What is Polkadot
HISTORY OF POLKADOT
Polkadot and its DOT token is a relatively young project, which is sweeping through absolute peaks of popularity. Many observers of the cryptocurrency market claim that Polkadot will be one of the biggest players in the next few years and can easily fight for the title of one of the cryptocurrencies that will take the market to a whole new new level. Polkadot (DOT) is an innovative cryptocurrency that supports multiple blockchains simultaneously.
Thanks to Polkadot it is possible to transfer assets between different blockchains located on a network. This functionality is guaranteed by various design features. First, it is highly scalable – the technology uses sharding to support multiple blockchains at the same time, enabling efficient transaction processing at the same time. Polkadot is designed with interoperability in mind, ensuring chain compatibility and allowing information exchange between different applications.
Undoubtedly, the use and functionality of this technology makes the DOT token currently available on dozens of international cryptocurrency exchanges, clearly raising the value of the coin and allowing it to reach an even wider group of investors. and users. Before September 2020, Polkadot was virtually unknown to ordinary investors. As of November 2020, it had a market capitalization of $ 5 billion.
Polkadot is a project that aims to create a completely decentralized network where users have full control. With Polkadot you can connect multiple blockchain networks, both private and public. It is a flagship project of the Swiss Web3 Foundation, established to facilitate a fully functional and user-friendly decentralized network. This platform can connect many blockchains that meet certain criteria, such as a specific transaction authorization method or a smart contract specially designed for this purpose.
Strings connected by Polkadot can transfer any type of data or assets to each other. The Polkadot system is very flexible because, unlike individual blockchains, it is not limited by rigid assumptions, but can act as a regulator between multiple block networks built on different principles. Polkadot has a right management system where all users have a voice. Network improvements are coordinated along the chain and implemented autonomously.
The consensus on which the Polkadot network is based is a specially designed type of proof of stake. The so-called nominated proof of stake (NPoS). Validators that approve transactions on the Polkadot network must store a certain amount of DOT tokens, which is to eliminate entities that act to the detriment of the network. Among the disadvantages of Polkadot as a cryptocurrency is that it does not have a limited supply. Additionally, many experts indicate that Polkadot is an ideal platform for use in the Internet of Things (IoT).
HOW DID THIS CRYPTOCURRENCY ORIGINATE?
Two former directors of Ethereum, one of the most famous cryptocurrencies in the world, decided to create and develop their own project. This is how Polkadot was created, which is being developed by Parity Technologies, led by Gavin Wood and Jutta Steiner. In addition, it is supported by the Web3 foundation, which provides funding, but also helps carry out research activities. It should be mentioned, that Parity Technologies was founded in 2015 and initially did not intend to create its own cryptocurrency at all.
Since its founding he worked on the development of a node software for Ethereum, a client called Parity Ethereum. However, as time passed, Parity Technologies decided to withdraw from the entire project and focus on another: Polkadot and the Substrate project. In November 2017, the first Polkadot code was published on GitHub. And, it was in mid-2018, when it released two proof-of-concept algorithms. Polkadot’s final release was in May 2020.
Polkadot was designed to support two types of blockchains:
Relay chain: the main network, where transactions are permanent. It is the backbone of Polkadot and the main communication center between the paratroopers. The function of the validators of this network is to accept blocks of parachute, which guarantees the security of the entire network.
Parachutes, that is, user-created networks that can be adapted to your current needs. These are fed by the main network.
HOW IS IT DIFFERENT FROM PREVIOUS CRYPTOCURRENCIES?
How does it work
The main difference of Polkadot (DOT) with all previous cryptocurrencies and platforms is the interoperability it has with different blockchains. Parallel processing capability gives Polkadot scalability that other chains lack. Ethereum, Neo, Tezos, Cardano – all of these blockchains possess unique features, smart contract capabilities, and functions. But, as a developer or user, you are tied to each ecosystem. You cannot build via blockchain or trade digital assets between them smoothly.
To understand why this is a problem, think about the Internet. Today’s web uses standard TCP / IP protocols to link and route all devices and information that passes through the Internet. In other words, the TCP / IP protocol allows the myriad devices that connect to the Internet to communicate with each other in a common language. In contrast, Ethereum speaks Ethereum, Cardano speaks Cardano, but there was no translator between them.
Polkadot addresses the problem of all these blockchains operating independently of each other, acting as a standard for interoperability between them. In a way, it is like the TCP / IP protocol adopted for the Internet, except that it enforces decentralization as the rule. Simply put, Polkadot bridges different blockchains, as well as giving developers the tools to build new ones, to create a decentralized network of blockchains.
How is it working?
The core of Polkadot is the so-called relay chain or relay chain. This is Polkadot’s central blockchain: it manages the states of the blockchain known as parachains, which are connected to the system. The native tokens used in the relay chain are called points. Among other things, points are needed to start new blockchains and couple them to the relay chain. Additionally, points are required for network governance and consensus building models.
The relay chain is the main strand that holds all the individual blockchains together. This is where all the tasks related to network administration and security take place. Also, interactions between individual parachutes are possible here. Parachutes are independent shards that have their own tokens and can tailor their functionality for specific applications. These can only be created in dedicated parachain slots in the relay chain.
Parachutes benefit from security throughout the Polkadot network and do not have to worry about regulating side chain security themselves. Parathreads also work in the Polkadot network, which are parachutes that are only used temporarily. Another component for the functioning of the Polkadot network are bridges. This component forms the bridge between the fragments (parachains / parathreads) and the outside world. The shards can also communicate with other networks like Ethereum or Bitcoin through bridges.
What advantages does its use bring?
The most important advantage of Polkadot is undoubtedly the ability to link blockchains with each other. This is an important function, especially for decentralized trading venues. But, this approach is also advantageous with a view to the general economy. It allows companies to link their blockchains with Polkadot and in this way interact with other blockchains. In addition, Polkadot is based on proof of stake and therefore wants to ensure high speed for transactions such as reservations, smart contracts or the exchange of information.
Polkadot developers have identified a clear problem in the world of blockchains and cryptocurrencies and are offering a smart solution with their system. If Polkadot prevails, the system could enable a wave of new and innovative blockchain systems that are not only secure and can access the resources of Polkadot’s group of validators, but above all can be started at low cost. Polkadot’s substrate platform is already making it much easier to start small blockchain projects.
Another important advantage of Polkadot is the bridges, which assume the function of giving a communicability response and thus guarantee excellent interoperability. Polkadot also offers these benefits:
High scalability.
Interesting architecture for DeFi.
Cheap platform for new projects
Possibility of DOT stakeout.
Convenient parathreads to perform operations on the network.
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