Launched in 2020, Polkadot is a system that connects other blockchains to help share data. This is mainly done for the value and date sent across incompatible networks. Polkadot is used for both staking and governance of cryptocurrency and other exchanges.
As a part of the governance token, the user has a say in the protocol’s future. They can decide the functioning of the protocol. While with the help of staking a token, one can use the coin for investment purposes. The Polkadot token can be exchanged for transactions.
Under the Polkadot protocol, one can operate a blockchain with the user’s generated blockchains. It is one of the competing blockchains that aims to grow an ecosystem of cryptocurrencies. Though Polkadot is an innovation in the blockchain network, it tries to bring a revolution in the process of transaction and governance.
The flagship project of Web3 foundation, Polkadot, was started to create a space where identities and data are maintained and safely secured from any central authority.
Gavin Wood founded Polkadot along with co-founders Peter Czaban and Robert Harbermeir. While Gavin played a crucial role in the Foundation of Ethereum, Peter is the technology director of Web3 Foundation. Robert has done thorough research and development on blockchain and its functioning.
In 2015, Gavin Woods founded Parity Technologies, a company that aims to implement projects built on Ethereum. It is a software essential to power the Ethereum network. Parity Technologies now maintains Substrate, a development software used by Polkadot parachains.
The Web3 Foundation is building polkadot by partnering with entities with knowledge in cryptocurrency’s field, application, and services. This includes research from Ihria Paris, ETH Zurich and developers from Parity technologies, capital partners from Polychain Capital, and other crypto-funds working together to build this excellent network. Web3 Foundation is sanctioning the grants. Gavin Wood, along with Pete Czaban, manages the Foundation.
Polkadot includes both the responsibility of investment and governance. Under investment, there are three types of blockchain that Polkadot works with. Relay chain, the main Polkadot blockchain, is the one where the transactions are finalized. This is mainly done to speed up the new transactions. This runs by the method of nominated-proof-of-stake. Second is the Parachain which are custom blockchains that confirm the transactions.
One can work as a validator, nominator, collator or fisherman in this network. While a validator is the one who approves the data in the parachian block, a nominator is someone who selects the trustworthy validator for the relay chain. The collator is someone who manages the history of each parachain. The fishermen monitor the behavior of the validator.
Additionally, one can also work as the governance in software development by being a part of the council of DOT holders or the technical committee, which manages the special proposal of the members.
Polkadot is a blockchain technology revolution aiming to bring greater independence and decentralization in the investment and governance of the transactions. Some of the main features of the network include:
- Heterogeneity- Unlike the traditional networking sites, Polkadot helps to connect to other blockchains as well. This includes private blockchains, permissionless blockchains, smart contracts, etc.
- Reach- The isolated blockchains only collect a limited amount of traffic due to limited members. However, as Polkadot allows interaction between different networks, its traction is much more.
- The responsibility of maintaining the security depends completely on the nominated-proof-of-stake. This means that the members choose the security and validators.
- Additionally, there is extra security due to multi-signature accounts. Instead of having a public key of one’s stash account to sign transactions, the public key for the controller is used.
The Polkadot cryptocurrency called DOT plays a key role in the running of the entire network. By being an owner of DOT, one has the ability to vote on network upgrades. The rewards that users with newly minted DOT get are based on the number of staking. DOT serves three key functions: governance, staking, and parachian.
Unlike other coins, Polkadot is a shared blockchain meaning it connects several different chains without sacrificing the overall security. DOT is the main token provided under the Polkadot network. All DOT holders control the use of the Treasure. As a part of the network, some of one’s rewards are diverted to the treasury. These funds are used to pay for the system’s smooth functioning. The DOT token has three primary purposes Governance, Staking, and Bonding.
DOT is available on almost all cryptocurrency exchanges. For eg. Coinbase, Binance
- Create an account: Create an account first. Opening an exchange account is easy if you cooperate with SEC’s (KYC) requirements.
- Add a payment method: Find the payment method section and select your preferred payment option.
- Make the purchase: Click the trade button and select “buy.” Choose the DOT token and enter the amount you’d like to buy.
- Complete the transaction: Select “Preview buy” and ensure the details entered are right. Go through all the steps, and you’ll have your first DOT right in your wallet.
Polkadot is used as a medium of exchange and store of value. Users can use DOT to participate in the Polkadot network along with governance, staking, and bonding. DOT Holders have voting rights for decisions like blockchain improvements through governance and network fees. Staking enables participants to earn rewards by acting as validators. Bonding enables the usage of DOT inside the network to connect diverse blockchains and use their capabilities.
To tackle the scalability issue, Polkadot uses parachains and parathreads whereas Ethereum uses sharding. Ethereum will use PoS consensus in ETH 2.0, while Polkadot utilizes NPoS.