An head start on Polkadot

Fredrick Awino

Polkadot is a cryptocurrency and open-source blockchain that offers investors the opportunity of running their blockchain. The system is also designed in expanding the cryptocurrencies ecosystem by giving different blockchains the chance of operating in one blockchain.

WARNING: Investing in crypto, or other markets, can be of a high risk for your savings. Do not invest money you cannot afford to lose, because there is a risk for losing all of your money when investing in crypto, stocks, CFDs or other investments options. For example 77% of retail CFD accounts lose money.

Polkadot’s network has three kinds of blockchains including Bridges, Parachains, and the Relay Chain. In Polkadot, the bridges are significant as it enables the network to develop bridges and communicate with other blockchains including Bitcoin and Ethereum. Also, Polkadot consumes less computational power because all the parachains are fuelled by one source.

Polkadot was launched in October 2017 and its token is known as DOT. The main aim of the token is digital management as well as payment. Even with crypto winter, some investors believe that Polkadot offers them a good opportunity for future crypto market growth. Besides, it is among the top 20 cryptocurrencies around the globe.

The Way Polkadot Blockchain Works

The relay chain is the significant and central element in the Polkadot ecosystem. It manages the blockchain states connected to the system. They are referred to as parachains. In addition, the native tokens form an important part of the Polkadot ecosystem and they are traded under DOT. It is a currency that manages the system and the main payment means in the Polkadot network.

Any individual who needs to link a new parachain with a relay chain has to use and own DOT. Besides, the token serves in creating governance and consensus in the network. Unfortunately, DOT does not seem to be a store of value as the developers have not put a fixed limit on the number of tokens

The Process of Purchasing Polkadot

To purchase Polkadot, you first need to select a Crypto exchange. Some of the top crypto exchanges include Binance, Plus500, and eToro. You will open an account with one of these crypto exchanges. To choose a good crypto exchange, consider the added fees, account minimums, and security features of the platform.

After opening an account, the next step is funding it. You can do this by entering debit card information or linking your bank account. Even as much as some firms may allow you to use a credit card, you should be careful when using it. This is because the card issuer will consider the transaction as a cash advance and then charge fees as well as a higher annual percentage rate (APR). After choosing the mode of funding, you will then enter the amount you need.

The third step is storing your Polkadot. After purchasing crypto, you are the one in charge of handling storage. The various storage options are crypto exchanges, software wallets, paper wallets, and hard wallets. Crypto exchanges like Coinbase and Plus500, have built-in storage that stores one’s cryptos. However, it may be risky.

Software wallet entails programs and apps that one may download to electronically manage your cryptos. Just like crypto exchanges, they are somehow insecure as they are connected to networks and the internet. For the paper wallet storage, one writes down the keys or applications to download a QR. In case you lose it, you may be unable to recover your cryptocurrencies. As for a hard wallet, it is like a USB drive or flash drive. It is a physical device, which you plug into your laptop or computer and it stores your personal and private crypto keys.

The Polkadot Market Capitalization

The current market cap of Polkadot is $9,047,858,898 according to Coinmarketcap. Also, one DOT currently costs $8.20. This is an indication that it is highly growing because initially, its cost was $0.29 per token. It is ranked number 10 in the Coinmarketcap list of cryptocurrencies. The ranking shows that Polkadot is becoming popular as it is competing against thousands of cryptos across the globe.

As a trader, you have to remember that a crypto’s value is not only measured using the market cap. Instead, other factors such as dominance and popularity are considered. The coins which have a high market cap are the ones that are believed to be safe to invest in.

In the past, Polkadot has highly invested in innovative partnerships. For instance, at one point, it partnered with Chainlink in using the Oracle network. The partnership is good as the Oracle network offers real-world data in interacting with the blockchain. The data are offered through smart contracts. Chainlink is quickly becoming the main Oracle provider for the whole Polkadot network. Such a step is good as the partnerships normally attract more investors.

Another successful partnership was the one with Ankr StakeFi. The project gives the Polkadot traders the opportunity of staking their cryptocurrencies as well as earning rewards through its Parachain. The issue of staking DOT is a good one as it enables you to earn passive income.

Lastly, Polkadot provides a solution to the interoperability issue. This is done by allowing cross-blockchain transfers. The transfer can take place for any token, asset, or even data. As a trader, this gives you the chance to interoperate different blockchains in the network of Polkadot.

Polkadot Strengths

The network has several developer engagements. Remember, developer engagement is important for every crypto as it alerts the potential funders as well as customers concerning the smart contract blockchain project status. For instance, the network has over 400 developers. This is good as they constantly work on new protocols.

Furthermore, the DOT blockchain offers security for every person. Its novel data validity scheme and availability give the chains the chance of interacting with one another in a good way. Besides, the chains remain independent in terms of governance even when they are united in their security.

Parity Technologies’ Substrate modular framework provides the developers with the flexibility of selecting some components suiting their application-specific chain. The blockchain is also good as compared to the other cryptos as it gives the developers the opportunity of launching their chains. Even as they do so, they do not have to worry about attracting validators or miners in securing their chains.

Polkadot Limitations

There is high competition in the crypto market. Polkadot competes with other Proof of Stake blockchains, smart contracting, general purpose, and Tezos.

In addition, Polkadot’s security is questionable. On two occasions, hackers have hacked the network by exploiting code vulnerabilities. During that time, they drained millions of dollars before they were stopped.

Author Fredrick Awino