Third-Generation blockchain networks are some of the biggest winners in crypto over the past year. Much has been said in recent months about Cardano’s Alonzo Upgrade and Solana’s increasing relevance in DeFi.
When it comes to talking about what the big next thing will be after Ethereum, these are often referred to as the Ethereum Killers.
The crypto space used to be saturated with coverage of networks like Bitcoin and Etherum, now there are so many projects that it’s hard to keep count! Well, that’s unless you are CoinGecko and have counted 9406 coins.
There is project that has also been considered a possible contestant for the crown in the past. However, in recent months it has been going under the radar of many despite being one of the top 10 blockchains by market capitalization.
Add the fact that it has seen its value increase by more than 600% during the past year and this is especially surprising.
In this guide, we will be talking about the project Polkadot that has been competing for the top place in crypto since it launched in 2020.
If you are familiar with Cardano and Solana, you will find that they all were born from the same objective: Creating a scalable high-performance blockchain network. When we talk further about the technical aspects of Polkadot, you will see why Ethereum doesn’t perform well enough for today’s standards.
While Polkadot has been around for a bit over a year now, the project still has a lot of potential to grow. This is especially true at a time when the entirety of the crypto ecosystem continues to grow.
No matter if you are a veteran/beginner who already knows how to buy crypto but wants to know about Polkadot or vice versa… This guide will tell you everything you need to know in this regard. Let’s get started.
What Is Polkadot?
Polkadot was one of our picks in our “What Are The Best Altcoin Investments For 2021-2022?” article.
Not only has this project shown incredible growth over the past year but its technical framework ensures it has a lot of potential. The currency is closely tied to the development of Web3, which promises to be the future of the internet.
DOT, which is Polkadot’s cryptocurrency, at this time is the 9th largest coin in the crypto market. This is an incredible achievement when you consider that it was released after both Cardano and Solana.
Despite being late to the party, it is now competing with them for the position of Ethereum killer after raising $43.3 million in a private sale in July of 2020.
Polkadot was envisioned by Ethereum’s co-founder Gavin Wood and was born from his reasons to leave the Ethereum Foundation. Wood cited multiple reasons for this decision, including his belief that Ethereum had deviated from its initial mission to develop the promise of blockchain.
He also referred to the “turf mentality” that had overtaken the network.
According to Gavin, the moment a network becomes so big that it gains dominance over the ecosystem, decentralization is not really possible. While Ethereum was technically decentralized., it was a few stakeholders with the most resources who controlled most of the blockchain space.
As a result, a big issue that has plagued the DeFi and NFT ecosystem since 2020: Once Ethereum failed to escalate, the space failed with it… Until new alternatives emerged.
This is where Polkadot comes in. Polkadot is a blockchain network but it is meant to be “a blockchain of blockchains”, also known as multichain. This means it is a huge ecosystem where other developers can create their own chains, creating a completely different ecosystem.
This is why Polkadot is so closely associated with the development of Web3, the decentralized internet of the future.
How Does Polkadot Work?
To understand how Polkadot aims to create a new type of blockchain network, it is important to talk about how it works. Polkadots aims to expand the use cases of blockchain by allowing arbitrary data to be transferred across blockchains instead of only tokens.
Polkadot makes use of sharding, a technology that is not unique to it as other networks have it and Ethereum 2.0 will also implement it. Sharding is the process by which a network is partitioned to allow data to be processed in parallel.
Sharding can be a complicated concept to understand at first but the key takeaways that you should know about it are that it allows for scalability by enabling blockchain companies to process more transactions per second.
Think about it as a highway, the more lanes you have for cars to circulate, the more traffic it can handle… Only that in this case, it’s called throughput.
The network makes use of the main chain named the Relay Chain which will allow communication between the shards, known as parachains.
These networks can then process in parallel, allowing a higher throughput of transactions per second
Unlike other networks using sharding, Polkadot uses a flexible protocol to allow parachains to connect to the main chain by letting them determine their own rules.
This gives a higher degree of sovereignty to increase decentralization.
When you combine these parachains that Polkadot uses with bridge parachains, you get an ecosystem that can connect to external blockchains like Ethereum, Binance Smart Chain, etc- While this is possible in other networks, it is nothing that is supported natively.
This makes Polkadot a network that is extremely easy for developers to integrate, which expands its use cases immensely.
Nominated Proof of Stake
Polkadot uses a consensus algorithm known as Nominated Proof of Stake, which is a variation of Proof of Stake. If you are not familiar with consensus algorithms, you can find an explanation in this guide.
This variation of Proof of Stake allows token holders to either take the role of validators or nominators, instead of limiting participation to those with a minimum amount of tokens. Its consensus mechanism is used by other networks like Cardano and Cosmos and has proven to increase participation and decentralization.
Combine this consensus mechanism with the highly independent nature of parachains and you can see Gavin’s vision starting to become a reality. But it doesn’t end here, there are other two roles that a node can play in this network: Collators and Fishermen.
Collators are nodes that limit themselves to store the full history for each parachain, aggregating it into blocks so it can later be added to the relay chain.
On the other hand, Fishermen are nodes that monitor networks to ensure validators who misbehave are reported. This specialization of the roles results in complex machinery that increases efficiency while allowing the network to adapt to changes.
Why Should You Consider Buying Polkadot?
However, this complexity results in reduced difficulty for developers looking to use the networks. This is because they can be more selective on how and where their resources are allocated.
We can see the trend reflected in the growth the Polkadot ecosystem has seen over the past months as new projects in different niches are launched.
With blockchain starting to be applied in different industries, flexibility and scalability are essential. However, you don’t want a network with a big number of low-quality projects.
This is why Polkadot auctions its parachain slots, ensuring the quality of the projects in the ecosystem. This also results in users having a higher degree of trust in projects running on the network, which is sure to drive adoption by users too.
The efficiency of Polkadot is also incredibly high. The network can process as many as 1000 transactions per second, which is more than 10 times the number Ethereum can handle.
While other projects like Solana are focused on creating ecosystems perfect for use cases like DeFi, Polkadot is creating a sandbox for different networks to emerge. Each network can then specialize in the use case it chooses. This will drive innovation in the blockchain space to a new level.
If you believe in the concept of decentralization that gave birth to crypto and blockchain, the need for flexibility and scalability, and the future of the Web3… You should consider investing in Polkadot
How to Buy Polkadot?
Now that you have enough information to determine if you want to invest in Polkadot, let’s talk about how you can acquire it. Using a crypto exchange is the most popular way to buy cryptocurrency.
While there are many options out there supporting Polkadot, we will be talking about using Binance. If you would like to know more about this exchange, make sure to check out our review.
If you would like to use a different exchange or platform, we have covered several of them in our exchanges section.
For the purpose of this guide, we will assume you don’t have a crypto wallet nor a Binance account. If you choose to use a different wallet or exchange, the process should be pretty similar.
Step 1: Get a Crypto Wallet
While many investors choose to keep their crypto exchange in Binance, this is not recommended for security reasons.
As such, you want to choose a third-party wallet that provides you with ownership over the private keys. If you don’t know what a crypto wallet is, make sure to read “How To Store Your Cryptocurrency” in this guide.
Some of the most popular wallets supporting Solana are:
|Wallet Name||Type of Wallet||URL|
|Trust Wallet||Software Wallet||https://trustwallet.com/|
|Fearless Wallet||Software Wallet||https://fearlesswallet.io|
You can find our reviews for some of these and other wallets here.
Once you have chosen your favorite wallet, make sure to set it up and store your seed phrase in a secure place. This is the only way for you to recover access to your crypto if you forget the password or swap devices!
Step 2: Create a Crypto Exchange Account
There is not much to creating a crypto exchange account as the process is pretty straightforward. Visit Binance and proceed to fill the form with the information you are requested. Once you do, choose the “Create account” option and follow the instructions. The process is as easy as creating an email account!
Step 3: Verify Your Identity
For security reasons and to comply with regulations Binance will ask you to verify your identity as soon as you log in after creating the account. Choose the level of verification you would like to do, and follow the steps.
Unfortunately, Binance changed its policies recently and a basic level of verification is required to operate on it. You will be asked to provide basic personal information and pictures of your ID. This will allow you to unlock different features and limits for your account
Step 4: Buy Polkadot Using Debit/Credit Card
The easiest way to buy Polkadot is by using the “Buy Crypto” option. This will allow you to buy the coin using your debit or credit card. Just find and click on the “Buy Crypto” button in the menu, click on it, and then choose the “Credit/Debit Card” option.
Fill the form with your credit/debit card information. Once you approve the transaction (hopefully after reviewing it), your new DOT will be added to your Binance wallet.
Step 5: Transfer Polkadot To Your Wallet
You are now the proud holder of DOT! However, you should now transfer it to your external wallet to ensure its safety.
To do this, just go to your external wallet and locate the “receive” or “deposit” option. If your wallet supports more than DOT, make sure to select it. You should now have a string of characters and numbers that you need to copy.
Head to “Wallet” in Binance and locate “DOT” in your fiat wallet. You will see the “Withdraw” option and once you click it, you will be asked how much DOT you want to withdraw.
Fill the field and paste your address under “Address”. Once you click on “withdraw” and verify the transaction using the codes sent to your email address and phone, you are done!
As you can see, this cryptocurrency is like any other in its ambition, which is one of the reasons why many people don’t understand it from a technical aspect. Hopefully, you should now have a better understanding of what Polkadot is, what it aims to achieve, and how it works.
With Ethereum becoming increasingly dependent on layer 2 solutions and cross/chain platforms continuing to emerge, Polkadot is a network to keep an eye on. Not only does it support these features natively but it also has created decentralized governance that adds sovereignty.
While other projects like Cardano and Solana are also revolutionizing the crypto space, Polkadot is all about collaboration. To this network, being the one to kill Ethereum is not what matters, which means it can succeed even if other networks succeed.
If you believe that blockchain is the technology that will open the doors to cooperation, privacy, and security, you agree with Polkadot’s ideals. Now that you know how to buy Polkadot, it is time for you to decide if you will support the future of Web3.
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