What is Polkadot
Polkadot is a protocol that connects blockchains and allows the sending of value and data across previously incompatible networks (e.g. Bitcoin and Ethereum). It is also designed to be fast and scalable. The network’s cryptocurrency, DOT, is used for stacking and management.
Polkadot is designed as an enhanced version of Ethereum. Launched in May 2020, Polkadot is the brainchild of Ethereum (ETH) co-founder Gavin Wood. The platform is currently managed by the Web3 Foundation (W3F) and developed by Parity Technologies – both co-founded by Wood.
The Polkadot team believes the network design will allow users to transact more privately and efficiently by creating a blockchain that does not expose users’ data to the public network or that otherwise processes a greater number of transactions.
To date, Polkadot has raised about $300 million from investors through two sales of its DOT cryptocurrency, making it one of the most funded blockchain projects in history.
Users who want to stay in touch with the project’s current development status can follow the official Polkadot project roadmap for up-to-date information.
How does Polkadot work?
The Polkadot network allows the creation of three types of blockchain.
Relay Chain – Polkadot’s core blockchain, this network is where transactions are finalized. To achieve greater speed, the relay chain separates the addition of new transactions from the action of validating them. This model allows Polkadot to process over 1,000 transactions per second, according to 2020 tests.
Parachain – custom blockchains that use the computational resources of the relay chain to validate that transactions are accurate.
Bridges – Bridges allow the Polkadot network to interact with other blockchains. Work is currently underway to build bridges with networks such as EOS, Cosmos, Ethereum, and Bitcoin, which will allow token exchange without a centralized exchange.
Relay chain
To keep its network consistent with system state, Polkadot’s relay circuit uses a variant of proof-of-stake (PoS) consensus called nominated proof-of-stake (NPoS).
This system allows anyone who stacks (bets) a DOT, locking the cryptocurrency into a special contract, to perform one or more of the following roles necessary for its operation:
- Validators – Validate the data in the blocks of paraversions. They also participate in consensus and vote on proposed changes to the network.
- Nominators – Secure the relay circuit by selecting reliable validators. Nominators delegate their pledged DOT tokens to validators and thereby allocate their votes to them.
- Collators – Nodes (nodes) are released that store a complete history for each parachain and aggregate parachain transaction data into blocks for addition to the Relay Chain.
- Fishers (Fishermen) – Monitor the Polkadot network and report bad behavior to validators.
Users who stack DOT and perform these roles are also eligible to receive rewards in the cryptocurrency.
Polkadot Management
Three types of Polkadot users can influence the development of the software. These include:
- DOT holders – anyone who purchases DOT tokens can use them to propose changes to the network and approve or reject major changes proposed by others.
- Council – Council members elected by DOT holders are responsible for proposing changes. Council member proposals require fewer votes to be approved than proposals from ordinary DOT holders.
- Technical Committee – Made up of teams who are actively building Polkadot, this group can make special proposals in the event of an emergency. Members of the Technical Committee are elected by the Council members.
Substrate
Polkadot’s framework includes a very powerful tool called Substrate, which makes it much easier to build a blockchain from scratch. It’s designed to help teams build the specific blockchain they want, and features protocol connection points that attach to relay chain functions.
This has two key benefits: it allows teams to focus less on building the underlying infrastructure for the next blockchain project, and it allows them to focus their energy on adding value to their project.
It also gives access to the world of blockchain for teams with great ideas but without the experience needed to build a network from scratch. This kind of dual-powered technology is powerful and has already been cited as a major reason developers choose Polkadot for their projects.
How to buy DOT?
1. Choose a crypto exchange
There are numerous cryptocurrency exchanges and exchanges that range from easy-to-use systems to complex dashboards for advanced traders.
Because DOT is so popular, you’ll be able to purchase the token on most cryptocurrency exchanges, but it’s advisable to stick to a few of the more popular exchanges like Binance, Kraken, Coinbase, etc. Different platforms come with different fees, security measures, and may include other features, so it’s a good idea to do your research before signing up.
2. Create an account and confirm it
Start with account registration, which is completely free on the aforementioned platforms. For added security, 2FA – two-factor authentication – is also enabled. This way, you and your device are the only ones who can grant access to the account.
You are then taken through a KYC process, which is providing personal information – ID card/passport/driving license details, proof of address (e.g. bank statement or utility bill).
After completing these steps, you are ready to buy, sell and trade Polkadot (DOT) as well as avail various services such as staking.
3. Fund your account
Once your account has been registered and verified, you need to fund the account to start taking advantage of the platform’s buying and trading services.
The main deposit options are:
- Credit/Debit Card
- Bank deposit
- Peer-to-peer (P2P)
Where to buy DOT?
On Binance, the world’s largest cryptocurrency exchange, deposits are absolutely free.
