The sleepy cryptocurrency market sprung to life again over the last year. The surge was fueled by factors like the fourth Bitcoin halving event, the appearance of exchange-traded funds (ETFs) tied to real-time cryptocurrency prices, and rising interest in crypto's potential anti-inflation functions.

Bitcoin gained 131% over the last 52 weeks, and Ethereum posted a 50% gain. But Polkadot (CRYPTO: DOT) didn't get the memo. The DOT token traded sideways instead, stopping at a 2% price increase.

But Polkadot's sluggish chart might get more exciting fairly soon. The Web3 Foundation and Polkadot's developer community just installed a game-changing technical update, paving the way to a full-fledged "Polkadot 2.0" upgrade.

Let me show you what's new and why Polkadot investors should pay attention to the Polkadot 2.0 revolution.

How Agile Coretime transforms Polkadot's ecosystem

Last Thursday, Polkadot introduced the brand-new concept of Agile Coretime. The old system of earning computing time for your Polkadot-based project by winning auctions is now gone.

Instead, developers and Web3 app managers can now simply buy time on the core execution network. The system is agile in the sense that there are different options for buying core time assets to meet your project's demands. Some Web3 projects need lots of processing time on a regular schedule. Others can simply pay for the processing they actually use, as needed. Either way, there's a secondary market where developers can resell their unused core time.

A better system for the Web3 future

The old auction system presented a discouraging barrier of entry to new development projects. In the new core time system, fresh projects can get started with small batches of on-demand time slots and move over to more affordable bulk processing as the project grows. At the same time, the core time model runs jobs all the time to give end users a smoother experience.

If that sounds like a good match for the Web3 philosophy, you're on the right track. Core time is a huge step in the Web3 direction, away from a slow and sometimes oppressive schedule of weekly project auctions. Suddenly, it's much easier to get a foot in the door of Polkadot-based app development.

The three-step journey to Polkadot 2.0

Agile Coretime was part two of a three-step upgrade process. Asynchronous backing went live in May, allowing Polkadot code blocks to be executed without waiting in line for approval. Agile Coretime would not be possible without that crucial step. Next up, the Polkadot 2.0 model will be complete when the elastic scaling upgrade comes along, maybe in 2025 or 2026. In the fully functional system, developers can buy time slots and pay extra to access several processing cores at once.

Beyond that, Polkadot and Ethereum co-founder Gavin Wood is leading the development of the Polkadot JAM. That's short for "Join-Accumulate Machine," set to replace Polkadot's main blockchain in a couple of years. That system will let Polkadot's smart contracts execute some of their code on separate machines that aren't managing the security and transactions for the blockchain platform as a whole.

Together, a JAM version of Polkadot 2.0 should have the tremendous processing power needed for running Web3 applications on a truly global scale. When Web3's decentralized finance (DeFi) and personalized content rights functions are as commonly used as ad-based social media networks are today, app developers will thank the Web3 Foundation and Polkadot developers for building this robust processing platform in the 2023 to 2025 period.

The economic effect of Polkadot's technology upgrades

Preparing the Polkadot platform for wider adoption should boost the DOT token's price in the long run.

First, there is a limited supply of DOT tokens on the market, so rising demand for their use should boost prices over time. That's a basic lesson in Supply and Demand 101.

Second, every request for core time is paid for in DOT tokens, and a small fraction of that payment is burned as a result. This way, the available token supply actually decreases over time. It's an example of reverse inflation, also known as deflation, which also plays into the supply-and-demand equation with price-boosting effects.

Why I'm bullish on DOT in the long run

So, Polkadot's price chart has disconnected from the crypto market's overall bullishness, and I can't guarantee that this token will benefit from the factors currently boosting Ethereum's and Bitcoin's soaring charts.

However, the Web3 platform has several growth catalysts of its own in the works, and I expect this cryptocurrency to deliver solid long-term returns as they play out. That's why Polkadot remains one of my favorite crypto investments, and I highly recommend grabbing a few DOT tokens while the price is low.

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Anders Bylund has positions in Bitcoin, Ethereum, and Polkadot. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

Why Polkadot's New Updates Could Make the DOT Token a Top Crypto Investment in the Long Haul was originally published by The Motley Fool