If you are new to cryptocurrencies or anything that has to do with blockchains, it is easy to get overwhelmed by the information.
For example, you may or may not have heard about Polkadot, and how it connects individual blockchains to form a single network.
This article seeks to explain everything Polkadot in plain language. We briefly go over the history of the distributed ledger and how Polkadot came to be the internet of the blockchain.
What is Polkadot?
When computers first came about, there was no internet, and you had to transfer information from one computer to another using a floppy disk. When the internet came about, it connected all computers that had internet access in one global network.
Polkadot is doing something similar with blockchain.
The founders of Polkadot blockchain were Robert Habermeier, Peter Czaban, and Dr. Gavin Wood under a Swiss Foundation known as Web3 that dedicated itself to sponsoring a decentralized, functional, and user-friendly web.
The three founders proposed Polkadot in a whitepaper in 2016, and they meant it as a solution to the myriad issues plaguing blockchains, such as scalability and interoperability.
In summary, Polkadot can be described as a sharded multi-chain network whose aim is to connect blockchains into one network.
Blockchains that are related to Polkadot operate in parallel and are called parachains. This allows them to gain access to Polkadot’s network proof-of-stake validation of security and transactions.
A blockchain is a decentralized public ledger that records all transactions via cryptocurrency. All blockchains work in silos or separately, and Polkadot aims to create a network of interoperable blockchains to form a decentralized web.
How Does Polkadot Work?
At the moment, there are two types of blockchains.
They can be purpose-built for specific functions. An example is Bitcoin, which was designed to provide a store of value and as an alternative payment method.
Blockchains can also be more general in their functions and applied to various uses such as TRON or Ethereum, building decentralized apps (dApps).
dApps are regular apps but based on blockchain.
The trio founders of Polkadot designed for the growing need for interoperability as the number of specialized blockchains grew. There was a need for something that could securely bridge the platforms for a harmonious relationship.
They tried to solve this issue by creating a platform where blockchains can communicate, no matter their differences. After developing the idea for three years, Polkadot came into being.
Polkadot is an infrastructure that can help blockchains improve their speed, upgradeability, security, and other capabilities.
What Makes Polkadot Special?
Polkadot processes various transactions on several blockchains parallel to each other via Parachain. Polkadot helps blockchains like Ethereum in scalability. A user can add other blockchains to the Polkadot network if they so wish.
It is easy to develop custom blockchains via the Substrate framework which connects in minutes to the Polkadot framework. The network is versatile and adaptive, allowing information sharing and functionality among participants, much like smartphone apps.
The network has a user-driven and high-tech governance system that is key to securing it.
A blockchain’s governance can be customized by communities depending on their needs and other ever-changing conditions.
Validators, nominators, fishermen, and collators have different duties that contribute to the network’s security and prevent malicious behavior.
Polkadot has four components:
- Relay Chain– The heart of Polkadot helps create interoperability, shared security, and consensus across the network made up of varying chains.
- Parachains– These are independent chains and which can have tokens of their own
- Parathread- These are the same with parachains but with more versatile connectivity that is modeled on a pay-as-you-go system
- Bridges: These allow the connection and communication of parathreads and parachains with other blockchains like Ethereum.
Is Polkadot Proof of Stake or Proof of Work?
Proof of Stake (PoS) is an alternative to Bitcoin’s consensus algorithm Proof of Work (PoW).
Polkadot uses an NPS (Nominated Proof of Stake) system. In this system, nominators use their stake to support validators. This is a show of good faith in the validator’s good behavior.
The blockchain participants who support a consensus are picked depending on their stakes, making Polkadot a Proof of Stake blockchain.
NPS is different from the delegated Proof of Stake, where nominators are subjected to losing their stake if they nominate or back a malicious validator.
Any staker who wants to maintain the network can operate a validator node. Other stakers can join in as nominators and can back at least sixteen validators as their trusted nominees.
The NPS uses incentives to ensure the validators follow the rules and do not try to play the system. A stakeholder needs to lock a certain amount of DOTs in the network to become a validator.
This becomes the stake, and the assets can be from the validators are nominators’ who nominated this validator.
In case the validator misbehaves, the validators’ stakes are slashed. If a validator is reported offline above a specific limit, slashing is done.
How Many Polkadot (DOT) Tokens Are Currently in Circulation?
DOT coins are native to Polkadot, with a 1 billion DOT token allocation after the network was redenominated from a maximum supply of 10 million in 2020.
The redenomination was to prevent the use of tiny decimals and ease calculation.
All balances went up by a factor of one hundred, but this did not alter DOT’s distribution or the proportional share of the holders.
The Polkadot Price today is approximately equal to $21.10.
How to Buy PolkaDot
You can purchase Polkadot on a crypto exchange and your payment method depends on the chosen exchange.
Some only accept the US dollar, and others are okay with various currencies. Other exchanges only accept bank transfers, while others accept payment via PayPal or other services.
Where To Buy Polkadot (DOT)?
Since Polkadot (DOT) is very new in the crypto world, buying options are limited. For Americans, the options are even less. Some of the places to buy in the US are:
Kraken is one of the best platforms to buy and stake Polkadot (DOT). It offers up to 12%, the highest staking reward for Polkadot, and it does not have a minimum DOT.
Unfortunately, Kraken is not ACH transaction compatible. Kraken also does not have the option of depositing funds via a debit or credit card.
Crypto.com supports ACH transactions but does not take bank deposits. Since Kraken has the best Polkadot staking reward, you can buy DOT on Crypto.com and then transfer it into your Kraken account.
In Canada, you can buy DOT from:
Polkadot Use in the Future
The Polkadot infrastructure will help foster human rights and the protection of privacy because you no longer have to trust a service provider…Polkadot’s infrastructure provides a trustless ecosystem where rules are obeyed.
Polkadot intends to provide better and broader financial services accessible to all, including people in low-income communities.
Also, it will offer a decentralized class of services and a new market. These services will serve all and will not exploit users.
Polkadot vs. Ethereum
Both Polkadot and Ethereum focus on providing opportunities for developers to create decentralized apps. The two platforms offer smart contract functionality with Ink! for Polkadot and Solidity for Ethereum.
However, the two platform’s most remarkable differences lie in their design goals. Polkadot envisions helping people to build blockchains and integrate identical blockchains.
Polkadot vs. Cardano
Both Polkadot and Cardano are PoS (Proof of stake) blockchains.
Both their goal is decentralized apps, but they have differing architecture. The two are rated as among the top cryptocurrencies globally.
The difference between these two blockchains is that Cardano’s stake pool is better than Polkadot’s. Cardano token supply is infinitely more significant than Polkadot’s.
Also, Polkadot has a one-layer architecture, while Cardano’s is two layers.
Best Crypto Wallets for Polkadot.
Polkadot and the native token DOT have been very successful, and it is wise to safely and securely store your assets. Some of the best crypto wallets to keep your assets include the following.
- Ledger Wallet
- Atomic Wallet
- Parity Signer
- Polka Wallet
- Guarda Wallet
- Token pocket
- Swipe Wallet
- Trust Wallet
It is not surprising to see people asking whether Polkadot is a good investment?
The future of Polkadot looks promising, and its underlying technology is one of its top-selling aspects. Any investment is a risk in itself, so it’s up to you to research and decide whether it is worth the risk.
Since Polkadot is one of its kind, it is arguably one of the top blockchains at the moment.
Our Polkadot prediction looks very promising, and its price has been on a steady rise. Who knows what could happen in a few years?
Watch this space for updates!