Are you investing in cryptocurrencies? If so, then you must have got the news that recently, a new cryptocurrency, Polkadot, has firmly secured a position among the list of top 10 cryptocurrencies. Currently, it is considered to be acquiring the sixth position in terms of capitalization of the market. Few have already begun speculating Polkadot to give a tough competition to Ethereum. The upcoming future of Polkadot is assumed to be the brightest of all.
Have you wondered how this newly-emerged blockchain has gained popularity and become a competitor for many within these few days? Well, that’s something we will dig into. Without further delay, let’s begin.
A new blockchain created to provide support to other parachains and works connected to several other blockchains under a single entity is known as Polkadot (DOT). Since it can work by joining multiple networks, Polkadot can be referred to as a multi-chain network. This is what makes it different from others that function on their own. The unitary base platform where several parachains are combined is known as the relay chain. However, do not confuse Polkadot as a platform. Instead, it is a network that connects different blockchains.
According to the August reports of CoinGecko, Polkadot has acquired the 7th position in terms of market capitalization. Further, DOT has already been used by 197 investors and developers. The primary purpose of Polkadot is to develop a new and more valuable platform for blockchains as a whole.
Want to know how Polkadot emerged into the market? Here is a short history. The mastermind behind Polkadot is Dr.Gavin Wood, the Solidity inventor and one of the founders of Ethereum. Dr. Wood and his team have been working on Polkadot for nearly the last four years. Right from its inception, Polkadot was much-hyped.
The primary motive of creating it was to bring together all the versions of cryptocurrencies under one roof. The first white paper draft was launched in October 2016. To raise funds to support the Polkadot project’s research work, Peter Czaban of Parity and Dr.Wood formed a Swiss non-profit organization named Web3 Foundation.
According to the details of the light paper of Polkadot, it is an open-source blockchain protocol that combines all the cryptocurrency networks to help them operate without any hassle in unison. Since many blockchains are connected and made into one entity, the parallel transaction is carried out with utmost security.
The rough draft of the Polkadot was launched in May 2020, while the transactions began in August 2020. As reported in September 2020, neither has the relay chain of Polkadot been activated, nor the blockchain auctions went live.
The structure of Polkadot provides various benefits to cryptocurrency investors. Let’s take a look at each one of them.
Just like you need to upgrade your website, blockchains too, work on the same policy. Upgrading blockchains is a must, as you need to stay up-to-date and enhance it with time. In traditional blockchains, the chains need to be forked to two different transactions that may take a lot of time to complete the updates. However, in Polkadot, the entire process can be conducted at once.
If you own dots transparently and fairly, you can easily take charge of Polkadot. Teams or individual investors can suggest and optimize blockchains to suit their needs or formulate new ideas. Even the Polkadot blockchain allows you to upgrade and optimize it to suit your conditions.
The interoperability and cross-chain communication function of the Polkadot blockchain allows you to disseminate functionality and information without depending on any central service provider. Unlike traditional blockchain networks that were mainly based on self-governing environments, the Polkadot blockchain provides you with the opportunity to exchange information.
The structure of a blockchain network is not suited to work for all other blockchains. One blockchain that may work efficiently for storing files may not function in the same way for another blockchain network. Every Polkadot blockchain comes with a different design to be used to fulfill specific purposes. Once developers can create a Substrate development framework, customizing blockchains become more accessible and faster.
Unlike the other blockchains that can deal only with local traffic, the sharded heterogeneous model supports the working of several transaction processing. As a result of parallel and multi-chain transactions simultaneously, the scalability is enhanced, thereby leading to rapid growth in the future. Since parallel transactions are conducted in Polkadot, these sharded connections are is known as ‘parachains.’
To buy DOT you have to go through the following steps:
Step 1: Open an account online
If you are not confident enough to purchase cryptocurrency on your own, you can help a crypto broker. Your broker will help you to change the fiat currency or other cryptocurrencies to DOT.
Have doubts about which cryptoexchange to choose? Here, you have two reliable options – Kraken and Binance. Both of them offer high security and are affordable. The kind of security that both exchange platforms offer makes it impossible for hackers to get through your network. In Kraken, you need only one dot to begin investing. This means, opening an account on Kraken will not even cost you $10.
Step 2: Purchase a wallet
There are hot and cold wallets. It is recommended that you store DOT in cold wallets to get access to your coins offline.
Step 3: Procure a purchase
Now comes the final step – use the exchange platform to buy orders. You will come across many types of orders like a market order, limit order, recurring order, and stop-limit order. Once you fulfill the order’s requirements, you are ready to transfer DOT to your wallet. If you are a bit afraid, you can start by investing a small amount.
Therefore, the cryptocurrency market is booming, especially after the emergence of Polkadot. It is high time that you grab the opportunity to buy DOT.
In 2021, investing in Polkadot coins is instead a better opportunity than investing in other cryptocurrencies. Right after its launch into the cryptocurrency market, the Polkadot blockchain took significantly little time to rise to the zenith, giving tough competition to the very popular cryptocurrency, Ethereum. People associated with digital currency assume that Polkadot is sure to grow more in the upcoming years.
Each year, the DOT faces a 10% inflation rate approximately. The inflation rate is divided into two parts – one part goes to the treasury, and the other portion is given to validators as remuneration of their duties. However, the rate of inflation varies in both cases.
You can experiment with blockchains via Polkadot. It allows you to get customized innovation cycles for transactions that are easier for you to conduct. It brings together all the blockchain cryptocurrency networks under one entity.