Polkadot (DOT) is one of the most promising cryptocurrencies in the blockchain world, which emerged in 2020. Its main idea is to unite different blockchains into a single network so they can 'communicate' with each other. Imagine the internet where all websites operate separately and cannot exchange information. Polkadot aims to change this for the world of cryptocurrencies and decentralized technologies.
Who created Polkadot?
Polkadot was developed by Gavin Wood, one of the co-founders of Ethereum, together with Robert Habermeier and Peter Czaban. Gavin Wood is a well-known expert in the crypto community who proposed the concept of Web3 back in 2014—a new generation of the internet where users control their data. In 2016, he wrote the Polkadot white paper, and in 2017, the project raised over $144 million through a token sale (ICO). The development is handled by Parity Technologies, and the Web3 Foundation supports the project at the idea and funding level.
How does Polkadot work?
Polkadot is not just another blockchain, but a platform that allows different blockchains to work together. Its architecture consists of several key components:
1. Relay Chain is the 'heart' of Polkadot. It is responsible for security, consensus, and communication between all parts of the network.
2. Parachains (Parallel Chains) are separate blockchains that connect to the Relay Chain. Each parachain can have its own rules, functions, and purposes—for example, for smart contracts, data storage, or financial transactions.
3. Bridges are special connections that allow Polkadot to interact with other blockchains, such as Bitcoin or Ethereum.
Polkadot uses the Nominated Proof-of-Stake (NPoS) consensus mechanism. This means that DOT token holders can 'stake' their coins to support the network, choose validators, and earn rewards.
What does DOT do?
Token is not just a cryptocurrency for payments. It has three main functions:
• Governance: DOT holders can vote on changes in the network, such as protocol upgrades.
• Staking: DOT is used to ensure the security of the network and reward participants.
• Connecting parachains: For a new parachain to join Polkadot, a certain amount of DOT needs to be 'bonded'.
Unlike many cryptocurrencies, DOT does not have a fixed maximum number of tokens. Its issuance is regulated by inflation (up to 10% per year), which incentivizes participation in staking.
How does Polkadot differ from others?
Polkadot addresses a problem that many blockchains face: they cannot exchange data or assets with each other. For example, Bitcoin and Ethereum operate independently, and transferring tokens directly from one to another is impossible. Polkadot creates a 'bridge' between them, allowing developers to build applications that leverage multiple networks simultaneously.
Another advantage is scalability. Thanks to parallel chains, Polkadot can process thousands of transactions per second, significantly exceeding the capabilities of Bitcoin (7 transactions/s) or Ethereum (15-30 transactions/s).
Polkadot 2.0: What's new?
In 2022, the team announced an upgrade to Polkadot 2.0. It includes:
• Agile Coretime: A more flexible way of resource allocation for parachains.
• OpenGov: Enhanced governance system where power is distributed among a larger number of participants to avoid centralization.
• Transition to applications: Instead of focusing on the chains themselves, Polkadot aims to become a platform for ready-made solutions and applications.
Pros:
• Interoperability between blockchains.
• High speed and scalability.
• Active community and developer support.
Cons:
• Strong competition with projects like Ethereum, Cosmos, or Solana.
• Complexity for newcomers in understanding all the functions.
Where to buy and how to store DOT?
DOT is available on popular exchanges such as Binance, Coinbase, Kraken, and KuCoin. For storage, wallets that support Polkadot can be used, such as Polkadot.js, Trust Wallet, or hardware wallets like Ledger.
Conclusion
Polkadot is a project with great potential that aims to make the blockchain world more connected and user-friendly. With its unique architecture and focus on interoperability, it attracts the attention of developers and investors. Will Polkadot become the foundation of the future decentralized internet? Time will tell, but it is already one of the most interesting cryptocurrencies on the market.
