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Polkadot is popular among the so-called ‘next-gen’ blockchains, here’s everything you need to know about it.
Polkadot is a next-generation blockchain platform connecting multiple specialized blockchains into one unified network.
It was created by Gavin Wood, one of the co-founders of Ethereum.
Polkadot aims to achieve scalability by making it possible for specialized blockchains called ‘parachains’ to interoperate.
Designed as part of a broad vision for a web that returns control to individuals over internet monopolies, Polkadot aims to build on the ideals of earlier blockchain networks but promises to offer several fundamental advantages.
Polkadot’s back story
Following the creation of Polkadot by Wood, the task of its development was completed Web3 Foundation.
Polkadot achieved several major milestones in 2018, including the development of Proof of Concept (PoC) 1, which was the first successful on-chain governance-based protocol upgrade from PoC-1 to PoC-2. It also saw the launch of the BBQ Birch testnet, which demonstrated the capability to build and deploy a Web Assembly smart contracts chain with Substrate.
The DOT cryptocurrency coin made its debut in August 2020 at an entry price of US$2.7.
How does it work?
Polkadot is a network protocol that allows arbitrary data—not just tokens—to be transferred across blockchains using a system of open and private key cryptography.
It is a sharded multi-chain network, coordinated by a central Relay Chain which allows it to process data and transactions on several chains in parallel, known as Parachains.
The system’s sharded architecture breaks up the network into individual segments, or shards, which increases the throughput of transactions by allowing them to be processed in parallel on each shard rather than sequentially across the whole network like older generation blockchains.
How it differs from other cryptos
The biggest difference between Polkadot and other leading blockchain solutions is scalability through sharding, the pooled security of a central relay chain and the interoperability of a multi-chain network.
Besides this, Polkadot also provides compatibility with existing platforms like Ethereum, without the need to choose one isolated blockchain network over another.
Another important difference is that, unlike most other cryptocurrencies, DOT isn’t limited in supply.
Polkadot in pecking order
With a market capitalisation of over US$13.1bn, Polkadot is the ninth most valuable cryptocurrency.
Its prices were hovering around US$13 on various exchanges.
Near lows for the year
DOT’s price had been rising since its inception and touched a record high of US48.88 on May 15, 2021.
However, it started declining after hitting the recording high and fell to its lowest level of the year in mid-July.
What’s the future for the crypto?
The majority of analysts and traders are bullish on the future prospects of Polkadot but some of them are predicting a further decline in the prices in the next few months.
They are projecting that prices could fell below US$10 in the next few months and there could a recovery in its prices in the second half of 2022.
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