Wait for Polygon To Mature Before Investing in the MATIC Cryptocurrency

By June 21, 2021Polygon
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Move over Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD), Polygon (CCC:MATIC-USD) is the new kid on the cryptocurrency block.

A concept image for the Polygon (MATIC) crypto.

Polygon is an Ethereum (Ether) protocol that aims “to create, issue, and manage digital securities on the blockchain.” The math and underlying technology of MATIC enables people to issue and manage digital security tokens on the Ether blockchain. Essentially, Polygon allows people to make digital financial transactions.

Polygon is part of the growing field known as “decentralized finance” that facilitates financial transactions without the need for banks, brokerages of exchanges.

While it might seem obscure to most investors, cryptocurrency enthusiasts see Polygon as a major advance and are super excited about its potential. That enthusiasm for Polygon has led the price of the cryptocurrency to rise more than 9,000% year-to-date to $1.47. Fans of Polygon point out that the cryptocurrency is now outpacing both Ethereum and Bitcoin in terms of its price appreciation. Polygon rose in recent weeks as Bitcoin and Ethereum retreated.

Polygon has also attracted support from celebrity crypto bulls, notably billionaire businessman Mark Cuban, who has said that Polygon is now “destroying” every other cryptocurrency, beyond Bitcoin and Ethereum.

Strategic Deal for Polygon

Polygon is still in its infancy, but is attracting a growing amount of interest. The Ethereum-based decentralized exchange called “Kyber Network” announced on June 16 that it is partnering with Polygon to enhance the liquidity of its decentralized finance network. Kyber Network said it will expand to the Polygon network on June 30 as part of its “Rainmaker” dynamic market maker (DMM) protocol that aims to enhance the liquidity of cryptocurrency mining programs.

Polygon is helping to reduce fees and congestion on the Ethereum blockchain protocol, and people will be able to use MATIC on the Kyber Network to more efficiently and cost effectively mine various cryptocurrencies.

Its functionality has made Polygon extremely popular in India and it is now among the world’s top 20 cryptocurrency tokens, according to BitcoinPrice.com. Proponents of Polygon say it has an advantage over other cryptocurrency networks because of its scalability, security and the user experience it provides.

Wider Adoption

Polygon was started in 2017 by three Indian software engineers — Jaynti Kanani, Sandeep Nailwal and Anurag Arjun. Co-founder Nailwal has said repeatedly that the goal is to have Polygon become the third-most valuable cryptocurrency after BTC and ETH. To get there, MATIC will need to grow substantially and gain wider adoption.

Indications are that this is happening. In addition to being used in decentralized finance, Polygon is also being used for creating video games and non-fungible tokens (NFTs), both of which are popular with consumers.

Twitter (NYSE:TWTR) founder Jack Dorsey turned his first tweet into an NFT using Polygon and sold it for $2.9 million, with the proceeds going to charity. In May, Polygon partnered with Infosys (NYSE:INFY), an Indian multinational information technology company. Infosys says it hopes that Polygon will help it bring “disruptive technologies” to its client base.

The founders of MATIC say they are working on several other new opportunities to scale Polygon and make it appeal to more businesses with enhanced data security and privacy features.

Wait for MATIC To Scale

Clearly, Polygon has some utility and purpose. People with a deep understanding of cryptocurrencies and the blockchain technology that facilitates their existence are extremely bullish on MATIC and its future potential. However, right now the focus appears to be on scaling Polygon and gaining wider mainstream acceptance.

As such, investors should wait for Polygon to scale up and become more established before investing. Given the current volatility among all digital tokens and assets, now is not the time to take a flyer on one of the more obscure cryptocurrencies.

On the date of publication, Joel Baglole 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.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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