Polkadot Review: Buying, Wallets, and Everything You Need to Know
Polkadot is an open-source protocol that enables the transfer of various types of data, digital assets, and tokens between different blockchain networks, thereby allowing for communication and interoperability between these networks. Its goal is to create a network that unifies the world of digital currencies under one roof.
The initial token issuance included 10 million coins, which were then divided into 100 new coins each (totaling to a billion). Currently, there are approximately 900 million coins in circulation, and the maximum coin supply is not predetermined and may increase in the future to support future staking expansion, network policy holding, and operation. In October 2017, around $145 million was raised for the project. 50% of the tokens issued were offered for public sale, 20% were distributed before the launch (airdrop), and the remaining 30% were retained by the founding Web3 Association.
Who is Behind the Polkadot Coin?
The Polkadot network was founded in 2016 by Dr. Gavin Wood, a co-founder and former CTO of the Ethereum network, who also created the Solidity programming language on which the Ethereum network is based. Dr. Wood founded Polkadot with Robert Habermeier and Peter Czaban after realizing that Ethereum 2.0 would not be built as quickly as he had hoped. As a result, he began building a network that he believed would solve many of the problems he saw in the Ethereum network.
Gavin also founded the Web3 Foundation, based in Switzerland, which serves as the governing entity for Polkadot. Additionally, he founded Parity Technologies in Berlin, which is involved in ongoing development, alongside Dr. Jutta Steiner.
How does the Polkadot cryptocurrency work: A beginner’s guide
The Polkadot network consists of several layers that enable its operation:
- Relay Chain: This is the central chain of the network, where all network validators holding at least the minimum amount (or more) of DOT coins locked within it (also known as staking) are located. Locking the coins grants participation rights in verifying transactions made on the network, similar to the Ethereum 2.0 protocol’s Proof of Stake consensus mechanism. The Relay Chain is composed of various transaction types that include ways to interact with the network’s policy mechanism, parachains (secondary chains), and the selection of network validator candidates.
- Parachain: Most of the mathematical computations taking place throughout the Polkadot network will be passed to specific “parallel” chains that have different relevant applications, which are responsible for handling various use cases. The Polkadot network does not impose constraints on what these chains will be capable of doing, except that they must be able to produce proof (mathematically) that can be verified by the allocated validators. Some of these chains may be used for decentralized applications, while others may have specific features, such as privacy or scalability, and some may even be based on experimental architectures that are not necessarily blockchain-based, such as IOTA’s Tangle.
- Shared State: The Polkadot network has a shared area between the Relay Chain (the primary chain) and the parallel chains.
If the Relay Chain is reset for any reason, then all parachains must also be reset to maintain a shared state.
What are parallel chains and what is sharding?
To shard is basically to divide/split something into smaller parts across multiple servers or nodes, allowing them to work in parallel for higher and more efficient speeds.
The particles (shards) in Polkadot are actually the parallel chains, with each chain considered a shard. Polkadot uses a mechanism called heterogeneous sharding, which essentially allows for greater flexibility for developers. To remind you, as long as the message chain receives the mathematical proof, then everything is correct according to the protocol, unlike other methods such as homogeneous sharding which Ethereum 2.0 is expected to use and does not allow for cross-compatibility.
The Advantages and Disadvantages of the Polkadot Currency
- Wide functionality and easy accessibility for upgrades and development
- Parallel blockchain chains that allow processing of a huge number of transactions
- Ability to cope with increasing demand – scalability
- Upgrades without hard forks that prevent community fragmentation
- A promising and maintained project
- Hundreds of millions of dollars raised to support projects in the ecosystem
- Polkadot essentially presents Ethereum 2.0 technology today and tries to attract the ecosystem built on Ethereum to them.
Polkadot is forced to attract many developers and entrepreneurs from the existing Ethereum ecosystem, since the adoption of Ethereum is much more widespread. Centralization – Although Polkadot aims to be completely decentralized, currently about 30%-40% of all currency is held by the Web3 organization, as well as relatively controlled development of the project. Hacks – The first hack occurred earlier in July 2017, in which about $33 million was exploited before the attack was blocked by defensive hackers. Although this hack occurred on the Ethereum network, the involvement was with Parity, the company currently working on Polkadot development. In addition, the $33 million refers to the relative part that belonged to Polkadot (and raised through ETH) and was held by Parity.
Recommended Polkadot Wallet:
Polkadot is digital currency, which means there is a wide variety of wallets available for it. These are the recommended wallets:
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1)Hardware wallets – the most recommended wallets. A hardware wallet is an external hard drive that is currently the safest way to hold digital coins.
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