Known as the potential ‘Ethereum Killer’, Polkadot aims to change the crypto sphere for the better. Its blockchain is built to become an ecosystem of cryptocurrencies where users can access competing coins together into one decentralised network.
Polkadot is looking at the bigger picture for the potential of cryptocurrency with its ambitious goals. Promising a more accessible platform for cryptocurrencies, is this digital asset up for the job? Find out more here at BTC Post!
Polkadot’s Ethereum roots
The genesis block of Polkadot cryptocurrency was only launched in May 2020 but the concept originated four years prior. Ethereum co-founder Gavin Wood, alongside known cryptographers Robert Hamermeier and Peter Czaban, developed Polkadot in 2016.
Wood is known for developing Solidity for the Ethereum Blockchain. He served as the chief technology officer for Ethereum Foundation in its developing years but left the company in 2016 to develop a different project.
Along with Hamermeie and Czaban, they established the Web3 Foundation that oversees the blockchain operations of Polkadot. They were able to raise US$140 million in 2017 for Polkadot’s Initial Coin Offering (ICO) that jump-started their venture towards creating a platform for decentralised transactions.
What is Polkadot cryptocurrency?
Polkadot is one of the newest cryptocurrencies in the market but it’s starting strong. The cryptocurrency functions the same way as other blockchains in the market, complete with a native coin denoted as DOT.
However, the network furthers its goals by promising solutions of scalability and interoperability that rivals the Ethereum blockchain’s progressive features such as smart contracts and dApps.
Polkadot is a multi-chain application environment that allows cross-chain interoperability for competing coins in the market. This means that the platform is a network wherein data communication between different blockchains take place.
At the moment, blockchains have little to no means of transactions with one another. Crypto users have to convert their coins to different cryptocurrencies to transact with a different blockchain. This makes the process gruelling for some, especially beginners who have little experience with blockchain technology.
How Polkadot works
Through its features, Polkadot aims to connect all blockchain into one decentralised network. There are four key components to the Polkadot network. It’s designed to operate heterogeneously through the relay chains, parachains, parathreads and bridges.
This is the main blockchain for Polkadot cryptocurrency. It’s the network where all DOT transactions are finalised. To make the processing time faster in this network, it separates the function of adding new transactions from actual validation. The network can transact 1,000 DOT activities per second.
Similar to Ethereum, the Polkadot blockchain allows for a more customised experience. It supports parachains that are sovereign blockchains with their tokens. Each of these networks is free to design governance mechanisms so that users can fully optimise it for specific cases.
Parathreads function in the same way as parachains; they run on a pay-as-you-go structure. These networks share slots amongst a group and it doesn’t need continuous network connectivity to function properly. This means that the core is only woken up when there’s a transaction happening to make the network cost-efficient for users.
While the relay chain is the heart of the whole network of Polkadot cryptocurrency, the bridges help solve the interoperability problems of the crypto sphere. This feature gives an edge to Polkadot because it allows the parachains and parathreads to communicate with external blockchains.
Polkadot’s bridges can allow transactions between blockchains wherein tokens are swapped without a central exchange. This feature is the key to Polkadot’s goal of decentralising the entire crypto sphere.
Cryptocurrency’s decentralised nature is made possible through a consensus. The consensus is powered by node validators that ensure transactions are not double recorded on a blockchain.
Most blockchains operate on either proof-of-stake (PoS) or proof-of-work (PoW) models. However, Polkadot took a different approach using the GHOST-based Recursive Ancestor Deriving Prefix Agreement (GRANDPA) consensus.
GRANDPA consensus offers a major upgrade, especially in network security. To achieve this, the network selects validators such as:
Nodes that are tasked with securing the relay chain. Nominators are in charge of selecting trustworthy validators from the network’s stakeholders.
Similar to other blockchains, validators in the Polkadot network participate in the consensus of validating transactions. They are in charge of staking DOTs and validating proofs to create new blocks on the relay chain.
These nodes are in charge of parchains. They store a full history for each parchain and collect the data so that the blocks are added to the relay chain.
To maintain order in the network, fishermen monitor the activities. These nodes are in charge of reporting bad behaviours to the validators so that proper actions can be taken.
Another issue that Polkadot cryptocurrency wants to solve is allowing blockchain upgrades without needing hard forks. This is possible through the network’s multilayered governance model that integrates transparent on-chain voting from the community.
There are three main groups in the community namely:
Anyone that purchases DOT coins is automatically part of the community. However, this does not mean that the investor has immediate influence over upgrades and protocols on the network.
DOT holders are considered passive stakeholders but they have the power to elect a representative in Polkadot’s council. The nodes that get elected as council members have two primary roles such as proposing new referenda or changes in the network and voting for said proposals.
The Polkadot technical committee is composed of teams that are actively building the network. These nodes have the special ability to make proposals and decisions in the event of an emergency. A stakeholder can become a member of the committee when they are voted by the council members.
Polkadot: The United Nations of blockchains
There’s no denying the potential this network has in bringing the industry together and cutting off intermediary processes that make cryptocurrency complicated for investors.
What Polkadot brings to the table is its ambitious goal of becoming the ‘United Nations’ of blockchains. This solves the compartmentalisation problem of blockchains because it can communicate information from private to public networks.
The network knows how to leverage its resources through its progressive features. Its blockchain works hand-in-hand with the nodes to make the whole process seamless, functional and accessible to investors.
Moreover, the blockchain offers scalable solutions to the growing problem of the crypto sphere. Its GRANDPA consensus allows for faster transactions and communication with other blockchains and public networks while maintaining top-notch security.
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