Table of Contents Hide
Coming in at one of the greatest coinbase assets out there, we have Polkadot.
Polkadot is one of those kinds of cryptocurrencies that many people can be, and have been, excited about as it continues to develop. It is an open source project that was developed by the Web 3 Foundation in order to have some form of adaptability with innovations as it pertains to networks, and from the growing need to have multiple blockchains operating with decentralization (and parallel to others). One of the most interesting aspects that derived from this premise, is the utility behind Polkadot having cross chain capabilities (which provides interoperability with multiple blockchains).
Furthermore, Polkadot has been attracting a lot of interest in the cryptocurrency community because it allows for user created blockchains to connect to the Polkadot network. As developers seem to show interest in the interactivity behind it, this in turn also attracts the attention from investors which can then culminate into furthering Polkadot overall.
How does the Polkadot ecosystem work?
While on the surface it may seem like it is complicated, the way in which Polkadot works is actually not. A way to think about it is like having a large city with various roads connecting both to, and from, the city. The city itself is an amalgamation of various computers, as its own blockchain, and these roads springing forth from this city are other blockchains being built, maintained, and operated by others.
This means that these various chains are not homogenous to each other. As Polkadot permits developers to launch their own “roads” (blockchains), this can lead to further and further connections. This openness of the Polkadot protocol, which allows for data or assets to transfer over blockchains smoothly and easily, offers interconnectivity that may be public, open, and permissionless or private and permissioned across blockchains that may, or may not, already have connections to each other.
This is able to be offered due to a few aspects within the ecosystem (with some of these aspects being quite interesting). The Polkadot relay, which is the central chain of the network, allows for blockchains (whether specialized or public) to connect to the unified network (however, one difference is that the relay chain itself will not support smart contracts…parachains do). Parachains (as the term implies), run parallel within the ecosystem and are secured by the relay. For a parachain to be added to the network, it needs to hold a parachain slot. This is no easy feat as there are a limited number of available parachain slots and the slots themselves only open every so few months. In this way, the usage of parachain slots can go to auction where people essentially bid for the available space.
Rewards that are provided within this ecosystem are found through a novel concept known as nominated proof of stake (which is similar to proof of stake, but with some caveats). Nominated proof of stake works like an election system, where validators (who maintain validation and production of blocks) are backed by tokens and incentivized to perform their services; these services are found in the proposing, validating and appending blocks. Nominators stake their tokens in selecting validators and are rewarded by the activity found via validators. Nominators are incentivized to back validators that contribute to the security and design in maintaining their operations (playing by the rules) because if they back a bad validator, they lose their stake. This operation serves as an effective checks and balances.
Who created Polkadot?
Polkadot was created by three main people, Robert Habermeier, Gavin Wood (who you may have heard about having worked on another major product), and Peter Czaban. Their mission was to ensure a Web were identity and data security would be held in the hands of their users, far from the control, oversight, and potential manipulation of central sources.
Their origins began with an initial coin offering of about 50% of its original supply (about 5 million of its native token, DOT) back in October of 2017. While October of 2017 seems to be the specific date in which an initial coin offering was provided, the whitepaper for this project was offered one year before it.
Is Polkadot coin a good investment?
The consensus is split. Over the years, the Polkadot price has fluctuated, driving up and down at various moments. At its all-time high, it reached upwards of the mid-50’s and at its all-time low, it centered around the mid-2’s. As of this writing, it has hovered between 15-16 and within the last 24 hours, has traded approximately 426 million.
While the numbers say one thing, what people find valuable is another. What has attracted many to consider Polkadot a good investment is its vision toward the future—especially as it revolves around the internet, connectivity, their integration of parity technologies, and removing third-party interference. While the coin itself may not be as attractive to some people due to its price, it has seen an increase of its overall network as developers join in. Also, investors consider this coin to be particularly young which can mean that, while riskier than some of the other stable coins out there, it may prove to be a huge payoff down the road.
The question is, do they know something that we don’t?
What are polkadot ecosystem coins?
Simply put, Polkadot ecosystem coins are the various coins that can operate within the network (of which there are many). While some places report that the more prevalent coins to look for are DOT (no surprise), Chainlink, and Kusama, other indicators seem to point to other up and coming coins in the ecosystem like Ren, Centrifuge, and Ocean Protocol.
Is Polkadot a coin or token?
So, Polkadot itself is actually a coin though the parlance that people often associate when wanting to buy it is known as a “native token”, the DOT.
It is important to know the distinction. The DOT token, for example, has function associated with it—all of which deal with the governing of the network, staking, and bonding. For DOT holders, they are able to provide feedback on future developments of the protocol and/or can stake to verify transactions or issue DOT.