Polygon Chain? Definition, Features, And Future Prospects!

At least over 18,000 kinds of virtual currencies are launched one after another every year. All of them are continuously traded 24 hours a day, 365 days a year, and the price and market capitalization are constantly fluctuating. If a popular currency appears, a new cryptocurrency with services will appear. One example is Polygon (MATIC), which was developed as Layer 2 of Ethereum.

Ethereum, which has been the second most popular cryptocurrency after Bitcoin, has persistent scalability problems, so it was released to compensate for this and support the expansion of What is Polygon?

Polygon was launched in October 2017 under the name MaticNetwork, and the token name was first “MATIC”. It was changed to “Polygon” in 2020, but it is still traded under the name “MATIC” in the market, and MATIC is commonly known as Polygon (this article hereafter referred to as “Polygon”).

The price as of October 2022 is about 122 JPY, and the market capitalization ranking is 11th among all virtual currencies, moving between 909 billion JPY and 1 trillion JPY. It has hit a record high of 422.89 JPY in the past, but since the beginning of this year, it has fallen significantly, reaching a low of 47 JPY in June 2022. The price volatility rate has exceeded 9% since the beginning of October of the same year, and the current volatility can be said to be quite high.

Feature 1: Symbol of Layer 2 Solutions

Layer 2 Solutions

Ethereum provides unprecedented services such as DeFi (decentralized finance) and NFT (non-fungible token) on the blockchain, not only for payments and remittances, but also by using a function called smart contract that enables the automatic execution of contracts. made possible. As a result, it has become the second most popular virtual currency after Bitcoin among many virtual currencies. However, on the other hand, Ethereum has scalability issues, such as long transaction times and very high fees for each transaction.

As a result, only some investors and wealthy people with sufficient funds can own Ethereum, which has led to complaints from the market and developers. Therefore, “Polygon” was developed as a layer 2 (second layer) solution for this scalability.

Layer 2 is the existence developed as a role to support the original Layer 1 (refers to Ethereum in this case), and in the blockchain industry, it means off-chain (outside the blockchain). However, recently, there have been many cases where polygons play a supporting role on-chain.

In order to solve the scalability problem, there are virtual currencies such as “Solana” and “Avalanche” in the form of Ethereum killers that have been developed as competitors to Ethereum. However, Polygon’s major feature is that it was developed with the aim of complementing Ethereum and supporting its expansion as a sidechain with speedy transactions and low fees.

Feature 2: Uses PoS

Cryptocurrency operations use confirmation algorithms as a means of proving the legitimacy of transactions. The most popular one is Pow (Proof of Work).

Pow is a mechanism in which people, called miners, using expensive terminals with high computing power, approve transaction data and connect it to the blockchain to receive virtual currency as a reward. Pow is very famous for being used in Bitcoin, but it requires a huge amount of power, is centralized by some miners, and is feared to be fraudulent by malicious miners. has often been the subject of criticism.

In that respect, Polygon adopts “Pos (Proof of Stake)” as an approval algorithm, and takes the form of determining the approval ratio of blocks according to the amount of virtual currency held. This avoids problems such as increased electricity usage due to excessive competition among miners such as Pow, centralization by some miners, and high-speed settlement (Ethereum has 15 transactions per second, Polygon 65,000 per month) and the fees are low, so it is widely supported by market players and investors.

Polygon Future

What is noteworthy about Polygon is the large number of dApps (decentralized applications) developed on its blockchain. In January 2022, there were about 7,000 cases, but in less than eight months, the number has exceeded 37,000. Some of these can be used on Ethereum, but the current situation is that there are far more apps that can only be used with Polygon.

In addition, polygons have a high affinity with NFTs and their connections with the Metaverse, and you can buy and sell avatars, land in virtual space, game character items, etc., as NFTs. In addition, DEX (distributed exchange), which allows virtual currency trading without going through an exchange, can also be operated on polygons by smart contracts, so the world of WEB 3.0 does not require a centralized existence. If it penetrates in earnest, there is a possibility that demand for polygons will increase greatly.

However, there are some concerns that should be noted.

In particular,

・Interest rate hike in the US

・Prohibition of virtual currency payments in China

・Russia’s military invasion of Ukraine…

In response to the move by the United States to raise interest rates several times in 2022 due to concerns about inflation, excessive dollar buying progressed in the foreign exchange market. As a result, the JPY has weakened to a level not seen in decades, and gold, a safe asset, has seen an unprecedented rise in Japan. In response to this movement, investment money flowed out at once from the boiling virtual currency market.

There is still no end in sight for the situation in Ukraine, and the rise in prices and destabilization are only accelerating. In response to these concerns, in the cryptocurrency market, even stablecoins, which had been gaining popularity due to their price stability, dropped sharply, so Ethereum and its closely related polygons also slumped.

In October 2022, the concept of “with corona” became stronger, and in Japan, national and local government support programs for tourism are in full swing. As tourism demand is rapidly increasing around the world, we can expect the outflow of investment money to return to the cryptocurrency market once the uncertainty about the future of the global economy is resolved. In anticipation of that, it might be a good idea to get cheap polygons at this time.

How to Buy Polygon

Finally, let’s talk about how to buy polygons.

Until recently, polygons could not be purchased directly from domestic exchanges, so they had to be obtained from overseas exchanges. However, from June 2022, Bitbank Co., Ltd. (bitbank) has started trading polygons in Japan.

Therefore, in this article, we will introduce two patterns: the conventional method of purchasing virtual currency other than polygons in Japan and using it to purchase polygons, and the method of purchasing polygons directly using Bitbank in Japan.

How to Purchase Using an Overseas Exchange

Step 1: Purchase Virtual Currency at A Domestic Exchange

First of all, you can open an account at a domestic exchange, whichever you like. If you have an identification card such as a driver’s license, passport, or basic resident register, you can complete the procedure online.

Step 2: Purchase Virtual Currency

At the exchange where you opened an account, use JPY to purchase virtual currency such as Bitcoin.

Step 3: Purchase Polygons with Bitcoin, etc.

Open an overseas exchange account and transfer the virtual currency, such as Bitcoin, purchased in step 2 to that account.

Step 4: Obtain Polygons

Get it in the form of exchanging Bitcoin and Polygon at an overseas exchange where you opened an account.

How to Purchase in Japan Using “Bitbank”

Step 1: Open an Account

Send your email address from the dedicated site (see below) to receive an email from Bitbank for setting your password. After setting a password, enter basic information such as name and address, agree to the terms of use, transaction rules, and risk items to complete registration.

Step 2: Confirm Your Identity

Identity verification is done by smartphone or by mail. If you use a smartphone, send your identity verification documents and face image and wait for the account opening review. If you use mail, upload your identity verification documents and receive the identity verification postcard that will be sent as soon as the screening is completed, to complete the account opening.

Step 3: Purchase the Polygon after Payment

After opening an account, deposit Japanese JPY and select polygons on the screen to purchase. There are two ways to buy: limit and market. Limit price is a method of purchasing when the price reaches a pre-specified amount. The market is a way to buy at the current price.

Summary

Polygon is a virtual currency with a high profile as a layer 2 solution for Ethereum. Moreover, unlike before, it is now possible to purchase directly in Japan.

In the future, if dApps with high utility value, such as DeFi, appear and the popularity of the Metaverse gains momentum, the market value of Polygon will surely increase.

At Relipa, dApps, marketplaces launching as well, and other blockchain services will be done speedily by experienced engineers and great know-how. Please feel free to contact us and start your NFT right away!