Polkadot: Everything you need to know

Cryptocurrency or as commonly known, crypto is just a form of online currency which can be stored and used digitally. Over the past few years, the industry has witnessed a surge in popularity and growth. As of today, I believe that a majority of you are already familiar with crypto and its working. For those who still don’t know what cryptocurrency is? Let me explain it to you in brief. Cryptocurrency as previously mentioned is a digital asset and can be used for various purposes including the purchase and sale of goods and services, exchange and trade services as well. 

This virtual currency is extremely secure, portable, easy to use, and user-friendly but there is a small downside to it as well. The virtual currency marketplace is highly volatile and really uncertain which means that the fluctuation of rates are almost immediate and it is really difficult to predict. Other than this, crypto is decentralized, which makes it outside the control of the government and can freely function on its own. 

If you think about say nearly twelve years back, you would never have thought that crypto would be something that would completely revolutionize the payment system all across the world. When crypto was first introduced to the world, people were not very thrilled to invest and it was quite obviously because it was just the word of mouth spreading and there were not many options for you to choose from but seeing its climb over the years, people from all across the world are intrigued to invest in digital currencies and it has managed to catch the eye of many global potential investors. Also, if you look around today, you will come across several currencies to choose from. Of course, it increases the competition in the marketplace but it also gives a chance to the investors to pick the right currency for them to put their money in. 

Talking about a lot of currencies available today, some of the currencies that you can buy right now include Bitcoin, Baby Doge, Dogecoin, Binance Coin, Cardano, and Ethereum to name just a few popular ones. On a similar note, will you believe me if I would tell you that in the near future, it is very likely that cryptocurrencies will easily be used for payments in shops ad outlets, no? let me tell you that just a few days back, McDonald’s in Ell Salvador has started to accept Bitcoin as a mode of payment from customers. This is just the beginning. This is surely the future of payment systems. 

Now that you have gotten a fair understanding of cryptocurrencies, let us talk about what we have with us today, Polkadot. To know more, I suggest you read further!

Everything to know about Polkadot(DOT)

Polkadot or as it is often referred to as DOT is nothing but an open-source protocol having a multichain architecture that uses a sharding mechanism and facilitates the cross-chain transfers of not just tokens but of any data or asset types, thus making a wide range of blockchains compatible with one another.

Moreover, this compatibility seeks to set up a private and fully decentralized web that can be controlled by users on the platforms and can help make it easy to create new institutions, applications as well as services. Not just that, the Polkadot protocol helps in connecting permissionless networks, private and public chains, and future and oracle technologies, thus enabling these independent blockchains to share transactions and information by using the Polkadot relay chain. 

For those of you wondering what is DOT? DOT is the native currency token of the Polkadot platform which majorly serves three purposes including the creation of parachains(parallel chains) by bonding and providing network operations and governance. Also, it is worth mentioning that Polkadot was developed by the Web3 Foundation which is a Swiss foundation that was created in order to facilitate a user-friendly and a fully functional web that is decentralized, as an open-source project. The founders of the platform were Dr. Peter Czaban, Gavin Wood, who is also the co-founder of the Ethereum network along with Robert Habermeier.

In addition to this, the network makes use of a Proof-of-Stake consensus algorithm which is environment friendly and allows customized layer one ‘parachains’ as well as external networks to communicate with each other, thus creating an internet of blockchains that is interconnected. Also, Polkadot is just not more scalable and faster if compared to Ethereum and Ethereum 2.0, unlike these, the Polkadot network is designed in order to work well with other networks as well. As a result, this would indeed allow developers to create apps that use both Bitcoin and the Ethereum blockchain, which means that Polkadot is such that, it is able to talk to other networks as well. 

Talking about parachains, some of you might be thinking what is a parachain? Allow me a chance to explain. As I previously mentioned about congestion on the network and speed of transactions, Polkadot makes use of parachains to solve these issues. Instead of pushing all the applications through just one single network, every application has its own small blockchain or parachain, that is connected to the main chain. As a result, if there is an increase in demand for one specific application then it won’t really affect the performance of other applications on the platform’s blockchain. Basically, this is like service lanes on highways that take traffic away from the congested areas. 

As per reports, in just a year, Polkadot managed to almost double its development community from about 197 members in 2019 to nearly 388 in 2020. However, if you go comparing these figures in the marketplace, you will find that this is just a fraction of the entire team of developers working on Ethereum. But as a matter of fact, it is not that bad as it indicates Polkadot’s popularity and growth. 

As previously mentioned, Polkadot managed to bring forward an entirely new era in interoperability, scalability as well as security. There are an endless number of reasons as to why you would want to connect two or more individual blockchains and Polkadot knows that. The platform’s adaptive and flexible layout also supports developing technologies including platforms for smart contracts. This way, developers from all around the globe will be able to take advantage of the fact that they can develop next-generation applications that will be able to get data from a private blockchain and then use it on a blockchain that is publically accessible. Seeing all of these capabilities, experts say that Polkadot is a possible threat to the Ethereum network’s dominance. 

It is worth mentioning that Polkadot has four major components which include Relay chain, Parathread, parachains as well as Bridges. Here, Relay Chain is considered to be the heart of Polkadot and it helps in creating shared security, consensus as well as interoperability across the network with various chains. On the other hand, Parachains are said to be independent chains that have their very own token and can in fact be adjusted for particular use cases. Also, parathreads are somewhat similar to parachains, having flexible connectivity which is built on a pay-as-you-go economical model. Lastly, Bridges, as the name suggests allows parathreads and parachains to connect and interact with external blockchains just like in the case of Ethereum.  

What makes Polkadot special?

Having read so far, some of you might be wondering what makes Polkadot special? As we talked in the very beginning, Polkadot is known to be a sharded multichain network, which means that the platform can easily process several transactions on several chains parallelly which are referred to as ‘parachains’, thus improving scalability.

Using the Substrate framework, custom blockchains can easily and quickly be developed and be connected to Polkadot’s main network, in just a matter of a few minutes. The network is extremely adaptive and flexible, thus enabling sharing of functionality and information among participants similar to the applications on a smartphone. Without having the need for a fork to remove bugs or implement new features, Polkadot can automatically be upgraded. 

Apart from this, the Polkadot network has an extremely sophisticated governance system that is user-driven and also works well in order to secure it. Also, communities can alter their governance of the blockchain on the platform based on evolving conditions as well as their needs. In order to eradicate bad behavior and help maintain and secure the network, validators, fishermen, and nominators, all carry out several duties. 

Not just that, in order to keep the network secured, the Polkadot network makes use of the nominated Proof-of-Stake(NPoS) mechanism to select nominators and validators and increase chain security. This unique scheme of validity allows chains to remain independently governed and still interact with one another securely under the same rules and regulations. 

Investing in Polkadot

As of today, the price of Polkadot is about 30.83 US dollars with a twenty-four-hour trading volume of nearly 3,520,862,240 US dollars. In just the past twenty-four hours, the platform has gone uphill by 5.56 percent. Having a market cap of 30,444,605,582 US dollars, Polkadot is placed at 9th position as per the CoinMarketCap rankings.

It is worth mentioning that, the maximum supply of the currency is a billion DOT tokens, while the initial maximum supply was nearly ten million as of August last year. Also, Polkadot has a circulating supply of about 987,579,315 DOT coins. In just a week’s time, the value of the platform fell by 9.13 percent. Polkadot is below its all-time high of 49.68 US dollars by about 42.16 percent.

As far as investing goes, I believe that like every other cryptocurrency in the marketplace, Polkadot is also a very risky and a highly volatile investment, which means that you might end up having a lot more money or will have to bear losses. Having said that, Polkadot has a solid fundamental base and a highly qualified and experienced team with a wide community of developers on a global level. Moreover, the technology used in Polkadot could solve the problem of interoperability which makes it even more desirable for a majority of users. Apart from this, you can stake your DOT and earn returns depending on how long you hold your investments. 

Reading so far, you must have gotten a fair understanding of Polkadot and by now you will be able to decide on your own whether or not you should invest in DOT and if it is the right thing for you to do. For some of you wondering what all exchanges have Polkadot listed? Let me help you with that. As of today, Polkadot is majorly available on all the crypto exchanges in the marketplace but some of the exchanges that have it listed include Binance, HBTC, OKEx, Huobi Global, Binance.KR. and more.

In conclusion, seeing what the platform offers and its future plans, I believe that, it might just be the right option for you to put your money in. Not just that, it is important for you to understand the fact that you should do your own research before investing in virtual currencies and not just go with the hype created over the internet. It is advised that you should not invest more than what you can afford to lose. 

What are your thoughts on Polkadot? Do let us know in the comments below. To know more about various cryptocurrencies, do check out other articles we have on our website. Thank you for your time & if you found our content informative, do share it with your investor friends!

Also read: Mini Cardano: Everything you need to know