Cryptocurrency has had a fantastic year as more people look into and explore the asset. Record numbers of wallets and people come into crypto month after month, with more transactions happening than before.
However, what happens when the blockchains can’t handle more transactions? How can you move between chains? The folks over at Polkadot have been working on solutions to these problems for a while, making the DOT token a project worth looking into and maybe even buying.
There is a need for cross-talk in a world with multiple blockchain ecosystems. Anyone who has tried to trade tokens across blockchains has come into the problem of trying to get their coins or tokens into a different blockchain ecosystem. It’s a tough process outside of trading on centralized exchanges or using niche cryptocurrency bridges.
Polkadot is a project that is trying to remove that inconvenience. The Polkadot blockchain is a project that acts as an intermediary between blockchains without a centralized middleman. By offering this functionality alongside a secure and scalable network, Polkadot is setting itself up to be one of the premier parachains in the cryptocurrency sphere.
Built into the Polkadot project is its native token, called Polkadot (DOT). This token serves a few purposes within the protocol: to act as a governance token and to use in its Proof of Stake (PoS) transaction verification measure.
Before we get into the ways you can snag some of this token for yourself, let’s look a little deeper into what makes this project tick.
The Polkadot token is more than just an asset that you can buy. While you can buy Polkadot coin and stake it for passive income, there’s more going on when you do so.
It’s easier to think of Polkadot as a network rather than a blockchain. Polkadot’s protocols allow for the transfer of data between different kinds of blockchains by transferring any kind of arbitrary data, not just coins or tokens.
Polkadot accomplishes this by linking relay chains with parachains. A relay chain refers to the base layer blockchain that transactions settle on. For example, this could be Ethereum’s blockchain for smart contracts or Bitcoin’s blockchain to better handle store of value transactions.
In either case, these base-layer relay chains can use Polkadot to connect to parachains. Parachains are side blockchains that can be either private or public. Also called side chains, parachains can aggregate data from a smaller or private blockchain and allow it to settle transactions on a relay chainThe benefit of this feature is true interoperability. By allowing different kinds of blockchains to communicate and settle transactions on each other, suddenly doesn’t matter what the transaction speed of a base layer blockchain might be. A parachain might be able to handle many transactions and then send those to a low-traffic blockchain to settle transactions and reduce gas fees.
Additionally, this allows for individual people or organizations to create small side chains that are private. These chains can handle sensitive data that doesn’t need to be public but still interact with the relay chain via smart contract calls without exposing data. For example, a university’s side chain could share degree data without identifying the individual associated with the degree.
In summary, Polkadot links blockchains together to create a way to automate data transfer, even if the data is sensitive or private, across blockchains.
Similar to many modern cryptocurrencies, Polkadot uses a variation of the Proof of Stake consensus model for its transactions.
In a traditional PoS model, stakers commit their coins or tokens to the protocol. From there, the protocol looks at incoming transactions to verify that the transacted coins or tokens do so in a similar way to the coins or tokens committed by validators.The staking mechanism makes sure transactions stay the same. If they don’t, then the node can decline the transaction since it is probably fake.
To add to this, Polkadot has several other roles that it introduces to its staking mechanism. These changes come from the fact that Polkadot is a network protocol instead of a chain and that Polkadot has to make sure we secure transactions across many different projects. Here’s what those extra roles look like:
Much like how checks and balances can help keep a government in check, these extra measures allow Polkadot to be adaptable without running the risk of leaving one group of the ecosystem in the dust.
Polkadot has plenty of teams and individuals working towards building out the ecosystem for everyone to use. However, three people stand out as the founders of Polkadot:
Polkadot has grown quite a bit since its initial founding because of the work these three founders have put into the protocol.
So, with all that has been said about the inner workings of Polkadot, let's take a look at how to buy Polkadot coins with iDEAL:
Just be aware that when you use iDEAL, they charge a small fee for the transaction. This fee helps the payment process convert your fiat to crypto fast.
Also, you should remember to choose an exchange that allows you to withdraw your crypto off the platform. That way, you can move your coins or tokens into a more secure wallet.
While exchanges have gotten better at security over time, many cryptocurrency veterans prefer other storage solutions that only control the private keys.
Private keys are the passwords generated when making a wallet. If someone has access to those keys, they can use those passwords on a new wallet to get into the original wallet.
If you want to set yourself up for secure storage of your DOT tokens, here are the steps:
Polkadot is a promising network that wants to expand on the communication between blockchains. In time, this interoperability could allow individual people or institutions to have their own blockchains. In this case, it would allow transactions to settle on layers outside of the relay chains.
If you think this project has what it takes to succeed long-term, picking up some DOT for yourself and staking it is the easiest way to participate in the project!