Polkadot is a cryptocurrency project with a dedicated blockchain network. This means it has its own native blockchain. DOT is the native token used to operate on this blockchain network. Currently, Polkadot holds the 11th place on the Cryptocurrency market, scaled by market capitalization with a market cap of $7,213,863,779 at the time of writing.
Polkadot’s history is incredibly interesting and many people think it's somehow operated on Ethereum's chain, but that is not the case. In reality, Polkadot was created by a man named Gavin Wood, a co-founder and former CTO of Ethereum. Much like other Ethereum co-founders that went on to create their own crypto projects, such as Charles Hoskinson’s Cardano, Gavin Wood created Polkadot, and while Cardano is somewhat similar to Ethereum, as far as usage and utility goes, Polkadot is very different.
How does Polkadot work?
To comprehend how Polkadot works, you first need to break down the name of the project because it holds the key to understanding. In reality, polka dots create a pattern of dots on a plane surface, all placed close to one another with equal distance between them. All of these dots actually represent cryptocurrencies like Ethereum, Bitcoin, Litecoin, Cardano and many others. Each of these blockchains are uniquely special in their features, applications and utilities. They all possess functionalities that are only available to them, however, what happens if they want to communicate with each other? To put it simply, they couldn’t. Each blockchain network operates with seperate cryptocurrencies associated with them that are also coded differently. In order for them to communicate, they would need a sort of a bridge to connect them and this is where Polkadot comes in. Polkadot acts as a bridge or connector of different blockchains. It allows blockchains to communicate with one another. It connects two networks that would otherwise have no ability to interact. To generalize, Polkadot solves the issue with Interoperability, which may sound fancy and complicated but it just means ‘connection’ or ‘sharing information’. This feature is missing in most blockchains nowadays and is an issue they’ve been struggling with forever. While you could use each blockchain on its own, connecting them was impossible or very, very difficult. Polkadots aim is to facilitate the connectivity and communication of blockchains which will allow the growth of the space and create advanced-level projects. Polkadot views itself as a Layer 0 network so when compared to other blockchains that are mainly Layer 1, Polkadot positions itself below them and thus connects all layer 1 blockchains and provides a platform for connectivity.
Polkadots mechanics?
On the surface, Polkadot looks like any other Proof-of-Stake network. It uses staking mechanics, so DOT holders can earn passive rewards upon staking some of their own DOT. If we dive in deeper, we can find what makes Polkadot special. Polkadot’s blockchain has a Relay chain and interconnected Parachains. The Relay chain is at the center of Polkadots network. This is the most important part of the network allowing Polkadot to operate as it does. It holds all the necessary information to allow the communication of different block chains. Each parachain holds vital information regarding a specifically connected blockchain and every once in a while, all Parachains have to sync with the Relay chain. Take a big corporation for example, all staff members have their own responsibilities and tasks that need to be completed, however, from time to time, meetings are being held in order to establish a clear direction of where the company is going and to update each other on your work progress. A very similar example is given by Gavin Wood, the founder of Polkadot, when he is explaining Parachain functionality.
Polkadot as a secure hub for developers?
Knowing that Polkadot is a Proof-of-Stake network, it's important to understand that for an entity to become a transaction validator and authenticate the transactions happening on the network, they would have to stake a considerable amount of DOT coins in order to qualify for a validator node. This mechanism ensures optimal security and limits the possibility of foul-play on the network. Because of this, Polkadot is seen as a very reliable and secure network that allows developers to create projects using Parachains, thus achieving both a boost to the ecosystem of Polkadot as well as allowing for the easier creation of new platforms and networks. The things that help Polkadot remain secure and reliable are the aforementioned validator nodes. Since there is a pretty high benchmark that you need to meet in order to become a validator on the network or in other words, you need to have a lot of DOT coins, there is a financial responsibility to take network validation seriously. Another aspect of Polkadot’s network that helps keep it secure and running smoothly is the so-called ‘Treasury’. Every time you use coins on the network, part of the trading fees you pay go to the Treasury. The funds can then be used to experiment with new updates, make suggestions and build-up the community as a whole.
Speaking of updates on the Polkadot network, you will probably hear about ‘Kusama’. With the aim of keeping it simple, ‘Kusama’ is a separate space on the Polkadot blockchain where developers are able to experiment with their projects and ideas in order to see how they would work in the real world. Although it's not entirely correct, you can view ‘Kusama’ as a sort of a test space(testnet).
Closing remarks!
Polkadot is one of the few projects that is standing strong throughout the Bear cycle. A project heavily invested in R&D (research and development) rather than marketing and hype. Polkadot is dedicated to its community of developers, investors, hodlers, validators, and enthusiasts. It is being developed constantly and has a very unique approach to blockchain cross-chain communication.
What is Polkadot (DOT) ?
