Ever since Satoshi Nakamoto launched Bitcoin blockchain, the popularity of the technology has increased significantly. This has resulted in the emergence of several blockchain projects and one of them is Polkadot. The project was created by Gavin Wood in a bid to create a more evolved version of Ethereum. The blockchain interoperability project wasn’t part of the top 100 cryptocurrency ranking a few months ago.
However, for individuals who have been observing the cryptocurrency market, Polkadot, as well as its DOT token, have increasingly become popular in recent times. In fact, it is already one of the top ten cryptos and has a market capitalization that’s about $4.9 billion. You can find this information on CoinMarketCap. Part of the reason for its meteoric rise has to do with something known as redenomination.
A look at most digital currencies shows that they are all focused on providing different services. For instance, Litecoin offers us transaction speed that’s four times faster than Bitcoin; Ethereum is a platform for smart contracts while Zcash is focused on zero-knowledge proofs and privacy.
Unfortunately, most of these specialized blockchains are not connected and this is one major reason why digital currencies have failed to gain mass adoption. One factor that could eventually lead to the increased adoption of blockchain projects is interconnection. Interoperability which is also regarded as the “Internet of Blockchains” has to do with a network where transactions and data can easily move from one blockchain network to another in a trustless way.
Every blockchain presently has its consensus algorithm, community, as well as the actors securing the network. The focus of blockchains on evolving their different ecosystems has caused them not to benefit from each other. Instead, most of them are now seen as competitors and the only way transactions can take place across various ecosystems is by depending on third-party platforms that are in most cases centralized.
What Does Polkadot want to Achieve?
One thing that clearly separates Polkadot from Ethereum and most blockchain networks is the fact that it is interoperable with the existing isolated and independent blockchains like Bitcoin and Ethereum.
Polkadot is often regarded by many as a next-generation blockchain protocol that connects different blockchains to a unified network. The design of the Polkadot blockchain is part of the broad vision to create a web that gives individuals control over internet monopolies.
The blockchain project by the Web3 Foundation which was also developed by Parity Technologies is focused on not just connecting different blockchain networks but also serves as a platform where developers and enterprises can easily build blockchains that are known as “parachains.”
So, all the parachains that will be built on top of the Polkadot blockchain will share the same Proof of Authority (PoA) consensus. The focus of parachain developers is mainly on the specific aspects of their blockchain and not the consensus type since it is already embedded within Polkadot.
Every parachain within the Polkadot blockchain is seamlessly connected to one blockchain known as relay chain which serves as a link between every parachain.
Here are some of the benefits of Polkadot:
- The network allows other blockchains to scale because the amount of traffic that isolated blockchains can process is limited. Polkadot is capable of processing many transactions on different chains at the same time. This effectively eliminates the limitations of legacy networks that have to process one transaction at a time.
- It enhances specialization. The truth is that one size doesn’t really fit all when it comes to blockchain architecture. To enjoy a particular feature and use case, blockchains often make trade- So, a chain that optimizes security and privacy may do so at the expense of being scalable. Since Polkadot allows blockchains to specialize in different use cases, they can now offer more efficient services while improving security.
- All blockchains on the Polkadot network are connected and this makes it easy for them to share information as well as functionality. They don’t really need to depend on centralized service providers that operate with questionable data practices. It offers blockchain interoperability as well as cross-chain communication.
- Upgrading on the Polkadot blockchain is quite easy, unlike conventional chains that may end up needing what is referred to as “hard forks” which leads to two different transaction histories that may end up separating a once united community. Blockchains, just like every software also need upgrades to continue to improve its services and remain relevant. On the Polkadot network, other blockchains can upgrade without hard forks and this enables them to evolve and easily adapt when more advanced technologies are available.
- The communities within the Polkadot blockchain are free to govern their networks the way they choose. They can also customize and further optimize their blockchain governance to suit their needs. They are free to explore new ideas that would increase their performance.
DOT is the native token on the Polkadot ecosystem. The DOT token performs three major functions. The first has to do with governance; token holders have full control of the protocol. They are allowed to handle certain functions like making protocol changes, determining fee structures as well as the addition or removal of parachains.
Bonding is another function. Validators on the network are expected to stake DOT tokens to the new parachains and will in turn enjoy active participation rewards. DOT holders need to be active participants on the network to ensure that the consensus mechanisms are properly maintained.
The Polkadot ecosystem is becoming more robust even as the number of developers who are interested in deploying their projects on the blockchain keeps increasing. With its unique design, businesses and individuals can now enjoy more possibilities for innovation.
This is one project that can genuinely help blockchain technology to attain its full potential for various use cases. You can purchase DOT from various exchanges such as Binance, Kukoin, Bittrex, OKEx, Huobi and several others. Before making any investment decision, it’s crucial to do your own research.
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