What is Polygon Crypto? Matic Price Skyrockets as Rest of Market Suffers

The price of Polygon (known as MATIC on the cryptocurrency market) increased by around 9 percent in the last 24 hours. The value of the cryptocurrency rose while that of all others ranked among the world's 15 largest cryptocurrencies, including Bitcoin, Ethereum and Dogecoin, dropped in the same time frame, according to CoinMarketCap, which monitors cryptocurrency prices.

MATIC is the cryptocurrency that powers the Polygon network, which provides a framework for building and connecting blockchains (a record of transactions) that are supported by Ethereum technology.

The Ethereum cryptocurrency itself is currently the world's second largest cryptocurrency by market cap value (the total market value of a cryptocurrency's circulating supply). Polygon currently ranks 14th among the world's largest cryptocurrencies based on market cap value.

Polygon's price was recorded to have reached as a high as around $2.46 at one point on Wednesday morning. That price surpassed the all-time high record set a day earlier when its value reached $2.18, following a price surge of around 25 percent in six hours. Its trading volume rose by around 122 percent in the last 24 hours.

The price of Polygon rose from early February before flattening out from mid-March. Its value began rising sharply from late April.

What is Polygon?

The Polygon network aims to be a hub to which different blockchains can easily be plugged into and its main chain is Ethereum. It aims to provide a cheaper, more secure and streamlined solution for transactions conducted on Ethereum blockchains.

The network provides a side chain to the main Ethereum blockchain. The MATIC token is used to pay transaction fees as well as in other capacities within the Polygon side chain.

"Polygon solves pain points associated with blockchains, like high gas fees [the cost of carrying out transactions on an Ethereum blockchain] and slow speeds, without sacrificing on security," the company website explains.

Polygon ultimately hopes to create an "open, borderless world" in which "people and machines collaborate and exchange value globally and freely, without gatekeepers or intermediaries," it says.

How did it begin?

Polygon was launched as the Matic Network in 2017 and was co-founded by three Indians: Jaynti Kanani, Polygon's CEO (a blockchain engineer); Sandeep Nailwal, the COO (a blockchain programmer and entrepreneur); and Anurag Arjun, the CPO.

The company rebranded to its current name Polygon in February this year, which Nailwal believes helped the Indian startup get more noticed in an industry dominated by Western companies.

Nailwal told India's The Economic Times: "There is a premium on Western projects. We have to work five times harder to get attention. But once we rebranded, brought on more people and built a global team, people started to take notice."

Polygon's technology has been used in several other projects, including most recently for YFDAI Finance, a "decentralized finance ecosystem of products and services."

It deployed Polygon to help "reduce transaction gas fees while enhancing scalability, interoperability and user experience for its user base," the company said in a statement on May 14.

The number of apps built on Polygon was reported to have increased eightfold to almost 400 between January and May, according to The Economic Times.

Nailwal said: "We want to establish India as a blockchain powerhouse," noting the company aims to become the third-most valued crypto project in the world after Bitcoin and Ethereum.

The risks of cryptocurrency trading

Users should note the risks that come with cryptocurrency investments, which are not backed by a government. The U.S. Federal Trade Commission advises: "Cryptocurrency accounts are not insured by a government like U.S. dollars deposited into a bank account.

"If you store cryptocurrency with a third-party company, and the company goes out of business or is hacked, the government has no obligation to step in and help get your money back."

The prices of cryptocurrencies can also be more volatile. The FTC warns: "The value of a cryptocurrency can vary rapidly, even changing by the hour. It depends on many factors, including supply and demand.

"An investment that's worth thousands of dollars today might be worth only hundreds tomorrow. And, if the value goes down, there's no guarantee it will go up again," the FTC says.

Users should also be aware of fees that may apply with cryptocurrency investments, such as trading, deposit and withdrawal fees. See the respective company websites for more information on fees.

The graphic below, produced by Statista, illustrates the price of Bitcoin declining in May 2021.

A graphic of May 2021 Bitcoin prices
STATISTA
Different cryptocurrencies pictured in January 2021
A photo illustration of different cryptocurrencies, including Bitcoin, Ethereum and Dogecoin, seen in January in Katwijk, Netherlands. The price of Polygon (known MATIC on the cryptocurrency market) increased by around 9 percent in the last 24 hours, while that of others dropped in the same time frame. Yuriko Nakao/Getty Images