Polkadot is known to be described using words such as Web 3.0, interoperability, and “layer 0”. But what does this network involve, and how will it affect the community and the cryptocurrency market? Polkadot also addresses the scalability of the distributed registry and web centralization.
Let’s consider a scenario in which Facebook is replaced by a decentralized social platform based on Polkadot. This is what initiatives like Subsocial are trying to do with their platforms, which allow users to choose what data they want to keep private and what they want to publish. By making Ocean Protocol (OCEAN) tokens and selling them in a decentralized market like Polkadex.
The bank charges overdraft fees when a customer’s account balance falls below $0.00 is an unpleasant thing for everyone. Well, a Polkadot-based project called Acala has built an automatic online system, which we could compare to a decentralized version of Stripe. This allows users to automatically transfer rewards from staking to their wallets linked to a physical credit card. This means that a person can be paid to help secure a decentralized banking system and banking system and that the money earned can be sent to a credit card and used to buy your morning Starbucks coffee.
Can Polkadot keep the promises made by Ethereum?
The Ethereum consensus mechanism requires all nodes to validate all transactions. On the other hand, the Polkadot blockchain divides new batches of transactions into numerous pieces and executes them in parallel. Blockchains that connect to the network can have significantly different operating rules, transaction processing, and capabilities, giving the system much more flexibility.
Polkadot is trying to expand without compromising network security. This famous problem, known as the “blockchain trilemma,” was elucidated by one of the co-founders of Ethereum, Vitalik Buterin himself.
Unlike Ethereum, which has a single blockchain, Polkadot contains numerous separate blockchains, known as parachains, connecting to a primary blockchain, also known as a relay chain or “layer 0”. Connecting different blockchains through the central relay chain establishes a mechanism for transporting messages and transactions across multiple blockchains without slowing down traffic on the transaction route, similar to the hub-and-speak approach commonly used in airport design. Layer 0 refers to the idea that layer-one protocols such as Bitcoin and Ethereum could act as nodes, with Polkadot serving as a hub.
There are no smart contracts on Polkadot
Since the Polkadot relay chain does not have smart contracts, it is up to the blockchains connected to Polkadot to secure the smart contracts. For example, a parachain called Moonbeam has full compatibility with Ethereum contracts. Moonbeam developers have created a way to interact with digital currencies built on Polkadot through MetaMask, the popular decentralized web browser wallet. This means that tokens built on the Polkadot Substrate, a blockchain development tool, can be seamlessly sent to Ethereum wallets and smart contract addresses.
The next layer of the Polkadot ecosystem includes projects built above the chains of blocks made above the relay chain. For example, Ocean Protocol is in the process of implementing its smart contracts on the Moonbeam blockchain. Building on the top of the Moonbeam, the OCEAN symbol will be compatible with both Polkadot and Ethereum blockchain applications.
Reconstructing the Ethereum network on DOT
The Polkadot ecosystem is full of projects, from decentralized cloud computers with the Phala network to cross-storage portfolios such as browser-based MathWallet. The Deeper Network hardware-based virtual private network project has sold over 10,000 physical devices on Indiegogo, Amazon, and BestBuy. Deeper’s blockchain solution coordinates all devices and routing in a way that maintains confidentiality, maintains the device registry (in the form of public key infrastructure), and manages the stakes and reputation subsystems.
Is DOT the new Ethereum? Is it a wise investment in 2021?
By the way, Polkadot works, being a “layer 0” project and solving many of Ethereum’s issues, it could be the next thing. There is a lot of talk around social media these days about Polkadot, and many people consider it a new type of cryptocurrency as we know it.
As you can see in this chart, Polkadot is currently trading at around $32 and is staying well above the 99-day Moving Average. It sure seems like a good investment, especially considering all the things we’ve covered in today’s article. Is DOT the future? Nobody knows for sure – we’ve all seen how volatile everything is and how the market can go from 0 to 100 real quick. All we can truly say, for now, is that it has the looks of a fantastic project with a promising future and a growing community.