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What is Polkadot and how does it work?

Polkadot is a protocol that connects blockchains and allows data to be sent over incompatible networks like Ethereum and other networks. The main goal of creating Polkadot is its speed and scalability.

Also, the DOT token is still used for governance and staking so you can buy it on any exchange like Binance, Crypto.com, etc. Like other cryptocurrencies, it is a decentralized coin that can be bought and solid on exchanges like you would buy Ethereum and other currencies.

Is Polkadot a cryptocurrency you are interested in? Well, don’t go anywhere because in this article we will discuss more about the mysterious cryptocurrency that many underestimate.

Let’s dive in!

How does Polkadot work?

Polkadot is a cryptocurrency coin that can process large amounts of information compared to other cryptocurrencies. The large amounts of parachains do a lot of heavy lifting for the main relay chain. The Polkadot network can handle more than 1,000 transactions per secondwhile larger cryptocurrencies will be able to process less than 100!

However, the Polkadot network keeps growing, which means more parachains are being added. So Polkadot should be able to go faster and maybe even reach millions of transactions per second in the future!

Parachains are responsible for delivering transactions between parachains. These are application-specific blockchains in the Polkadot network. Each para chain within the Polkadot network is its own blockchain and has its own unique characteristics.

Anyone who bets for the Polkadot token during a contract can perform the following functions:

  • Validation of the role: The data is validated in the para chain block. Additionally, consensus is achieved and votes are collected for any proposed changes within the network.
  • Collection roles: Nodes will store a record and add the most recent data about transactions made from parachains in blocks to add to a relay chain.
  • Role appointment: Trusted validators are selected and the validators assign the DOT tokens. This is how votes are cast.
  • Fishing roles: These roles monitor what is happening in the Polkadot network and report any suspicious behavior.

When was Polkadot created?

Polkadot was founded by Gavin Wood, the co-founder of the famous cryptocurrency Ethereum, with the help of Peter C. and Robert H. in 2016. In other words, people will know that the Web3 Foundation developed Polkadot.

Gavin Wood was the co-founder of Ethereum, but he also managed to create a programming language to write decentralized applications (dapps) on the Ethereum network. He first started out as a scientist, working for Microsoft. Yet after inventing the Ethereum network, he would pave the way for many new cryptocurrencies that are considered great investments in today’s world, including Polkadot.

In 2015, Gavin Wood founded a company called Parity Technologies. Since Ethereum was invented right after Bitcoin, the main goal of Parity Technologies was to build and implement more projects that wanted to grow on Ethereum. Moreover, it ran on software that powered Ethereum.

Alongside Parity Technologies, there is also Substrate, which is a software development framework used to create parachains for the Polkadot network.

Why is Polkadot important?

Developers who build decentralized systems and need to design those systems from the ground up consider Polkadot a vital blockchain. But unfortunately, the developers are using all their time, talent, and resources to build the proper networks rather than creating a standard for everyone who wants to develop Polkadot.

After all, the main goal of Polkadot is to create value on all blockchains rather than just one.

Where can you buy Polkadot, and what is its value?

Polkadot is available on major crypto platforms. However, even though many platforms allow you to buy cryptocurrency, we do not recommend that you trust them all! Your best bet is to buy Polkadot on popular platforms such as Binance, Crypto.com, Coinbase, Gemini, etc.

These crypto platforms that we have mentioned offer extensive security and have many phases of identity verification. Nevertheless, you better invest in these platforms rather than random platforms that may scam you.

The value of Polkadot (DOT) is at $9.40 with a market capitalization of $9.3 billion, but right now the crypto market is “bleeding” and experiencing a lot of price swings. Moreover, within a year, the crypto token managed to gain significant value, and within a range of a year, it managed to reach almost $30, but due to the global recession happens, prices are back down to around $9. However, the coin is expected to reach a higher price soon, rebound and generate a lot of returns for DOT coin holders.

How does Polkadot handle staking?

Polkadot uses a proof-of-stake consensus mechanism to provide maximum security within the network, verify transactions, and create new DOT coins. There are many ways Polkadot holders can interact with their staking system, depending on how much time and money they want to use.

Let’s start with the Validators. They are the ones who do most of the work and cannot succeed if they do not have the necessary technical knowledge. To become a validator and be successful, you need to run a node and have no downtime. Additionally, you have to wager a certain amount of your own Polkadot capital.

When you become a validator, you have the power to verify whether transactions are legit or not, add new transaction blocks to the relay chain, and even earn more Polkadot capital with lower transaction fees.

On the other side we have nominators. Nominators allow investors to bet indirectly. You may consider delegating your Polkadot capital to a validator who you believe will handle it within the rules. However, you need to be careful who you choose and make sure validators play by the rules.

In addition, we have fishermen and collectors, as we mentioned before. They are less committed than becoming a full validator, but you must have the technical skills required. In other words, anglers will report suspicious behavior on the Polkadot network, while collators will track para-chain transactions and submit them directly to the chain’s validators.

Last but not least, a benefit of participating in the network is that you can receive rewards.

Polka Dot Governance

Three types of users can influence the software development of Polkadot:

  • The board: Council members are elected by Polkadot holders and are responsible for proposing any changes that need to be made to the software. However, proposals made by Council members require far fewer votes to be approved than those made by regular Polkadot holders.
  • Polkadot Holders: Those who purchase the coin can use their DOTs to request any changes from blockchain networks and even approve any change requests requested by other holders.
  • Members of the technical committee: The teams building Polkadot. This team can make special proposals in an emergency, and Council members vote on these types of members.

What makes Polkadot different from Ethereum?

Polkadot and Ethereum share the same owner, but there is not just one owner here. As a result, many questions arise about what differentiates Polkadot from Ethereum. However, many new projects have been with the Ethereum project, and Polkadot simultaneously shares similarities in operations and design.

Ethereum and Polkadot blockchains leverage the main blockchain where transactions are finalized and allow smaller blockchains to leverage their resources. Additionally, Ethereum and Polkadot use staking instead of mining to keep the network in sync.

Parity technologies created by the Ethereum co-founder allow developers to deploy applications leveraging code from ETH that would also work on Polkadot.

Additionally, the Polkadot development framework uses a copy of the ETH blockchain for use on its own blockchain designs.

Wrap

That’s it for this article. First, we showed you what Polkadot is and how it works. Now it’s your turn to invest in cryptocurrency and seek to receive plenty of long-term returns. Alternatively, you can choose to stake DOT, which gives a 10-12% back long-term.

Also, we like the coin because it has no supply limit like Bitcoin and some other cryptocurrencies. It is excellent for its value and does not make you think twice when investing in the coin. Moreover, the crypto coin shares many similarities with Ethereum, which is a good sign for Polkadot!