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Introducing Polkadot

Polkadot is a next generation blockchain that sets out to establish an ecosystem of cryptocurrencies. It incentivises a global chain of computers to operate a blockchain and is thought by many to be one of the most innovative projects in the world of cryptocurrency. Polkadot's native coin (DOT) was initially conceived in 2016.

The DOT token became available in the summer of 2020 and was founded by Gavin Woods, co-founder of Ethereum. Woods invented the language used by developers when they write decentralised applications on Ethereum. Polkadot is still relatively new but has raised a significant sum of money from investors through the sale of DOT cryptocurrencies.

What makes Polkadot different?

Polkadot has several interesting technical features. For example, it operates two separate types of blockchains: a relay chain, the main network, and parachains, which are creative networks. While the transactions within the main network are permanent, the parachains can be customised for a variety of reasons before being fed into the main blockchain.

Once they have been fed into that blockchain, they benefit from the same level of security as the leading network. Thus, Polkadot transactions are always secure and can take advantage of the computing resources allocated to the main chain. However, users get the added benefit of being able to customise separate parachains for multiple uses.

How does Polkadot work?

Within the Polkadot network, three different types of blockchains exist. As mentioned, the relay chain is the primary channel that operates at great speed while new transactions are segregated from the validation process. The custom blockchains (parachains) then use the relay chain resources to validate the transactions. In the meantime, a separate type of blockchain, called a "bridge," allows the Polkadot network to engage with other blockchains. Eventually, Polkadot aims to interact with the other leading blockchains like Bitcoin, Ethereum and Cosmos.

At the heart of the relay chain is a hybrid proof of stake rule called "nominated". This rule allows anyone to stake DOT by putting the cryptocurrency into a special contract to perform a particular role. They can validate the data in parachain blocks while also voting on any proposed network changes, or they can act as a nominator by choosing trusted validators. They can also act as monitors (also called fishermen), reporting any adverse behaviour back to a validator. All these roles make them eligible to receive DOT rewards as well.

How is Polkadot governed?

When it comes to software development, Polkadot has various levels of governance. Those who have purchased tokens can propose changes within the network and reject or approve any major changes brought forward by others. These DOT holders will elect Council members, who are then responsible for determining which proposed changes are made. There is also a technical committee, composed of developers and analysts who are building Polkadot. They are allowed to make special proposals.

Frequently asked questions

What is Polkadot (DOT)?

Polkadot is a next generation blockchain, which is at the heart of a multi-chain framework. It's an ecosystem aiming to markedly improve security and scalability, which are seen as major limitations within existing blockchains. Polkadot consists of a main network called a ‘relay chain’, which connects with other blockchains. It hosts these blockchains and handles security and transactions seamlessly. It is also possible to build entirely new blockchains from scratch by taking advantage of Polkadot's adaptive network architecture.

How do you buy Polkadot in Australia?

If you want to buy Polkadot in Australia, you can easily set up an account with BTC Markets. Once your account is verified and you have funded your account with AUD or crypto, you canbuy and sell DOT or other digital assets immediately. We offer several payment options, such as OSKO and BPay.

How is the price of Polkadot determined?

As Polkadot is traded worldwide, the price can vary significantly based on several factors. These can include service fees, order books and volume. Polkadot has a floating exchange rate, so the price is set by vendors and governed by the laws of supply and demand.

Buying and trading Polkadot through BTC Markets

If you want to trade or buy Polkadot (DOT) and take advantage of this emerging cryptocurrency, you can sign up with BTC Markets. Check out all the features that you will discover when opening an account. We have a reliable, convenient, secure platform to make it as simple as possible to buy or sell DOT.

BTC Markets is the largest crypto exchange in Australia and is fully Australian-owned and operated. You can learn moreabout BTC Markets or find answers tofrequently asked questions. If you have further questions, our experienced support team can assist you.

What can I do after I buy Polkadot (DOT)?

Once you havebought Polkadot, it is time to decide how you intend to store your new assets. There are many types of crypto wallets in Australia which will host Polkadot should you chose to move your coins. The two main types of digital wallets are:

Hot wallets — A hot wallet is a storage system that operates on a browser or app and is usually connected to your trading platform. This gives traders the convenience of being able to trade, sell or store their DOT in one place.

Cold wallets — These digital wallets can store your cryptocurrency offline, typically on a USB. Having your assets stored this way can reduce your risk of being hacked or exposed to other kinds of cybercrime. Keep in mind that if you misplace your cold wallet or forget your seed phase, you risk losing your assets. Some traders opt to use a combination of cold and hot wallets to safeguard their assets.

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This Week in Crypto: 8th December 2022
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