This is the first time I’ve been asked to write about MATIC (CCC:MATIC-USD) by my InvestorPlace editors. It will likely be my last column about the cryptocurrency.
Polygon is the new brand name that MATIC’s backers have chosen for the decentralized protocol.
So Polygon and MATIC really refer to the same cryptocurrency. But for me to trash the currency without even exploring the inner workings of its blockchain efficiencies is really quite rude.
But to tell you the truth, I really don’t care. I’m getting tired of trying to explain the value of some of these new cryptocurrencies and blockchain-based ventures to readers.
Honestly, I’d take writing about meme stocks daily over some of this stuff.
After looking up and down the Polygon website, I couldn’t begin to tell you what you’re buying when you purchase Polygon or MATIC tokens. I really couldn’t.
If you can’t explain in one sentence why you own an asset, you have no business buying it.
But I’ve got to tell you why I think MATIC/Polygon is a lousy investment.
MATIC’s Viability Is Questionable
One of the InvestorPlace contributors I rely on most when it comes to cryptocurrencies is Josh Enomoto. He’s owned both Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) over the years. He still holds small positions in both after selling a big chunk of those two assets, and he has the analytical mind to cut to the chase in a way that laymen can easily understand.
Enomoto recently wrote about MATIC. While he was generally complimentary about its technology, he wondered about its viability.
“My contention is that we as a society are not ready for decentralization, at least not to the extent that Polygon bulls envision,” Josh wrote in early June. “But the opportunity is that MATIC trades on the greater fool theory, and in this manic environment, there are many who are at least still fooled by blockchain’s wizardry.”
He’s 100% correct.
Again, if you can’t explain what MATIC or Polygon does, you have no business investing in it.
What Does MATIC or Polygon Do?
Based on Enomoto’s analogy of highways, Polygon is a network of multi-lane highways, whereas Ethereum is one multi-lane highway, and Bitcoin is a single-lane highway.
“We envision an open, borderless world. A world in which people and machines collaborate and exchange value globally and freely, without gatekeepers or intermediaries. A world in which communities thrive, unconstrained by artificial borders and archaic regulations,” Polygon’s vision statement proclaims.
If I was a gullible investor, I would buy that vision hook, line, and sinker. In past articles, I have professed my love for decentralized finance. I really do believe that the world is currently far more complicated than it needs to be.
That said, I don’t want to see the world of finance become a Wild West filled with scammers who have no fear of criminal prosecution. That would be no better than the overly regulated banking environment in which we currently find ourselves.
Anyway, back to the subject of what Polygon does.
According to the network’s technology page, it is the “Foundation for the Internet of Value and People.” It goes on to state that it “provides the core components and tools to join the new, borderless economy and society.”
At this point, I will ask the following question: Can I buy 25 stocks in 25 countries using only my smartphone to complete the transaction?
If Polygon can do that for me, I’m all ears. If not, it’s just another technology solution in search of a problem.
The Bottom Line
Perhaps I was overly dramatic at the beginning of this article.
I really do find all of this blockchain stuff intriguing and thought-provoking. But, more importantly, if Polygon becomes the gold standard of decentralized finance, I’ll be the first to sing its praises.
Until then, whether you call it MATIC or Polygon, it’s a really lousy investment, in my opinion. If you own some of it, I hope you prove me wrong in the months and years ahead.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.