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Everything You Need to Know About PolkaDOT

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Many people don’t realize that PolkaDOT is not just a cryptocurrency, it’s also a blockchain, so it’s important to make this distinction. Let’s talk about what blockchains and distributed ledger technologies are.

A blockchain is a digital ledger of transactions that are recorded chronologically and publicly (usually on the internet). This ledger can be private or public, meaning that anyone can read it if the creator of it has allowed it. 

Blockchains are considered to be “decentralized” because they aren’t owned by a single person or authority figure, like a bank or government agency. Instead, peer-to-peer networks govern blockchains; in other words, multiple peers—or individuals—have control over them and use consensus mechanisms to keep track of changes made to the records on the blockchain.

At its core, PolkaDOT is a distributed ledger technology (DLT), which is used to record and share data through its distributed database protocol called XORdata. It’s important to note that PolkaDOT does not currently utilize blockchain technology since there isn’t an underlying public chain for each network. However, once integrated into Ethereum-based projects like Polkadot Network and Acala Network later this year, Polkadot will become what we call an open-sourced “blockchain 2.0” protocol layer.

If you’ve been looking to diversify your cryptocurrency portfolio and bring it into the next generation, read on to find out about what DOT is, why you should buy DOT, and how you can go about investing in DOT.

Triple-Hashing

Let’s say you want to purchase a candy bar from a vending machine. The transaction is simple: you insert your money, and the machine credits one candy bar token to your account. You remove your candy bar from the machine, and it decreases one candy bar token from your account. 

Although this may sound like an effective way to purchase goods (and for many years in real life, it worked), there is still a security issue that remains. This issue is called double-spending, which occurs when digital currency is spent more than once or twice because it’s not properly accounted for in a ledger system.

More specifically, double spending occurs when someone spends their digital currency on more than one item at the same time. For example, if you had two digital accounts of 10 units each, you could potentially spend 20 units by using both accounts at the same time on different items in the same instant. While this may seem unlikely or even impossible, it’s something that has happened before in cryptocurrency history while using peer-to-peer payment systems without proper checks and balances installed.

To prevent instances of double-spending within PolkaDOT, the developers have implemented triple hashing into the system as an extra measure of security—not just as a means to hash individual blocks repeatedly to make sure they are accurate and valid but also as a way to check all previous blocks against each other so that no one can simply alter them whenever they want. This measure keeps its prices relatively stable in the volatile crypto market.

Double-spending

As mentioned above, double-spending is the act of spending cryptocurrency more than once. Although it may seem impossible to do so, there are several cases where this can and has occurred. These include:

  • A sender secretly sends money to two different recipients at the same time, keeping the funds for themselves 
  • A sender sends money to a recipient without letting their network know that they sent it 
  • A sender broadcasts an old transaction instead of the most recent one

Besides triple hashing, these actions are all mitigated by PolkaDOT’s use of NPoS consensus. The validators in our network run validator nodes that are constantly verifying transactions and blocks on our blockchain.

The Main Chain

The main chain is the single point of failure for all other chains in the PolkaDOT network. The consensus mechanism used on this chain is referred to as GRANDPA (GHOST-based Recursive Ancestor Deriving Prefix Agreement), and it uses a voting scheme different from the one that is used on all other chains.

The main chain determines which blocks are canonical and hence valid for inclusion in the PolkaDOT network, thereby providing finality to transactions originating from other parallelized chains. This might make the process of how to buy Dot seem complicated, but this simply means that a singular point of failure for the PolkaDot blockchain is non-existent and that you can safely consider investing in PolkaDot, once you’ve assessed its risks. 

Synchronous vs. Asynchronous blockchains

We spoke about how PolkaDOT is a platform that bridges Polkadot with other blockchains. To facilitate this, it can work in two different ways: synchronously or asynchronously. In synchronous mode, every transaction has to be validated by the parallel chains before being processed. 

This ensures greater security by ensuring transactions are genuine, but also means that there are limits on scalability and flexibility. In asynchronous mode, the validators don’t have to do this and can process transactions more quickly and easily—but there’s a higher chance of error due to the lack of validation. Similar problems arise if you’re working with siloed systems.

PolkaDOT takes advantage of this flexibility by considering asynchronous mode its default way to operate—but it also provides options for developers who prefer synchronous operation or want to use a mix of both modes.

Cross-chain Atomic Swaps

Cross-chain atomic swaps are a type of trade that enables users to swap two cryptocurrencies on different blockchains. The exact process may be described as exchanging funds between two parties on different blockchains without requiring trusted third parties or centralized intermediaries. 

This means that if you want to swap your PolkaDOTs for Bitcoin, you do not need a centralized exchange platform like Binance or Coinbase. Instead, you can make a direct transaction from your PolkaDOT wallet to the recipient’s Bitcoin wallet.

For the trade to be completed, both wallets need to initiate and confirm the transaction at the same time. This is what makes DOT atomic, though the nomenclature might seem a bit confusing.

Private Consensus Algorithms

PolkaDOT is a shared multichain network that connects private chains, public chains, oracles, and future technologies known as parachains. The network is connected by several core components: Relay Chain, Parachains, Shared Security (Babe), Consensus Algorithms (NPoS), and the Network Bridge.

Consensus algorithms are the rules that determine who gets to add blocks to a blockchain. While traditionally thought of as proof-of-work or proof-of-stake consensus algorithms, there are many other kinds of consensus algorithms that exist on Polkadot. Some examples are:

  • Private consensus algorithms: This refers to any consensus algorithm not used by Polkadot’s relay chain, which allows for different rules of block production for different parts of a blockchain (e.g., Proof-of-Authority/Proof-of-Stake/etc.)
  • Public consensus algorithms: This refers to any consensus algorithm used by Polkadot’s relay chain which determines who will be able to produce blocks on the relay chain itself (e.g., Nominated Proof of Stake)

PolkaDOT employs the former for its operations.

Trustless Distributed Governance

In the world of cryptocurrencies, there’s no shortage of blockchain-based networks designed to increase your trust in their communities. Unfortunately, all these systems are not created equal.

The one that PolkaDOT is most proud of is its Proof-of-Stake (PoS) system. It means that instead of people having to send coins out into a cold, risky world of cryptocurrency (unless they want to sell them), every transaction on PolkaDOT’s network is verified by individuals who have a stake in the system—meaning their votes can be trusted since they’ve been given voting power by contributing money to the network and thus have an investment in its success. 

For this reason, PoS was designed with an emphasis on decentralization—because it means that people can vote without having to trust each other with their wealth; instead, voting power can be distributed among everyone who holds tokens on the network. 

As more people join PolkaDOT and more coins are distributed to everyone, this also adds extra weight to every vote since more users get to influence what goes on within the system as a whole (since each person has less voting power than each unique coin).

It’s important not just for security but also for sound business practices: If a token holder doesn’t like how PolkaDOT decides something, such as how much entry fees should be charged or how many transactions should be included at registration time, that individual coin holder can simply sell his tokens off or wait until they lose value before they’re worth nothing at all. 

This helps ensure there will always be some reward if you hold onto your tokens so you won’t lose money if you don’t agree with PolkaDOT’s decisions—and it takes away any reasoning for keeping bad actors around when it could damage the relationship between parties forming a community and the project itself.

PolkaDOT Is Meant to Usher in a New Era of Trustless Smart Contracts

PolkaDOT is a blockchain platform meant to usher in a new era of trustless smart contracts. It’s also a multi-chain framework that connects multiple chains and enables them to interact with each other.

The primary benefit of PolkaDOT is that it provides the infrastructure for DOTS, or DOT tokens, which can be staked and delegated to validators all over the world. This creates a robust, secure network with many different actors ensuring the safety of the blockchain.

PolkaDOT works by securing multiple blockchains through its main chain, which is called the relay chain (or “relayer” by some). The relay chain is connected to various other chains called para chains (“parallel” + “chains”) and performed the function of coordinating between them, as well as handling their consensus process.

In this way, PolkaDOT has been described as more like an operating system than an application itself—more like Windows or Android than Word or Photoshop. Essentially, the PolkaDot platform is doubly insulated against the threats blockchains currently face because it is the next generation of blockchain programming. Now that you’ve acquired some knowledge of the platform, all that’s left is to ask yourself why one should buy DOT at all, and we hope you’ve found some answers here.

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