Is Polkadot the solution Cryptocurrency needs?

Back in august 2017 bitcoin got split
part of the community wanted to increase the block size while another part didn't
want to not everybody agreed and this
disagreement gave birth to bitcoin cash this is a perfect example
of protocol limitations and how a community deals with it
the key issue here is that a one blockchain application can only handle a
limited amount of transactions meaning that if too many transactions
happen you can get bottlenecks bottlenecks can result in delays and
high fees another point is the governance they
weren't able to reach a consensus so they opt for a fork a fork is when
developers take the source code and start independent development on it
this literally forks the chain in two on the one side you had
bitcoin and on the other side new chain was born
being bitcoin cash so how can issues like these be
prevented well the main issue here is that you have
one blockchain that has to solve everything so basically this blockchain
has to be good at everything but what if instead of building a
one-size-fits-all blockchain we could just take
multiple blockchains link them together and let them communicate
so every blockchain in that chain can be designed for
one specific task or purpose this is where polkadot comes in
it unites all sorts of different blockchains into one single ecosystem so
what are the benefits of polka dots well polkadot offers
cross-chain communication this basically means that if we take
multiple blockchains and we link them all together
all the transactions can happen and be calculated in parallel which means
we can prevent bottlenecks polkadot is future proof
the example of bitcoin that i used i discussed a fork
with polkadot you will have the possibility to do on-chain
upgrades but i'll go into more detail a little bit later
the third point i wanted to discuss is the transparent governance
this basically means that everybody who owns the dot
token this is polka dots native token will be able to propose
changes to the protocol or vote on existing proposals
this means that polka dot is governed by the community
so how does all of this work well to explain it i'm going to keep it
as high level as possible i'm not going to go into any technical details
i'll just use this illustration that polka dot used in their
white paper so this ring in the middle is the polka dot
relay chain this is basically the heart of the polka dot
network i told you before that one of the core concepts of
polka dot is that you connect multiple blockchains together
this way they can communicate and exchange functionality
so you have the relay chain and on this relay chain you connect
power chains a para chain is basically a sovereign blockchain
polkadot called it parachains because it allows transactions from all the chains
in the network at the same time which is called parallel processing
so parallel processing parachain and
finally the third element in this illustration are the bridges
this basically means that you can have special
blockchains that are connected with external networks like ethereum or
bitcoin polkadot uses a cross-chain messaging scheme for communication this
allows a secure exchange of any type of data
the data that they used as an example are tokens account balances
stock prices etc the biggest benefit of connecting multiple blockchains
and letting them communicate and share functionality is that each of these
blockchains can be optimized for specific use cases this means that the
develop team can really focus on making their blockchain excel
in something this of course improves efficiency and
security and it brings down development time by
a lot one of the bigger issues in the cryptocurrency world has always been
scalability once too many transactions happen
you get bottlenecks which result in delays and high
fees with the relay chain of polka dots you can allow transactions from all the
chains in the network at the same time like i said before this is called
parallel processing if we look at this chart of transactions
per second and we'll take visa as example which handles
about 1700 actual transactions per second this
was in 2020.

We see that bitcoin and ethereum are
really far behind this bitcoin with seven transactions per second maximum
and ethereum with a 15 to 20 transactions per second
maximum one of course can say that the point of bitcoin is not having a lot of
transactions bitcoin excels at a specific use case
and that is the one of store of value so does it really need a
high number of transactions ask the people of bitcoin cash so back
to business on top of all of this we see polka dots polka dot has a theoretical
capacity of over 166 000 transactions per second the founder of
polka dot gavin wood even mentions getting this up to a million
transactions per seconds and this of course is because of
the parallel processing so the idea of polka dot really tackles
one of the major issues a lot of the cryptocurrency had
being scalability another really interesting point about
polka dot is governance in the past there were two ways of
governance regarding networks the first way of governing a network was
that once it was launched that was going to be the way that it was
going to be forever the second example is where one person
or the original team of developers only has the ability to make changes
with polka dot it's different polka dot is governed by all
the stakeholders who wish to participate so it all boils down that
the polka dot network is ruled by the community itself
the governance part ties really close together with the next point that i
wanted to make being upgradability so a lot of
blockchains use forks to make upgrades this can be a
long process sometimes it can even take months and it
can split the community like we saw with bitcoin and bitcoin cash
in the traditional blockchains when an update happens all the nodes have to
download and install this update this means that when some nodes
don't agree with the update or some people
just aren't aware of the update that you can get a split
this results into two groups one group of nodes that will have the correct
updated version and another group that refuses
or does isn't aware of the update this way you can get a split
in the chain polka dot solves this issue by having forkless on chain
upgrades this means that the notes so all the computers where a copy of the
blockchain is stored on they don't have to do an upgrade they
just keep on participating in the network
and once the chain is upgraded your node will just start following the new
logic the reason why i said that governance is tied
together with the upgrade ability is because that there will be a rigorous
voting system deciding if an upgrade gets implemented
or is even needed to start with so that was it for
this video i basically took the polka dot
white paper and light paper read it through and tried to boil it down and
keep it as simple and high level as possible the
main takeaway of polka dot is that instead of having a one size fits all
blockchain you can now just chain blockchains
together which means that every blockchain
in the chain can focus on one specific use case
your blockchain doesn't need to be good at everything anymore because there's
another blockchain already on the chain that is good at the specific thing you
need to me this sounds like a really nice
idea and it really tackles one of the bigger issues in cryptocurrency which is
scalability i also really like the idea of governance
where everybody who owns dots is able to cast a vote or
make decisions this really brings the feeling of decentralization
back to cryptocurrency which i kind of felt
that i was missing lately there's so many
centralized companies popping up left and right and i really feel that the
idea of polkadot is something that i can support so anyway that was it for
this video i think polka dot has a lot of
potential and i look forward to seeing how this project unfolds again
i tried to keep it as high level as possible if anything wasn't clear
please leave a comment and i'll try to reply to it as fast as i can
if you enjoyed this video please leave a like and subscribe
i also want to add that i have a discord server i'll add the link to the
description here we can discuss cryptocurrency and
investing in general so i want to thank you for watching and goodbye

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