Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol

Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol

Summary:

  • Polkadots aims and desires.
  • A deeper look into how Polkadot works.
  • Past, Present and Future Prices of Polkadot.

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What is the Polkadot protocol?

Polkadot is an open-source protocol built for everyone, it is founded by the Web3 foundation. The Web3 foundation has commissioned 5 teams and over 100 developers to build Polkadot.

The Polkadot mission is: they envision a Web where their data and identity is their own and where safety is ensured from any central authority. Polkadot supports the ease of creating and connecting decentralised applications, institutions and services. Through empowerment of investors to build better solutions, they are seeking to free society from the grip of a broken web whereby institutions have the chance to break trust.

The aim of Polkadot is to enable a completely decentralised web whereby the users are incontrol. The protocol is built to connect private and consortium chains, oracles, public and permissionless networks and future technologies that are yet to be created.

Polkadot protocol offers parachain messaging, this refers to parachain-to-parachain communication, this is Polkadots version of inoperability.

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Polkadot launched their DOT token in May 2017. DOT plays an active role in securing the Polkadot network. The DOT token has around $8.3 billion in market capitalization, a circulating supply of more than 1.6 billion tokens and does not have a maximum supply.

Polkadot features:

  1. True interoperability: Polkadot allows cross-chain transfers of any type of asset or data, users are not limited to token only transfers. When users become a part of the Polkadot network, they open themselves up to a wide variety of blockchain networks.
  2. Economic and transactional scalability: unprecedented scalability is provided by Polkadot through the enablement of a common set of validators which have the ability to secure multiple blockchains. Transactional scalability is provided through spreading transactions across multiple parallel blockchains.
  3. Easy blockchain innovation: users can create a custom blockchain quickly by using the substrate framework. Once users make their own blockchain, they can connect it to Polkadot and get interoperability and security from the get-go. This ease of development is a major factor helping the Polkadot network grow.
  4. Security: Polkadots novel data validity and ability allows the interaction between chains, whilst maintaining independence in their governance but united in their security.
  5. User-driven governance: Polkadot maintains a sophisticated governance system, whereby all stakeholders have a say. Network upgrades are coordinated on-chain and autonomously without forking the network. This ensures that Polkadots development remains community-driven and future proof.

Advantages of Polkadot:

  1. High energy efficiency: in comparison to conventional blockchains, the energy consumed by Polkadot is much less. This energy efficiency is as a result of its next-generation nominated proof-of-stake (NPoS) model. This NPoS uses the equivalent of 6.6 Us households' energy per year. The Polkadot platform has the lowest carbon footprint amongst proof-of-stake protocols analysed in recent research.
  2. High security

The proof-of-stake network refers to the ability of cryptocurrency owners to validate block transactions based on the number of coins a validator stakes.

About the DOT Token:

The DOT token was created by the Polkadot protocol and is designed to serve 3 distinct purposes:

  1. Governance: the Polkadot token holders have full control over the protocol. The privileges on platforms that are normally only available to minors are given to DOT holders, including managing exceptional events such as protocol upgrades and fixes.
  2. Staking: Polkadot uses game theory to incentivise token holders to behave honestly. Those who do not exercise honest behaviour will lose their stake in the network, whereas those who exercise honest behaviour are rewarded by the game theory mechanism.
  3. Bonding: new para-chains are added by bonding tokens. Outdated parachains or those that are no longer useful and removed by removing bonded tokens. This bonding represents a proof-of-stake.

Where to buy Polkadot (DOT)

The DOT token is currently available on many of the major platforms such as Binance, Huobi Global, OKEx, Coinbase, KuCoin and more.

Past, Present and Future Prices:

We already know that the cryptocurrency market is volatile, this is reflected in the chart below. In the past the price has jumped up and down, with the data it is hard to read a trend for the price of DOT.

Currently, the global market conditions have investors turning away from risky assets such as cryptocurrencies, and turning to safer assets.

For the future, the price of the DOT token is expected to increase, with some analysts expecting the price to reach over $64 in 5 years time. However, given the volatility in the crypto market, it is difficult to make an accurate assumption on where the price of DOT will go.

(DOT) Polkadot Price Chart

Polkadot (DOT) Price Chart

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Sources: finance.yahoo.com, polkadot.network, coindesk.com, coinmarketcap.com, capital.com

Rebecca Duthie

Rebecca Duthie

Remote Editor and writer Intern
FXMAG.COM

Rebecca has a bachelors degree in Investment Management, a Post Graduate Diploma in Financial Planning and is currently enrolled in a Masters program in International Management with a Specialization in International Finance.