Polkadot’s ultimate goal is to become the new internet of blockchains that are going to seamlessly communicate with each other. You may ask, why do we need something like that if there are already so many great platforms out there, like an Ethereum or Cardano. Well, creators of Polkadot believe that no single blockchain can serve all purposes efficiently in a fast and secure manner. Imagine future Ethereum (even ETH 2.0 with improved transaction speed) hosting billions of smart contracts serving all the different applications — this is not simply going to be effective and it will definitely not scale well. Therefore, welcome to the world of the Polkadot network, a project which tries to bring all the different blockchains under one roof and provide the best platform for any project which you can think of.

How Polkadot works

Polkadot is a new generation blockchain protocol that greatly simplifies cross-chain communication and interoperability by bringing multiple blockchains into one network. This network is going to be secured by a GRANDPA consensus algorithm, tailored for the Polkadot (a flavor of a PoS, detailed information are on Polkadot’s wiki).

Relay Chain

Relay chain is the backbone of Polkadot’s network and it’s the main communication hub between parachains. Validators on this chain are accepting blocks from all parachains and thus providing security for the whole network.

Parachains

Parachains are independent blockchains that will run on top of the Relay Chain a provide chain-specific features to the Polkadot network. Each parachain will serve a specialized purpose in the network — think of having a fine-tuned chain for smart contracts, another chain that will provide a stable coin for payments between chains or a parachain which will bring a decentralized energy industry to the network.

Parathreads

Parathreads are very similar to parachains from a technical point of view, however, they are very different from an economical standpoint. As we said in the previous paragraph, parachains have to compete in auctions in order to become part of the network. On the other hand, the parathread slot can be leased almost instantly and for only a short period of time.

Bridges

Can you imagine a modern blockchain platform running in complete isolation from other, already established networks? The Polkadot’s authors definitely couldn’t and that’s why we have a special kind of parachain, called the bridge. Bridges will connect other already running blockchains into the ecosystem (like a BTC or ETH) and allow for transfers of tokens between Polkadot and outside networks.

Scaling

Do you remember all the discussions in the BTC community which eventually led to the creation of Bitcoin Cash and still “hated by many” Lightning Network? Or fees for transactions in Ethereum getting insanely high? Well, those issues are all coming from scaling problems which 1st and 2nd generation blockchains have.

Specialization

If we think about most of the blockchains, they all are trying to support various features and all of them have to make some trade-offs in order to achieve that. But, in the Polkadot, it’s very easy to deploy one parachain which will serve as file storage, another chain that will provide decentralized identity management and another one for enabling payments in the whole ecosystem by creating a stable coin. Imagine how effective, simple, and secure specialized blockchains can be by skipping all the code which is normally necessary to deploy a full-fledged chain.

Cooperation

All parachains and bridges can share information like applications on the smartphone share underlying features of the phone’s operating system. One of the biggest benefits of Polkadot is that parachains are not going to run in isolation but they will be able to communicate with each other. And not by just simple token transfers but they can actually exchange any kind of messages. For example, a chain providing synthetic asset trading (let’s stay stocks or commodities) can go to the oracle running in a different parachain and ask for a stock price.

Governance

The Polkadot community can govern the network in a completely decentralized way. An example of how such a voting process can be found in our article How Polkadot token denomination can affect trading.

No more hard forks!

Like all the other software, even blockchains needs to be upgraded either for security reasons (bugs can always creep into your code) or when community votes for adding new features. Normally, most of the blockchains require a hardfork, especially when making significant changes to the network (like consensus protocol upgrade). Unfortunately, this process can sometimes give a hard time to the community and even lead to the network split like in the case of Bitcoin Cash.

Ecosystem

The Polkadots ecosystem is growing bigger every day because development teams are realizing the advantages of such a flexible, effective and secure network. Unification of multiple specialized chains into one highly scalable, interconnected network allows any blockchain to reach its full potential for any real-world scenario in preparation for a new, decentralized economy. The projects don’t have to compete with each other anymore, they can now work together in the Polkadot network so all of us can achieve independence from the centralized world.

  • Energy Web Token — decentralized energy market
  • ChainX — inter-operability bridge
  • Robonomics — robotics, smart cities and industry 4.0
  • Sora — decentralized exchange
  • and many others

Team

Polkadot was founded by a team around Web3 Foundation which strives for the decentralized web. Polkadot’s leading figure is a Dr. Gavin Wood which some of you may know as one of the founding fathers of Ethereum and author of the Solidity smart contract programming language.

Gavin Wood, Polkadot founder

Tokens

Polkadot is using it’s DOT tokens for various purposes

  • Staking — you can stake your tokens in favor of the Polkadots security model. Honest validators are being rewarded by the network for their stake
  • Bonding — parachains are winning their slots by locking up DOT tokens
  • Fees — for message passing between the parachains

Token price

Polkadot passed through its ICO on the 14th of October in 2017 and the price for 1 DOT was $28,80. It was one of the most successful ICO ever conducted and the project raised $145 million in the first round of sales.

Conclusion

Interoperability and scaling are the next major steps in the blockchain industry. Bitcoin presented a revolutionary change in a way how people think about currencies and decentralization and Ethereum and other 2.0 blockchains brought smart contracts into the industry.

Czech bloggers & community builders. We are validators of Polkadot, Kusama, Darwinia, Crab, Bifrost, HydraDX, StaFi, Centrifuge under the name: POLKADOTTERS