Blockchain platforms such as Ethereum made it possible to transfer any amount of digital assets with ease, whether it be local or cross-border transactions. However, with Ethereum’s scalability issue, people started looking for an alternative with cost-effective and efficient transactions. This is where Polygon cryptocurrency comes in.
What is Polygon?
Polygon was the alternative solution for Ethereum’s scalability problems before it’s 2.0 update. It’s described as a sidechain or a layer two that builds upon the original blockchain technology introduced by Ethereum and allows a more seamless and cheaper transaction by making the network more robust. Aside from that, it also functions as a platform to develop decentralized apps or DApps.
History of Polygon
Polygon was originally launched back in 2017 under the name ‘Matic Network’. It was built around the Ethereum blockchain by Indian blockchain developers Anurag Arjun, Sandeep Nailwal and Jayanti Kanani.
The developers created Polygon to address issues the Ethereum Network was facing. With the inability to handle huge volumes of transactions, the network became clogged, which led to expensive transaction fees and slow processing time.
How does Polygon work?
Polygon is also known as a sidechain that can run parallel with the Ethereum Network or any blockchain for more efficiency. This results in them being able to access the selection of apps formerly exclusive to Ethereum.
For Polygon to work and connect itself to the main network of Ethereum efficiently, it has to make use of different kinds of technologies. This includes:
Proof-of-stake consensus mechanism
To make sure that every transaction made in any form of cryptocurrency is accurate and transparent, it makes use of a consensus mechanism for verification. This ensures that no one can tamper with the information stored in the network such as wallet addresses and the funds being transferred.
With Polygon, it utilises a proof-of-stake consensus mechanism. In essence, the Proof-of-work is the original consensus mechanism that was first used by Bitcoin back in 2009 and until today it’s widely used by different cryptocurrencies.
This mechanism is done through mining where people from around the world, also called ‘virtual miners’ verify every transaction made on the blockchain. The first one to successfully verify a specific transfer will be awarded a predetermined number of tokens. However, PoW uses a lot of energy to execute a transaction.
On the other hand, the proof-of-stake consensus mechanism was invented because the developers of Ethereum were aware of the inevitable limitations of proof-of-work. This mechanism is relatively faster and requires fewer resources which makes it possible for platforms such as Polygon to have speedier and more affordable transactions.
In PoS, the nodes that will verify a transaction is based on the number of tokens staked on the network. This eliminates the need for massive energy consumption that PoW has.
With proof-of-stake, users can verify and secure transactions by staking instead of mining. Two types of users can engage in staking. These are:
The validators do the bulk of the work in the Polygon Network. They are the equivalent of virtual miners from proof-of-work mechanisms where they’re the ones responsible for verifying new transactions. In return, they’re rewarded with a predetermined amount of MATIC.
Validators are randomly selected. However, some factors that may increase the user’s chance of getting picked such as the amount of MATIC staked and the number of transactions they have verified.
If a validator goes rogue and attempts to manipulate data or makes an error while validating a transaction, they will lose a portion of their prized MATICs.
Delegators indirectly stake their MATICs through their trusted validator which means that they don’t have to fully commit to staking full-time. However, delegators can’t simply stake their MATICs as they also need to do some research, especially with who they choose as a validator.
This is because if their chosen validator acts maliciously or even makes a mistake in any transaction they can lose all of their assets.
What is MATIC
MATIC is the native cryptocurrency that powers the Polygon network and has a finite supply of 10 billion tokens, 67% of which is already in circulation.
As with any other cryptos in the market, this token can be used in various ways such as:
One of the main uses of any kind of cryptocurrency is trading. Purchasing and trading is part of owning a digital asset like MATIC with hopes of it increasing in value in the long run. Luckily for you, if you decide to invest in this crypto, you won’t have a hard time finding an exchange that supports it.
MATIC is supported by various several major exchange sites such as:
As was previously mentioned, MATIC is mainly used for staking. You can either be a validator or a delegator, either way, you’d be earning money by lending your tokens to the Polygon network.
Once you stake your tokens to become a validator, it will gain interest which you can add to your assets. However, keep in mind that rates will change often in a volatile market like this. It can easily fluctuate upwards or downwards but that’s part of staking.
One thing that you need to know about MATIC is that it’s a governance token. This means that investors will have a say in the future of the platform. This is done by making proposals that token holders will then vote for.
The gas fee in Polygon pertains to the fee that the network automatically deducts from your account with every transaction. This comes in the form of MITAC but it will only be a fraction of what will cost you if you use other cryptos and money transfer services.
Invest in Polygon cryptocurrency now!
If you’re looking for a solution to the hefty fees and long transaction times, Polygon is the ideal crypto you can invest in. Add to that the fact that it’s supported by several major crypto exchanges in the market and you’ve got yourself a worthy investment. Learn more about this token and how you can maximize it here at BTC Post!
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