While only emerged last year, Polkadot (DOT) cryptocurrency is already the 7th largest cryptocurrency in the world, with a capitalization exceeding $ 8.41 billion.
But more than a mere speculation tool, the Polkadot is linked to a project that provides a technical solution to a real problem. Indeed, Polkadot and its DOT token aim at the interoperability of blockchains. Its use could therefore explode as more and more companies use blockchain technology in all fields.
In this guide, we will introduce you to Polkadot cryptocurrency, its benefits and how it works. We will also detail the evolution of Polkadot's price. Of course, we will also explain to you how like to get DOT.
What is Polkadot (DOT) ?
Polkadot logoPolkadot is the creation of Dr. Gavin Wood, who is one of the co-founders of Ethereum and the inventor of the smart contract language Solidity. His project began in 2016, and DOT began trading publicly in August 2020.
The ultimate goal of Polkadot is to become the new internet of blockchains (Web 3.0) which will be able to communicate with each other transparently. The cryptocurrency thus seeks to improve the solutions provided by Ethereum and Cardano ADA in this area.
What is the Polkadot used for?
As we have already pointed out, Polkadot is not just a vehicle for investment or speculation, but it is also a project that addresses concrete problems.
The two problems that blockchain-based systems must solve are:
- Scalability: the number of transactions per second that the network can process
- Governance: the way the community handles upgrades and protocol changes.
The Polkadot aims to solve these two problems, in particular by allowing collaboration between different blockchains and a high degree of adaptability.
Polkadot Characteristics Explained
The design of the Polkadot cryptocurrency is intended to support multiple blockchains. This is not a simple blockchain that exists in isolation, as is the case, for example, with Bitcoin. The Polkadot thus has several specific characteristics:
- The Polkadot supports several blockchains thanks to a mechanism called “sharding”. This allows efficient and parallel processing of transactions.
- The different Polkadot applications can share information and functionality thanks to the compatibility between the blockchains.
- Polkadot can be upgraded without resorting to hard forks, unlike other cryptocurrencies such as Litecoin. New features can be added without having to completely review the network.
How does Polkadot work?
Technical Polkadot Blockchains can connect to Polkadot and operate in parallel as “parachains” to access the network's proof-of-stake transaction validation system. In the network's “relay chain”, transaction addresses are verified and data is normalized so that every system can understand it. This is where all the channels share security.
While functionality is provided, blockchains connected to Polkadot can use their own PoS mechanism, decide when and how to update their code, and run any dapps or tokens of their choice. Essentially, this is a feature that allows networks to maintain their own security and incorporate new protocols.
The Polkadot system therefore works in a unique way that unites a network of heterogeneous blochchains called parachains and parathreads. These chains connect to the Polkadot Relay Chain and are secured by it. In some cases, these chains are also linked to external networks by bridges. This design gives Polkadot increased flexibility.
Polkadot can therefore be useful in many cases, and this is a key difference from purely speculative cryptocurrencies. Like the Chainlink for example, the Polkadot responds to a problem posed by the development of the use of the blockchain, which is set to explode in the coming years.
The Polkadot Blockchain Explained
Polkadot parachain The Polkadot blockchain is unique with a mechanism that aims to be revolutionary. It incorporates several elements, and introduces new roles. This is what we will detail in this section.
Elements of the Polkadot blockchain
Find below the details of the different elements of the Polkadot blockchain.
- Relay Chain: This is the relay chain, which is the core of Polkadot's functionality. This protocol is responsible for shared network security, consensus, and interoperability between chains.
- Parachains: Parachains are other blockchains and networks that have their own tokens. In most cases, these networks are optimized for specific uses.
- Parathreads: Parathreads work the same as parachains but with a few small modifications. These networks operate on a pay-as-you-go model. This model is more cost effective for blockchains that do not need continuous network connectivity to function properly.
- Bridges: Bridges allow parachains and parathreads to connect and communicate with external networks like Bitcoin. Bridges extend network interoperability.
The roles introduced by the Polkadot blockchain
In addition, the Polkadot blockchain offers a major innovation which offers almost instant confirmations. So, Polkadot introduces new roles in the system:
Nominators: Nominators are responsible for securing the Relay Chain. This task requires nominators to select reliable validators and stake out points in the ecosystem.
Validators: Validators are responsible for securing the Relay Chain. Validators accomplish this task by staking points, validating evidence from assemblers, and participating in consensus with other validators in the network.
Collators: The goal of Collators is to maintain shards by collecting shard transactions from users. Once this information is gathered, the Collators will produce evidence for the validators.
Parachains : The network also uses some unique monitoring protocols known as “Parachains”. These nodes monitor the network and report bad behavior to validators.
How To Buy Polkadot?
There are various ways to obtain Polkadot (DOT), as is the case with most cryptocurrencies on the market.
. Exchange cryptocurrency for Polkadot
If you already have cryptocurrencies like Bitcoin or Ethereum, you can exchange them for Polkadot.
Several brokers or exchange platforms allow crypto-currencies to be converted between themselves, some crypto wallets also directly allow this kind of operation.
So, if you already have Bitcoin, you can get Polkadot without paying more, apart from any conversion fees.
. Polkadot staking
It is also possible to obtain DOTs through Polkadot block validation staking, as is possible with other cryptocurrencies like Tezos. Staking is a savings-like transaction, where you deposit your DOT tokens with a staking operator, who uses them to generate additional tokens for you, for a commission.
Most staking sites now offer Polkadot with an annual return on investment of around 10%. But to be eligible, you must first have DOT.
What Factors Make Polkadot Value Soar?
Not having enough perspective on the Polkadot stock price yet, it is still difficult to analyze the determinants of its price since its inception. However, we can however highlight some key influences
The evolution of Bitcoin
In general, fluctuations in the price of Polkadot and other altcoins have a positive correlation with movements in the price of bitcoin. This means that if the price of bitcoin increases, we can expect the price of DOT to rise as well.
Market interest in the Polkadot project
Apart from the evolution of BTC, the other factor that causes the value of Polkadot to fluctuate is the interest shown in cryptocurrency by the media. Indeed, while this crypto has only been around for a few months, with hundreds of other cryptocurrencies, it must prove itself and earn a place in the crypto community. So far, we can say that Polkadot has done a good job, making it into the Top 10 cryptocurrency in less than a year.
The adoption to use Polkadot
If the Polkadot is a cryptocurrency that can be speculated on, it is also a project that offers a technological solution that has real utility. Polkadot allows different blockchains to communicate with each other. However, blockchain technology is exploding, being used by more and more companies. Thus, the widespread adoption of Polkadot by more and more companies could play a major role in future fluctuations in DOT token prices.
Regulations and safety
Finally, as with all cryptocurrencies, regulation and security are potential threats to Polkadot's price. The obstacles to the development of the cryptocurrency market put in place by certain countries or even hacks will have a negative effect on the prices of DOTs.
Forecast And Future Of Polkadot
The Polkadot cryptocurrency gained attention by entering the top 10 cryptocurrency market capitalization very quickly after its meteoric rise. This fact thus gives it an essential spotlight for its future. But there are other factors to consider as well.
Bitcoin Trend
If the cryptocurrency market, and Bitcoin first and foremost, manages to maintain its uptrend at the end of 2020, the price of Polkadot should continue to rise and gain more investor attention. and crypto users. This will ensure a bright future for it with the other big names in cryptocurrency.
The democratization of the Blockchain
In addition, unlike Bitcoin which is primarily a tool for speculation and investment, Polkadot has real utility. The goal of this cryptocurrency is indeed to communicate between them blockchains. However, all the experts are unanimous on the fact that blockchain technology, independently of cryptocurrencies, will continue to explode in 2021. As a result, the more the use of blockchain technology will spread in the business world, the more solutions offered by Polkadot will be useful for a large number of companies.
Polkadot Price Review: Is It Too Late To Invest?
Polkadot is a new cryptocurrency whose DOT token was launched in August 2020. Nevertheless, the growing interest in this new crypto has propelled it into the top 10 in just a few months, as other new cryptos fall into oblivion or disappear.
However, with the Polkadot having set an all-time high above $ 10 in early 2021, a threshold it remains close to, it may not be the ideal time to invest now.
But that doesn't mean it's too late to buy Polkadot. It suffices to wait for a correction in Polkadot's price to position ourselves, the future of Polkadot remaining bright for many reasons.
Polkadot Exchange Price: What Determines The Price Of DOT?
All assets, whether cryptocurrencies, traditional currencies, stocks or commodities, are priced determined by supply and demand.
The principle is quite simple: If at any given time there is more Polkadot for sale than for purchase, the price of Polkadot will drop. If conversely there is a larger quantity bought than sold, Polkadot price increases.
When analyzing Polkadot price and trying to predict the price of DOT, one should therefore be interested in the factors that can influence traders' buy and sell decisions. This is what we will explore in the next section.
Polkadot Value: Price, Evolution & Capitalization
In this section, we will study the recent development and current price of Polkadot, as well as its historical variations since its inception.
The Current Polkadot Price
The Polkadot price varies from day to day, and even from minute to minute, even every second. So the DOT's stock market quote changes at all times, like the price of any currency, digital or not.
However, it can be noted that the DOT cryptocurrency price experienced a very strong increase from December 28, 2020 precisely, while the price of Polkadot was $ 5.
In less than a week, Polkadot has been doubled in value, rising above $ 10 as of January 3, 2021. Shortly after, the Polkadot price set an all-time high of $ 10.27 on January 7.
Historical Polkadot Price
As the Polkadot was launched in August 2020, its stock market history is still very recent. However, we can already identify several different phases. After an ICO of around $ 2.85, the Polkadot more than doubled in value in less than two weeks, peaking at $ 6.62 on September 1, 2020.
DOT then corrected sharply, finding support in the $ 4 area. There is then a slightly bullish consolidation phase between October 2020, and the powerful bullish rally described in the previous section.
Is Polkadot (DOT) Worth Buying in 2022?
Polkadot is a remarkable cryptocurrency in many ways. The first reason is that it has managed to climb into the top 10 of the most important cryptocurrencies within a year of its creation.
Its meteoric rise in late 2021 and early 2022 also testifies to its explosive potential. But more than a speculation tool, Polkadot also brings useful solutions to companies that use blockchain technology.
As a result, in addition to benefiting from the rise in the cryptocurrency market in general, Polkadot will benefit from the democratization of blockchain technology, which is set to explode in 2022.
Finally, if you are convinced of the potential of Polkadot, know that one of the easiest ways to acquire it is through a regulated online broker such as Binance.