What would the crypto space look like if all
blockchains had a common link to one another? Something like a superhighway for blockchains
where Ethereum connected to Cardano and Bitcoin, Bitcoin connected to Tezos
and VeChain. Tron to Litecoin. Join us as we take a peek
into THE chain to connect all other blockchains – Let’s connect
the dots and answer the question… What is Polkadot?
Launched in 2016, Polkadot is the brainchild of Gavin Wood, an Ethereum co-founder
and creator of Solidity, the programming language used by Ethereum. Polkadot is now run by Web3
Foundation and developed by Parity Technologies, both of which Gavin is a co-founder of. Polkadot
is what Gavin Wood envisioned as the next version of Ethereum, and THIS is how it works.
The current blockchain landscape is, at best, fragmented, with multiple, independent
blockchains all operating in isolation. As yet, there is no efficient way for these separate
chains to operate and communicate with each other to share data, transact, or exchange value.
Polkadot is working to correct this by providing for the first time—cross-chain interoperability.
Polkadot will allow any blockchain: private and public, permissioned and permissionless, as well
as oracles and decentralized apps to talk to each other and be connected in a trustless way
under a single decentralized Polkadot umbrella.
Here’s a few examples of how this could work. A smart contract event on Ethereum
triggers a payment on the Bitcoin network
An oracle that feeds price data to dozens
of different blockchains at the same time
This is why Polkadot is being
called the Internet of Blockchains. Like the Internet, Polkadot will
behave as an interoperable network connecting all blockchains.
How does it do this? Polkadot will achieve it through the Polkadot Relay
Chain, parachains and connectors called bridges.
Polkadot’s Relay Chain is the core
layer of the network and acts like a bookkeeper overlooking all network transactions. Parachains are the second layer. They’re
made up of individual blockchains all connected in parallel. Hence, parallel
chains or para-chains. Para-chains allow multiple chains to run simultaneously to enable
scalability and increase transaction speed. They can be bought by cryptocurrency
companies and customized to suit their needs.
Thirdly, bridges. Polkadot will use Bridges to
connect to difficult or established blockchains like Bitcoin and Ethereum by writing
a break-in or a break-out smart contract that will allow these chains to
communicate with the Polkadot network. But why is connecting blockchains valuable? And
can Polkadot truly support the ever increasing number of blockchains? Click the link above to
read more about Polkadot in the Exodus blog.
Ok. Now that we know what Polkadot
is, let’s dig into DOT. What exactly is it and what is it used for?
$DOT is the native token of the Polkadot network and is used for 3 main
things: Governance, Staking and Bonding.
First, Governance. All DOT token holders are
given the right to vote over decisions that govern the network, such as upgrades or changing
network fees. Votes are weighted according to the amount of tokens, and the agreed time period
that the tokens are locked up with the vote.
Next, Polkadot Staking. DOT holders
can help secure the Polkadot network by staking their tokens to the network as
validators and nominators.
Validators take part in the minting of blocks while nominators
back these validators up. Both provide important security functions, and therefore receive
$DOT as payout rewards as incentives. And third, Bonding. As mentioned earlier,
Parachains can be bought. In order to buy a parachain a user has to “bond” DOT
in order to control the parachain. Bonding ties DOT tokens to the Relay
Chain whenever a new parachain is added. Polkadot aspires to build a multichain universe,
where multiple blockchains can co-exist and operate together to create a more vibrant,
interoperable mega-system of blockchains. How do you envision an internet of blockchains
working for you? Is this all hype or do you see real value coming to your life because of it?
Please share your thoughts in the comments.
And if you’re a $DOT crypto token holder,
let us know your Polkadot price prediction.
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