect any other cryptocurrency to be. Its developers might have bigger plans for the future, but there is no way to ensure that other blockchain networks or Ethereum itself would not cause a decline in the coin’s popularity and worth. Besides that, the coin has been unable to sustain its brief rallies so far this year, which means the price might still be falling.

If you want to invest in it, make sure you follow the golden rule of investment by not putting in more than you can afford to lose.

Daria Uhlig contributed to the reporting for this article.

This article has been updated with additional reporting since its original publication. Information is accurate as of May 31, 2022.

This article originally appeared on GOBankingRates.com: Is Polygon (MATIC) a Good Crypto Investment?