Crypto & Us : Bite 17 (Polkadot)
With every other token claiming to be the ‘Ethereum Killer’, we need to realize that the goal is not to beat a particular blockchain or a cryptocurrency in terms of market cap. The goal is to solve problems. The problems that restrict or limit the others to scale. The goal is to make things simple for people working on them regardless of how complex they are from within. This is precisely what Polkadot aims to do.
- Polkadot was launched in May 2020 and is already making the headlines. It was founded by the former CTO of Ethereum in Switzerland. It operates on a Proof-of-Stake (PoS) model that is focused on delivering interoperability among blockchains. It is designed to allow multiple blockchains to run together on the same platform without any hiccups.
- The major contrast between Polkadot and Ethereum is that rather than just creating dApps on Polkadot like ethereum, you can also create your own blockchain while taking the leverage of the security that Polkadot already has. This is known as shared security. Blockchains created on ethereum need to have their own security which tends to leave loopholes in the case of smaller projects.
- Polkadot has a lot of moving parts, all of which work together to form a system that the developers love. The Relay Chain is the heart of Polkadot and is responsible for the entire network’s shared security, consensus, and interoperability. Then we have Para Chains which are individual blockchains within polkadot, each having their own tokens and built with keeping specific functionality and use cases in mind. The other part is Para Threads which are similar to Para Chains but are on a pay-as-you-go model which is economical for projects which need limited connectivity. The last component is Bridges which basically helps the Para Chains and Para Threads to interact with external networks like Bitcoin.
- Just like an army has different layers of defense. The Polkadot network has its own set of ‘soldiers’ responsible for the network’s security. We have Nominators who secure the Relay Chain by selecting reliable validators. Validators secure the chain by staking DOTs (the native token of Polkadot), validating proofs from multiple collators, and then participating in consensus with other validators. Collators maintain records by collecting shard transactions from users and producing proofs for validators. Then we have Fishermen who monitor the network and report anything ‘fishy’ to the validators.
- The native token of Polkadot is DOT. The currency has a market cap of around $12.4 Bn as I type and ranked 9th among the cryptocurrencies, which is stunning for a project that is just one year old. The primary use case of DOT is in staking and governance which keeps the Polkadot network secure. The initial supply of DOT was 10 million which soared to 1 Billion when it underwent a redenomination (similar to a stock split).
Polkadot is a great leap forward in the world of cryptocurrencies. Where projects are still undergoing Hard Forks (major upgrades on a blockchain), Polkadot welcomes you to a Forkless future where even the major upgrades can be handled without a need for a major reset. A project which is adaptable, very new, and upgrades itself as better technologies become available is precisely what we need to evolve towards a more decentralized future.