on the crypto
After losing more than 70% of its value in 2022, Polygon is now up more than 90% since the start of 2023. While this increase is likely due to a rally affecting the entire cryptocurrency class, there is it's reason to believe that Polygon still has plenty of room to run in the coming years.
Despite 2022 destroying its price, Polygon has had one of the most successful years compared to other cryptocurrencies. Thanks to a multitude of new partnerships with companies looking to harness the potential of blockchain technology, Polygon's market cap has leapt into the top 10 most valuable cryptocurrencies.
Companies such as Meta Platforms, Disney, Starbucks, Coca-Cola and JPMorgan have announced various forms of partnerships with Polygon in 2022, seeking to develop new business models that leverage the potential of technology and invest on blockchain.
A precious shoulder
Polygon was chosen for a number of reasons, but probably the most interesting was its compatibility with Ethereum. Known as a layer 2 blockchain, Polygon is intended to make Ethereum faster and cheaper to use. As one of the most popular blockchains, Ethereum can be expensive and slow to use when traffic is high. With Polygon, transactions are processed on its own blockchain, pooled, and then added to Ethereum. As a result, Polygon offers users the best of both worlds. It's cheap to use, fast, and maintains compatibility with Ethereum.
This technology has helped put Polygon in a unique position as one of the most sought-after blockchains. But with more and more companies wanting to use the blockchain, Polygon itself must be ready to ensure exponential growth in users without sacrificing speed or increasing fees.
zk-what?
For the past year, the developers of Polygon have been working on implementing new technology that will allow the blockchain to handle this increase in usage. To this end, a new technology known as zero-knowledge rollups (zk-rollups) will be implemented, which is expected to be released in late Q2023 or QXNUMX XNUMX. With zk-rollup, Polygon will become even faster and cheap to use. The technology behind zk-rollups is a bit technical, but understanding this process can be helpful in projecting the potential future price of Polygon, because usability is one of the key characteristics that determines the value of a cryptocurrency.
Currently, Ethereum transactions require validators to include their “proof of calculation”. It is similar to having to show your work when solving a math problem and prevents errors from occurring in the blockchain.
However, instead of pen and paper, all of this is done with computers and entered into every block of the Ethereum blockchain. As transactions become more complex, blocks become more congested and complicated.
But with zk-rollup, this proof of computation can be downloaded from the Ethereum blockchain and processed on Polygon. As a result, Polygon can process more transactions and make Ethereum even faster. This new feature could help boost Polygon throughput to nearly 40.000 transactions per second (tps), a significant increase over Ethereum's current 12 tps and 15 tps.
Conclusions
With such a high speed, Polygon could offer users an efficient and cost-effective solution for using blockchain-based applications and business models.
Priced at around $1,48 as of this writing, Polygon still has a lot of potential, as it's still down more than 45% from its all-time high. As mentioned above, one of the main metrics that help us evaluate the potential price of a cryptocurrency is its usability. When zk-rollups are introduced, Polygon will be able to handle exponentially more traffic, thus increasing its usability. Additionally, as blockchain usage trends continue to materialize, Polygon is likely to become a lucrative staple of cryptocurrency wallets in the coming years.
