Polkadot — Connecting the Dots to a Blockchain Future
Accelerating interoperability and adoption
Before reading this article, feel free to check out our easy peasy guide to the blockchain ‘trilemma’:
The case of Polkadot is an interesting one. The blockchain isn’t exactly designed to compete with its peers in an increasingly saturated market. On the contrary, it aims to accelerate the wide-spread adoption of blockchain technology through scaling improvements and interoperability — the ability of independent blockchains to co-exist and share crucial data.
The blockchain ‘trilemma’ highlighted the technology’s shortcomings. While networks like Ethereum are decentralised and secure, they suffer from scalability issues. The inability to handle large amounts of transactions at an affordable cost while maintaining decentralisation has rendered blockchain technology unable to compete with its centralised and hence more efficient counterparts (E.g. Visa and Paypal).
This is why Polkadot’s facilitation of interoperability is a significant development in the blockchain and cryptocurrency world. It’s essentially a scalable protocol that allows multiple unique blockchains to operate under a single network, forming a unified decentralised web that can draw on the data of previously isolated blockchains like Bitcoin and Ethereum.
Here’s an easy breakdown of how the Polkadot network functions:
Relay Chain and Parachains — This is one of the key features of Polkadot’s multi-chain design. Parachains are ‘sovereign’ (independent) blockchains that run in parallel with each other within the Polkadot ecosystem. This creates a more scalable network as transactions can be spread out over different blockchains while being processed in parallel.
Similar to the internet’s multi-functional nature, parachains are based on the idea that each blockchain serving a different purpose will be able to work together to provide a range of services. For example, a parachain for finance (decentralised finance), and a parachain for gaming and digital ownership (NFTs) can exist under the same network.
This is why Polkadot is said to be the foundation for Web 3.0, whereby transactions can occur without a trade-off between decentralisation and scalability.
The Relay Chain is the network’s central chain. It coordinates the protocol’s parachains and provides security, consensus, and interoperability to the entire network. It’s built with Substrate — a ‘framework’ that enables users to easily develop their own unique blockchains.
Parathreads — Parathreads are similar to parachains, except that they connect to Polkadot via a ‘pay-as-you-go’ model. It’s an affordable option (as compared to aquiring a parachain slot) and is suitable for blockchains that do not require continuous connection to the Polkadot network. However, parathreads are still able to benefit from the network’s security and technology.
Bridges — As its name suggests, ‘bridges’ enable parathreads, parachains, and applications to communicate with external blockchains like Ethereum and Bitcoin.
DOT — DOT is Polkadot’s native currency. DOT holders can control the protocol by voting on network developments and upgrades.
Check out our easy peasy guide to blockchain consensus mechanisms:
Governance and Consensus — Governance is arguably the most crucial element in decentralised networks and it’s especially important in a protocol that ‘hosts’ multiple blockchains. Polkadot currently has ‘council members’ and a ‘technical committee’ (DOT holders) that can vote on network changes. If a development is deemed to be harmful by the committee, DOT holders can lose their DOT, therefore incentivising holders to be on their best behaviour.
Polkadot is a Nominated Proof-of-Stake (NPoS) system. Here’s a brief description of Polkadot’s consensus mechanism:
- Nominators — Stakes DOT and are responsible for electing the validators.
- Collators — Responsible for processing parachain transactions by creating a ‘block candidate’. They are similar to cryptocurrency miners.
- Validators — Provides security and consensus by validating transfers submitted by collators.
- Fishermen — Responsible for monitoring the network. Reports bad behaviour to validators.
Kusama — Polkadot’s ‘sandbox’. Think of it as a test network for parachain developers and users who want to have an idea of the network’s technology and mechanisms. While it’s a ‘trial’, Kusama is still a decentralised protocol governed by KSM token holders and will continue to exist as an ‘independent community network’.
Purchase DOT on Tokenize Xchange today! Tokenize Crypto Earn is offering users up to 12% APY for DOT Staking. We’re the easiest way to buy and sell cryptocurrencies.
Thanks for making it this far! If there are worms in your brain (admit it), fret not.
Visualise a highly efficient but complex train system — one that requires an interchange for passengers to change from one route to another. Polkadot is the ‘interchange’ for blockchain networks. It allows data (passengers) to move freely between blockchains (train routes) under a consolidated structure (interchange).
Tokenize Xchange is a firm believer in blockchain interoperability. The Polkadot network and its projects have immense potential, which is why we’re exploring the option of migrating TKX to our very own unique blockchain on the Polkadot network (by bidding for a parachain).
Keep Tokenizing! Exciting times are coming.
Still confused about blockchain and cryptocurrencies? We get it! Check out our previous Tokenize Research articles:
Here at Tokenize, we strive to provide the best possible platform for cryptocurrency trading. More importantly, we believe in sharing our passion on all things blockchain, crypto, and DeFi.
