April 20, 2022

How to Invest in Polygon (MATIC)

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Wondering how to invest in Polygon (MATIC)? Find out how in this guide, and why it could bring valuable contributions to the overall crypto ecosystem.

Polygon, a layer 2 cryptocurrency, has several bullish factors that led to its meteoric rise.

But can its strong performance continue?

In this guide, explore how to invest in Polygon (MATIC) and why it may be positioned for success. Plus, see your best storage options and possible risks for this cryptocurrency.

What is Polygon (MATIC)?

Polygon is a secondary (or, "layer 2") scaling solution that runs on top of the Ethereum blockchain.

Polygon runs on top of Ethereum, and uses its scaling platform to produce lower fees and faster transactions than what's available on Ethereum.

Given Ethereum's infamously high gas fees, this has made Polygon a very appealing solution for those who want to transact on the Ethereum network without overpaying.

Initially created in 2017 under the name Matic Network, Polygon was founded by India's first crypto billionaires: Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun. MATIC is the cryptocurrency used to power the Polygon network, and it thus serves as a utility token for Polygon.

Why Invest in Polygon (MATIC)?

There are a few things that differentiate Polygon (MATIC) compared to other cryptocurrencies. In particular, there are three big tailwinds working in Polygon's favor:

  1. A Premier Layer 2 Blockchain
    Layer 2s like Polygon are increasingly important as networks like Ethereum and Bitcoin continue to grow and require greater scalability and efficiency. And when it comes to Ethereum layer 2s, Polygon is one of the best.

    Polygon uses its own Proof-of-Stake (PoS) blockchain to help scale the Ethereum network by solving inefficiencies that may hinder widespread adoption of blockchain technology (such as Ethereum's high gas fees).

  2. Leveraged to Ethereum's Network Effect
    As one of the premier layer 2 blockchains, Polygon is in a unique position to fully benefit from Ethereum's network effects (i.e., growing number of users, projects, and transactions on the platform).

    Polygon thus captures all the benefits of Ethereum with some added advantages, such as being simultaneously more secure, open, and powerful.

  3. Strong Backers and Believers
    Polygon is an India-founded platform whose founders have stated their committed to Web3 and decentralization.

    Aside from the management, however, Polygon also boasts some very prestigious backers and mentors on its team. On Polygon's website, you can see that the project is backed by everyone from Mark Cuban to Coinbase and Binance.

    Polygon has also become one of the most-loved development platforms for Web3 and NFT developers. Polygon recently released an article stating that "the number of teams using Polygon jumped 100-fold in the past year."

How to Invest in Polygon (MATIC)

Are you wondering how to invest Polygon? Its native token MATIC is available on a growing number of exchanges, making the investment process relatively simple. That said, it's important to remember that crypto exchanges differ in their levels of security and their fee structures.

Some of the best exchanges for investing in Polygon (MATIC) include:

Binance
Binance, the world's biggest crypto exchange by volume, is known for its low fees. Binance users can invest in MATIC in just a few easy steps:

  1. Sign up for an account on Binance's website or app. (Download: App Store, Google Play)
  2. Follow the instructions in their confirmation email to confirm your account.
  3. Visit MATIC's page and click "Buy."

Crypto.com
MATIC is also available for direct purchase on Crypto.com. You can buy it in just four easy steps:

  1. Sign up for an Exchange account on their website.
  2. Verify your account by clicking "Connect to Exchange" in the email they send to you.
  3. Deposit fiat or cryptocurrency to fund your account.
  4. Visit the MATIC page and click "Buy MATIC."

eToro
MATIC is available for purchase on eToro, a popular exchange for its focus on social trading:

  1. Sign up for an account on the eToro website.
  2. Verify your account with a valid U.S. passport, driver's license, or state ID.
  3. Fund your account (minimum deposit is currently $200).
  4. Visit the MATIC page and click "Trade."

What Does It Cost to Buy Polygon (MATIC)?

Unlike traditional markets, blockchains are always open and running transactions, so the cost of Polygon is always subject to change.

However, the key thing to remember when investing in MATIC is that you're not just paying for the price of MATIC itself. You must also consider exchange fees.

Some of the fees to be aware of when investing in MATIC include:

  • Transaction Fees: These are often charged by the exchange to cover the cost of trading.

  • Spread: This is the difference between the sell and buy price, often used by "commission-free" exchanges as a way of profiting from a transaction without disclosing it. Some exchanges charge it on both buy and sell transactions, others only once. This cost is sometimes hidden, and may be unlisted by the exchange.

  • Deposit Fees: Exchanges typically offer a variety of deposit methods. Sometimes they're free, others may be extremely expensive. Common deposit methods include ACH Bank Transfer and Wire Transfer.

  • Debit / Credit Purchase Fee: Many exchanges charge more for these purchase methods than others.

  • Withdrawal Fees: Many exchanges charge you for withdrawals. Prices often vary depending on the withdrawal method.

  • Inactivity or Maintenance Fees: These are fairly uncommon on exchanges, charged for having an inactive account for around 12 months.

  • Gas Fees: These are also fairly uncommon on exchanges; they're charged to pay for the cost of executing an operation on the Blockchain.

Remember, the fees for buying and selling MATIC vary by exchange, so make sure to do your own due diligence on the fee structure of your chosen exchange platform.

Where to Store MATIC Safely

After investing in MATIC, it's time to decide how you want to store it. The two main options are to leave it stored on the exchange or move it off the exchange and onto a wallet.

Generally speaking: Storing crypto in exchanges is more liquid, but less secure.

  • Short-term investors looking to frequently buy, sell, and trade may prefer to simply leave their MATIC on the exchange.
  • However, if you want more security or plan to hold for the long term, it's best to store MATIC on a wallet for added security.

Those who want maximum security often choose to store their MATIC on an external, cold storage wallet like the Ledger Nano S or X.

Prefer to keep MATIC on an exchange? Be sure to review our guide to the safest crypto exchanges to choose from the most security-conscious platforms.

Is Polygon (MATIC) Worth the Risk?

Even with all the bullish factors behind MATIC's rise, it still carries certain risks.

Polygon must face other layer 2 competitors, for example. Polygon's popular competitors include Cosmos, Kusama, and Arbitrum. Layer 2s are very much in their early days, so it's hard to tell which will be the clear winner in the future.

One could also argue that Polygon's origins in India may pose a risk. India has had an off-and-on-again relationship with crypto. They previously tried to ban cryptocurrency, but the Supreme Court went on to strike down this ruling in 2020.

Still, regulation is always a risk factor with all cryptocurrency projects.

Bottom Line

As one of the premier layer 2s running on the Ethereum network, Polygon has a lot of potential to increase in value as cryptocurrency becomes more popular and requires more scalability. The project is also backed by some of the strongest names and institutions in the industry.

Still, Polygon faces risks when it comes to regulation and competition. It's ultimately up to each investor to decide if Polygon (MATIC) is worth the risk-reward trade-off as a possible inclusion for a diversified investment portfolio.

Write to Corbin Buff at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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