Cryptocurrencies are often created with specific and clear objectives in mind. As such, Bitcoin and Ethereum both cope well with data stored on them but their legacy blockchains are unable to communicate easily and effectively with other blockchains without the use of a trusted third-party intermediary. Additionally, these networks are unable to scale once they are required to handle a lot of traffic. This is where Polkadot fits in.
What is the problem that Polkadot solves?
Transaction Processing Speed: Polkadot helps to solve the speed problem. Founder Gavin Wood claims that the network can do 1,000 transactions per second (TPS) while having the capacity to scale up to an impressive 166,666 TPS. For context, Bitcoin can do up to 7 TPS, while Ethereum is approximately 25 TPS. Electronic funds transfer company Visa in comparison did 1,736 TPS in 2020.
Scale: Polkadot connects many blockchains and also enables different blockchains to run independently within one network, thereby setting the stage for future expansion while being protected by a shared security system.
Reliability of new networks: With new networks, it is difficult to build large communities while mobilizing trust from stakeholders.
Why use Polkadot?
Users may find the Polkadot Network appealing based on its focus on facilitating interoperability between blockchains.
Why is Polkadot unique?
Polkadot can process transactions across multiple chains simultaneously and this parallel processing capability gives Polkadot scalability that other chains lack. Polkadot also allows the creation of custom chains that can quickly connect to the network and the apps developed by these custom chains can interact with each other.
Who founded Polkadot?
Gavin Wood, former CTO of Ethereum, founded Polkadot and the genesis block was launched in May 2020.
What potential does Polkadot hold?
The cryptocurrency based on the Polkadot network are tokens called DOT. Smart contracts on the Polkadot ecosystem are enabled by exchanging DOTs and Polkadot’s interoperability and scalability which provides the potential for being deployed in many real-world applications including in decentralized finance (DeFi).
In summary, Polkadot is definitely worth keeping an eye on in the coming months.