This cryptocurrency will be the Ethereum of 2023

when Ethereum (ET 0.69%) started receiving wide public notice in 2020 and 2021, it already had a huge lead over other blockchains that were plunging into the crypto bubble. Developers have spent years building tools and infrastructure upon which to build projects such as non-fungible tokens (NFTs) and new tokens.

As we begin a new year, there is one cryptocurrency that has momentum of a different kind that could make it the Ethereum of 2023. This is Polygon (MATIC -1.81%)the blockchain that has become the benchmark for corporate America.

Cryptographic chart and NFT.

Image source: Getty Images.

What is Polygon?

Polygon is a layer 2 blockchain built on top of Ethereum. Combine the transactions together and then post a transaction on the main Ethereum blockchain. The idea is to lower the cost of each transaction and make the blockchain more scalable while still being able to use the Ethereum infrastructure.

Corporate partners have flocked to Polygon, partly because of its scalability and development resources and partly because Polygon is paying millions of dollars to attract them. Metaplatforms(A HALF -1.18%) Instagram has enabled NFTs on its platform, Stripe uses Polygon for payments, and Starbucks (SBUX -0.45%) he’s using it for a new NFT loyalty program.

The momentum takes hold

Cryptocurrency values ​​have been driven in large part by momentum. There is a natural network effect in cryptocurrencies for both investors and developers. Why develop business models for a blockchain that has no uses?

Despite not having that many users, Polygon manages to leverage Ethereum’s development capability by attracting businesses with its lower costs. And once businesses start flocking to Polygon, more will naturally follow.

This was a similar dynamic to the NFT wave of 2021. Ethereum has become the go-to blockchain, so why build anywhere else? It seems like that will likely be the case with Polygon, but this time it’s corporate money flowing into Polygon.

Not all business projects will stick

I think 2023 will be defined by companies trying to determine their best strategies for blockchain and the decentralized Web3, as opposed to the version of the web we have today with its dominance by a few large companies. I mentioned some of the companies to watch above, but there are dozens more that are experimenting with NFT loyalty programs, low-cost payment binaries, and digital assets to sell in the cryptocurrency market. Most are building on Polygon.

What is not entirely clear is whether companies will develop winning strategies for cryptocurrencies and Web3 in 2023. There are some examples, such as Adidas And Nike launching successful projects with Bored Ape Yacht Club and RTFKT (which Nike acquired) respectively. But many companies have seen NFTs as a cash grab they would like to participate in. It will not be a sustainable strategy and those who are not into cryptocurrencies in the long term will eventually fade away.

The fact that companies are building on Polygon during a bear market could be enough to make this the best cryptocurrency for 2023. Some blockchains will fail as users and developers flee, but it looks like Polygon is here to stay.

Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, serves on the board of directors of The Motley Fool. Travis Hoium has positions in Ethereum. The Motley Fool has positions and recommends Ethereum, Meta Platforms, Nike, Polygon, and Starbucks. The Motley Fool recommends the following options: long January 2025 $47.50 call on Nike and short January 2023 $92.50 put on Starbucks. The Motley Fool has a disclosure policy.

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