However, there is a new cryptocurrency currently gaining popularity known as Polkadot. Launched in May 2020, Polkadot is a digital currency that connects the technology of blockchain from many different cryptocurrencies.
Although, Bitcoin is still at the top of all cryptocurrencies, and no sign that bitcoin will drop soon, other cryptocurrencies such as Ethereum are being jeopardized by Polkadot by the rising of its rank.
The new cryptocurrency is known as a layer-0 metaprotocol because it forms the base and identifies the layout for a network of layer-1 blockchains called Parachains (Parallel chains). Polkadot has the ability to be self-reliant in updating its own codebase as a meta protocol.
Table of Contents
1. What is Polkadot?
Polkadot is a blockchain application that makes cross-chain ability on a level formerly impossible. Particularly, Polkadot permits users not only to send tokens over blockchains and also permits interaction with actual data through these networks.
Polkadot is one of the elite blockchain networks designed around the philosophy of building different smaller inter-connected sub-chains under the umbrella of a single blockchain on top.
2. The discovery of the Polkadot
Polkadot is discovered from Ouroboros used by Blind Assignment for Blockchain Extension (BABE). The co-founder of Ethereum, Gavin Wood altered Polkadot which was also developed by the Web3 Foundation. In 2016, Gavin Wood left the Ethereum project 2016 due to him having thought that it was doing enough to pursue the assurance of blockchain technology.
In October 2016, Gavin launched the first draft of Polkadot’s white paper due to which he began working on an idea of a shared version of the Ethereum blockchain. Later on, he and Peter Czaban created a non-profit entity founded to back up the research and development of Polkadot known as Web3 Foundation. In October 2017, Polkadot’s first token auction was hosted by the Web3 Foundation. In the below two weeks, $145 million was raised and the initial 10 million DOT tokens were sold 50%.
However, Polkadot began to test its base relay chain in 2018 due to the rolling out of different kinds of proof of concepts and the relay chain’s backup of parachains executing below the main relay chain. The main launch of the network was a path to gear up.
3. The contrary between Blockchains and Banks
The Banking Network is a focused system in which the fundamental bank supervises banks further below the network while blockchains are unfocused. There is no monitoring and also government actually directs banks but on the other hand, blockchains are not controlled.
It is easier to hack into banks than blockchains, but money is generally safe in the bank because due to fraudulent transfers, the Electronic Fund Transfer Act makes banks creditworthy for losses. In crypto, transactions can not be reversed and identified.
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4. The quality of Polkadot between other cryptocurrencies
Polkadot is the latest cryptocurrency trending worldwide. Bitcoin was the first cryptocurrency to emerge in the world and it provides introductory abilities compared to the second known cryptocurrency, Ethereum, which has abilities to accomplish more tasks.
The cost of more complex transactions adds up faster because there is a charge for each task with Ethereum and Ethereum has a specific path for transactions, which can lead to network congestion.
5. Parachains (Parallel chains)
Parachains are collections of connected blockchains which execute alongside one another in a way that speeds up transactions which makes Polkadot different because Polkadot provides parachains.
When Polkadot’s blockchain network is flexible through the Polkadot-producing protocols that permit its network to interact with other blockchains which have an increased ability to pivot and serve more specific needs.
The largest European telecom company known as Deutsch Telekom is interested in Polkadot and the company has shown assistance to the blockchain technology. CoinDesk reported that its subsidiary, T-Systems Multimedia Solutions, has bought a specific amount of DOT and will offer an introductory structure for the user who risks assets on Polkadot.
As an investor, you have the most to gain, albeit at greater risk, from investing in a budding new crypto opportunity that shows a lot of potential
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6. Investment risk on Polkadot
However, it has a record for equivalence which makes it risky in different ways as Coins are not supported by a vital asset, prices can easily be fickle and the Influence of the government can restrict cryptocurrency to be used.
7. What will be the future of Polkadot?
Polkadot is still new and if a newer cryptocurrency is out now, it might be difficult and competitive for Polkadot. There are many projects in the pipeline by Polkadot so it will take time for Polkadot to be profitable. Another interesting thing is that it has the pecuniary amount in exchanges.
In the history of this nascent technology, Polkadot is one of the most well-financed blockchain projects due to the investors that raised around $200 million. Its value is assumed to be assured to give important ability between multiple blockchains and listing the gains and potential of the sharding technology. The project of Polkadot has a long way to go compared to bitcoin and Ethereum. Polkadot needs to reach the point where it will be competing with different cross-chains.