Polkadot is currently ranking #4 in Coinmarketcap with the price of $15.53 and a market cap of $14,055,194,508 at the time of writing. Many experts believed that it deserves to be on that spot. It outperformed most of the cryptocurrencies in the market in the recent days. Why Polkadot is so popular today? Let's take a look here.
What is Polkadot?
Polkadot is an open-source sharing multichain protocol founded by Robert Habermeier (a Thiel Fellow and co-founder of Polkadot),
Dr. Gavin Wood (co-founder and CTO of Ethereum), and Peter Czaban (Technology director) of Web3 Foundation. The Web3 Foundation is providing grants for development of the ecosystem such as, Parity Technologies, ChainSafe, Soramitsu, and Polkadot JS.
Polkadot enables the cross-chain transfer of any data or asset types, not just tokens, thus creating a wide range of blockchains interoperable with each other.
Creating and connecting decentralized applications, institutions, and services become easier through the help of Polkadot. They seek to free society from its reliance on a broken web by empowering innovators to create better solutions. It facilitates an internet where blockchains can exchange information and transactions in a trustless way via the Polkadot relay chain.
How does Polkadot works?
Polkadot is a scalable, interoperable & secure network protocol for the next web.
By bringing multiple blockchains into one network, it simplifies cross-chain communication and interoperability. The GRANDPA consensus algorithm secured the system and tailored it for the Polkadot.
Polkadot has four core components:
The Polkadot native DOT token serves three distinct purposes:
Polkadot token holders have the privilege to vote for protocol uograde and proposal for the new feature.
You can stake your token in favor of the Polkadot security model and the honest validators will receive rewards.
New parachains are added by bonding tokens and the parachains are winning their slots by locking up DOT tokens.
What makes Polkadot unique?
Polkadot can process multiple transactions on several chains in parallel (“parachains”) and enables cross-blockchain transfers of any type of data or asset, not just tokens. It has a better secure model, highly flexible and adaptive, and can create a custom blockchain using the Substrate framework in just a matter of minutes. There is no need for hardfork for Polkadot because it can upgrade or fix its bugs automatically.
The network has a sophisticated user-driven governance system that enables all stakeholders to have a voice and also helps to secure it. The chains remain independent in governance but united in security. Nominators, validators, collators, and fishermen all perform different duties to secure and maintain the network and eliminate bad behavior.
At the time of writing, Polkadot has a market capitalization of $14,055,194,508, a trading volume of $3,134,728,632, and a circulating supply of 904,976,816 DOT coins. Its price increases from $5.3 in December 2020 to $16.24 this January 26.
Interoperability and scaling are the next major steps in the blockchain industry and that makes Polkadot one of the most valuable projects in the market. It will definitely attract many interesting projects, therefore, driving its price higher. That means, Polkadot is good for long term investment and can be added to your crypto portfolio.
Disclaimer: I am not a financial advisor and this article is for educational purposes only. Always make your own due diligence when investing in cryptocurrency. Any investment involves high risks, so do not invest more than what you can afford to lose.
Thanks for reading @Jane