What would you think the crypto universe will look like if all of the blockchains had the same link with each other? Something like a Blockchain superhighway where Bitcoin connected to Ethereum and Bitcoin Cash, Bitcoin connected to VeChain and Tezos and Litecoin to Tron, something like that.
Let's take a peek into the chain to connect all other blockchains - let's connect the dots and answer the question "What is Polkadot?".
What is Polkadot?
Launched in 2016, Polkadot is the brainchild of Gavin Wood, an Ethereum co-founder and creator of Solidity - the programming language used by Ethereum.
Polkadot is currently operated by Web3 Foundation and was developed by the Parity Technologies, both of them are co-founded by Gavin.Polkadot is what Gavin Wood envisioned as the next version of Ethereum.
How Polkadot works?
The blockchain landscape now is fragmented, with different independent blockchains that operated in an isolation. As yet, there is no efficient way for these separate chains to operate and communicate each other to share data, transact or exchange value.
Polkadot is currently working to correct the problem by introducing the first ever time-cross-chain interoperability. Polkadot will allow any blockchain: private and public, permissioned and permissionless, as well as oracles and decentralized apps to talk to each other and be connected in a trustless way under a single decentralized Polkadot umbrella.
Here is one example of how this project could work:
A certain smart contract event on the Ethereum network will triggers a payment from the Bitcoin network.
Cross-chain swap for LTC to XRP with the use of smart contract without any intermediaries.
An oracle that feeds price data to dozen of different blockchains at the time. This is now the reason why the Polkadot project is having the name as the Internet of all Blockchains.
Like the internet, Polkadot will behave as an interoperable network that connects all blockchains.
How does Polkadot do this?
Polkadot are going to achieve this with use of the Polkadot Relay Chain, the parachains and connectors or Bridges.
The Relay Chain of Polkadot is the main layer of the Polkadot network and this acts like a bookkeeper that overlooks all the transactions in the network.
Parachains are the second layer. They are made up of individual blockchains, all connected in parallel. Hence called parallel chains or parachains.
Parachains allow multiple chains to run simultaneously to enable scalability and increase transaction speed. It can be bought by companies using cryptocurrencies and can be customized in the way they want it.
Bridges is what Polkadot uses to connect to difficult or established blockchains like Bitcoin and Ethereum by writing a break-in or a break-out smart contract that will allow these chains to communicate with the Polkadot network.
What is Polkadot token DOT?
DOT is the famous token of Polkadot network and is being used for 3 different things:
Governance
Staking
Bonding
1. Governance
All DOT token holders are given the right to vote over decisions that govern the network such as upgrades or exchanging network fees. Votes will be weighted depending to the amount of the tokens, and the time period set that the tokens needs to be locked up along with the vote.
2. Staking
DOT holders can help secure the Polkadot network by staking their tokens to the network as validators and nominators. Validators can take part in the minting process of blocks while the nominators back the validators up. Both provide important security functions, and therefore receive DOT tokens as payout rewards as incentives.
3. Bonding
As mentioned above, Parachains can be bought. In order to buy a Parachain, a user has to "bond" DOT tokens in order to control the parachain. Bonding ties DOT tokens to the Relay Chain whenever a new parachain is added.
Polkadot Vision
Polkadot aspires to build a multichain universe, where multiple blockchains can co-exist and and operate together to create a more vibrant, interoperable mega-system of blockchains.
Image source link: Polkadot
