There’s always something new with cryptos as people buy Polkadot coins nowadays. Back then, it was deep below the cryptocurrency list. Now it has earned its spot in the top 10 and maybe a place in your portfolio later.
We’ll explain what’s so great about the Polkadot network, which the media calls the “Ethereum Killer.” We will explore the many ways it’s similar to the top 2 crypto coin. More importantly, we’ll show you why it may just knock out Ethereum.
Those new to cryptos often focus on big players like bitcoin. Yet, there are other great investments found beneath the top 10 list. Polkadot is one of the cryptos that may deserve a place in your portfolio.
What is Polkadot?
In 2016, three great minds wanted to bring Web 3.0 to the world. Their goal was to allow everyone to use the internet without a few companies controlling it.
Polkadot is an open-source project created by Gavin Wood, Robert Habermeier, and Peter Czaban. It was the flagship of the Web3 Foundation, another company that Wood started.
Together with Parity Technologies and other groups, they set out to realize Web 3.0. Its core is the Polkadot network, and its tokens ranked top 9 in the crypto list.
What does Polkadot do?
Believe it or not, Polkadot works similarly to Ethereum. The number 2 crypto allows people to make apps powered by blockchain. Polkadot lets people make blockchains of their own!
These Parachains could use a separate coin from Polkadot (DOT) tokens. These computer networks have functions for specific use-cases too.
What’s more, it allows people to make Parathreads. These are blockchains that don’t need always to be connected to the network. It’s also more affordable due to its pay-as-you-go model.
Bridges connect all these smaller networks to the leading network. Also, they allow communication with other networks like Bitcoin and Ethereum.
The Relay Chain serves as Polkadot’s leading network. It protects the users and the smaller networks. It manages operations and voted changes among them.
People may earn other cryptos by mining. They include their computers in the network. Once there, it would confirm transactions and earn new coins as block rewards.
You could earn Polkadot coins by staking, not mining. You need around 100 DOT coins to start. This method takes around 10% every year. It’s much cheaper than mining, though.
At the time of writing, its circulating supply was around 937 million tokens. That means people hold that much at the moment. This changes as more people buy Polkadot coins, though.
How does Polkadot work?
There’s another reason why you’d want to stake DOT tokens. It allows you to vote on how the Polkadot network will change. It’s made possible by nominated proof-of-stake (NPoS).
Once you’ve staked Polkadot coins, you can’t touch them anymore. In exchange, you get to play one of the critical roles in running the network:
- Validators – They check data in para chain blocks. They also vote on suggested changes to the network.
- Nominators – They keep the Relay Chain safe by choosing trustworthy validators. They could also vote on changes. It’s done by assigning DOT stakes to the validators.
- Collators – These people compile parachain data and history for the Relay Chain.
- Fishermen – They check the Polkadot network. Also, they report bad behavior to the validators.
What’s more, users could earn more DOT rewards from these roles. Three types of users could affect the software’s development:
- DOT holders – If you hold Polkadot coins, you could vote on changes to the network.
- The Council – Users vote on who will be its members. This group puts forward the changes that the DOT holders recommended. Suggestions from Its members require fewer votes.
- Technical Committee – It’s made up of the people who are actively working on Polkadot. The council elects the members of this group. They could make special proposals in case of emergencies.
Can Polkadot beat Ethereum?
Online articles often talk about how Polkadot would be the next Ethereum. It’s mainly because Gavin Wood was one of the co-founders of the Ethereum blockchain!
Moreover, it shares similar features. You earn Ethers (ETH) just like Polkadot coins. Ethereum allows decentralized apps (dapps) similar to Polkadot’s parachains.
Ethereum allows intelligent contracts while Polkadot doesn’t. These are agreements with set conditions. The deal settles once those are met, without the help of a third party.
The Polkadot network has intelligent contract platforms. These run on specific parachains. They still need a lot of work, though. The same could be said for the Polkadot network in general.
Pros & cons of investing in Polkadot coins
If you’re planning to purchase Polkadot coins, you need to think long-term. People usually buy cryptos then wait for them to grow in value. This happens as the currency becomes more valuable.
Polkadot has a lot of potential applications. This could be the reason why it’s the top 9 crypto coin right now. Here are the other reasons why Polkadot coins could be a good investment:
- It may develop new applications easier – Developers don’t need lots of miners for their parachains. As a result, Polkadot gets more use cases. When more people find it useful, it becomes more valuable.
- Parachains could link to other cryptos – This allows Polkadot to benefit from the growth of other coins.
- Lots of funding – It’s raised nearly $200 million, and it’s now one of the top 10 cryptos.
As we said, Polkadot still has lots of issues. These are the problems that could prevent it from becoming an excellent investment:
- Too few parachains, too many costs – There are a set amount of parachains. They’re sold on auctions that may prevent smaller use-cases. This may limit its potential for growth and profit.
- Hackers – Some people have cracked its code twice. They’ve taken millions of dollars before they were stopped.
- Competition – More people prefer Ethers than Polkadot coins since they’re next to Bitcoin. Cardano and Tezos also have custom blockchains similar to Polkadot.
Should I get Polkadot coins?
If you’re sold on the potential of Polkadot, then buy tokens. Otherwise, you may want to get other cryptos instead. You could choose from thousands from the exchange platforms.
It has some growth potential in the future. Polkadot could apply to numerous fields. Its value increases as this happen. Its recent jump to the number 9 spot proves this.
However, it needs to improve soon. Similar cryptos are doing much better than Polkadot. If not, the other coins could leave it in the dust.
Never invest in something you don’t understand. Research all you can learn about cryptos and how they work. Check bitcoin and other coins too. See if those altcoins are promising as well.
See how their prices went over the years. Visit websites like CoinMarketCap for this info. You could check other details like their market cap and volume.
Learn more about Polkadot coins
What is a Polkadot coin used for?
The tokens allow you to use the services in the Polkadot network. What’s more, staking them lets you vote on how it would change in the long run.
How much is a Polkadot coin worth?
At the time of writing, the Polkadot price was $40.89. Crypto prices change every second, though. See the price today on CoinMarketCap or exchange platforms.
Is Polkadot a good investment in 2021?
As the number 9 crypto, it looks like a good choice this year. Still, it has many problems that could prevent its further growth. Study Polkadot first before you invest.
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