Imagine a highway toll during a long weekend and everyone is paying cash like the good old days, now imagine the huge bottleneck this would create (when Spotify won’t have enough songs to get you through), the slow processing would cause massive delays – this is the problem networks built on a single blockchain face, limited number of transactions that can be performed and increased transactions fees.
Here is where the Polkadot magic comes, Polkadot is a “multi-chain network”, with the goal to unite different specialised blockchains into a single unified network or better called “Relay Chain Ecosystem”, avoiding bottlenecks and keeping transaction fees low.
Polkadot allows developers, start-ups, and companies to make use of the right blockchain technology, from their Relay Chain, according to their needs. What is the advantage of this? they don’t have to customise from scratch and make a Frankenstein monster from all the patches to create an operational product. Instead, you can choose the blockchain that works better for you, that can be easily optimised for that specific use; therefore, making it more functional, efficient, and secure!
These blockchains that connect with the Relay Chain are called Parachains and are part of the whole Polkadot network, this allows the network to process in parallel multiple transactions, reducing cost and time.
Polkadot enables bridges to other networks such as Bitcoin and Ethereum, for cross-network functionality and communication
Polkadot makes blockchain scalable and customisable, allowing cross-chain communications and easy to upgrade blockchains – an existing problem with some existing old-school networks such as Bitcoin. And I will mention again the capability to upgrade blockchains because this might sound like a given for most of us since nowadays upgrades seem like part of the day to day operations of our devices, but when it comes to blockchain this is a huge differentiator.
Upgrading a network diverting from the main blockchain is called Hard Fork, and this can represent significant work to the development team and affect the capabilities of the network. Polkadot has Forkless On-Chain Upgrades, allowing them to bring new features to their blockchain easier and faster than any other protocol.
With so many new coins and tokens created every day, I always like to take a quick peek at the masterminds behind these projects… Polkadot was founded by the Web3 Foundation, a Swiss Foundation aiming to facilitate a fully functional and user-friendly decentralised web. One of the Polkadot founders is Dr. Gavin Wood, he was also part of the initial founders and CTO of Ethereum, so you know there is some experience within the team.
The token for this all-mighty network is called DOT. Holding DOT allows you to vote on referendums and the future of the network, that is the way governance work in the Polkadot network, the future of this project is given to those DOT holders.
Polkadot works with Proof of Stake, in short, that means that by staking coins you help the network, and of course, they are willing to pay some rewards for your support. There are several places you can stake, search for an exchange that allows you to do so or use the official wallets. With a 12%APY, Kraken is my preferred choice, crypto.com gives 12.5% with a 3 month lock period. Check if your exchange gives you decent rewards for your DOT tokens!
Another way to make use of your DOT is by participating in the parachains. You can support the parachain you consider the most viable and promising by allocating some DOTs, the catch here is that you might need to lock your DOT for several weeks to support the parachain project; nonetheless, your commitment won’t go unnoticed, no, no, no, you will get paid for this, the parachain typically issues its native token and you’ll get some of that juicy reward.
I’ve only participated in one parachain auction, so not much experience on this front, but no one has, the first auction launched mid-2021, and the second Q3 2021, so isn’t too late to jump into this ship. I allocated my DOT through Kraken, the process was quite simple. If you want to check Polkadots projects, you can visit https://parachains.info/
Polkadot launched its Mainnet in May 2020, and since then it has crawled all the way to the 9th position by market cap (over $35B or 624B Zambian Kwacha [let’s keep it international] in 2021). I’m invested in this project, I think it has a good future.
Now that the holiday season is coming, Polkadot, in a smart move to get people on board that is unfamiliar with crypto, has launched a new feature that allows you to send DOT Gifts to family, friends, colleagues, random people, etc, even when they don’t own a wallet, you can check more about this here.