In the world of cryptocurrencies, Polkadot is one of the most recent entrants but its popularity catapulted almost immediately after its launch, making it the sixth most popular cryptocurrency based on the market cap as of March 2021. While in terms of value, it remains far lower than the most popular digital currencies like Bitcoin and Ethereum, what's interesting is that the Polkadot price has posted a year-to-date gain of over 250%.

The proof-of-stake blockchain project aims to allow for seamless interoperability between different kinds of blockchains, an interesting concept that is likely to keep it popular until the next innovation in this area comes along. A heterogeneous blockchain that has the functionality to integrate various other types of blockchain projects and let them process transactions in parallel and exchange data with each other without impinging on security, Polkadot holds much promise towards helping boost the mainstream adoption of blockchain technology and crypto-based initiatives.

While some analysts tout Polkadot as one of the most important launches the cryptocurrency market has seen in recent times, others have criticized the project as well, especially concerning its "rocky history". The parent firm behind Polkadot, Parity, has faced several issues in the past in addition to other challenges that the developers behind DOT need to address before it can be considered at par with other cross-chain competitors.

Polkadot Current Trends

September and October data from GitHub tracked down over 50o daily contributions on the Polkadot Network throughout the month of September. This is alongside 26,528 messages being sent across Polkadot parachains and a total of 14,930 developer contributions on the Polkadot Github through August 2022.

Polkadot is a relatively new cryptocurrency. The blockchain has also been in talks with the SEC since 2019, following discussions around the fact that DOT could be a security. On a November 4 2022 post by the Web 3 Foundation, the chief legal officer outlined that Polkadot had morphed into a software rather than a security. According to the blog post, Polkadot and SEC had met multiple times and discussed on how to do anything it takes to ensure DOT wasnt going to turn out as a security.

Polkadot’s native token, DOT facilitates transactions taking place on the Polkadot blockchain. The token also empowers and incentivizes Polkadot’s community for participating in validator voting and governance. Presently, DOT is number 11 among the leading cryptocurrencies by market capitalization. New DOT tokens are added into the total market supply at an yearly rate of 10%. Take note that the cryptocurrency lacks hard limit cap as its maximum supply. Polkadot blockchain was developed and run by Garvin Wood under its infrastructure company, Parity Technologies. Very recently, Garvin Wood stepped down as the chief executive officer in October 2022, and now will take the role of Chief Architect. Therefore shifting his focus from running the business side of the Polkadot Blockchain, to developing the infrastructure of the blockchain and implementing critical tech to drive mass adoption.

Here are some unique features of the Polkadot Blockchain that should spark your interest ; when considering it as an investment vehicle across digital assets:

1. Multichain support - Polkadot is a multichain blockchain at layer 0 that aims to support interoperability of different chains. The chain is a standard protocol for enabling intercommunication across multiple blockchains.
2. Data handling in parallel - Polkadot blockchain does not handle a single transaction at a time. The blockchain validates multiple transactions simultaneously. In fact, the blockchain can run different processes and functionalities simultaneously.
3. Kusama is Polkadot’s twin blockchain - The Kusama blockchain and its native currency, KSM share a common codebase with Polkadot. However, both chains run independently with Kusama running on top of its own mainnet.
4. The GRANDPA consensus - Polkadot uses a unique consensus mechanism based on Nominated proof-of-stake, the GRANDPA Consensus. NPoS sets itself apart from the standard proof of stake by having participants use DOT tokens to vote for validators. Only a validator with adequate votes and community backing can take part in transaction verification. Unlike Solana and Cardano where any network participant with adequate tokens can validate transactions.

Polkadot Breakdown

Polkadot is a protocol based on blockchain technology that makes it possible for various kinds of blockchains to operate on a single network - its biggest strengths are interoperability and scalability. As it is built on Ethereum - the world's second most popular cryptocurrency and the backbone of the world of DeFi, it is of great interest as it can offer more use cases that require cross-chain communication.

Polkadot's design permits it to operate two kinds of blockchain - a main network, also known as a relay chain, with permanent transactions, and user-created networks or parachains which can process interactions in parallel, allowing for greater scalability. In addition, it supports the option of spreading out transactions across the chains so that a higher number of transactions can be processed within the same duration of time, making the overall ecosystem far more efficient.

Unlike proof-of-work or proof-of-stake blockchain networks that need to build a significant community to improve security, Polkadot allows various blockchains to pool together their security, offering a safer and more secure network overall with the power of this aggregation, right from the initial stages. Its developers are expected to roll out several features in 2021 that would make Polkadot more secure, scalable and innovative, including the launch of numerous parachains and potentially drive the DOT price higher in turn.

Polkadot History

The Polkadot protocol was created by Gavin Wood, a co-founder of Ethereum, along with Robert Habermeier and Peter Czaban, with the launch of its whitepaper in late 2016, followed by the first token sale about a year later, in October 2017, which helped its founders raise more than 485k ETH.

The year 2018 saw the development of Polkadot's Proof of Concept (PoC) 1 and a successful on-chain upgrade of the governance protocol from PoC-1 to PoC-2. Later in the year, the BBC Birch testnet was launched, which provided the feature of building and deploying a Web Assembly smart contracts chain with Substrate - the software development framework used by Polkadot developers that allows for speedy creation of parachains.

The PoC-3 milestone was achieved in January 2019, which brought with it better governance as well as a novel consensus finality gadget. In May 2020, the Genesis block of the Relay Chain of the Polkadot network was launched as a Proof of Authority (PoA) network. The transition from PoA to Nominated Proof of Stake (NPoS) took place in June 2020, and in August 2020, the DOT token was redenominated with the value of 1 old DOT = 100 new DOT.

Polkadot Price Factors

The DOT price - the native token used on the Polkadot network can vary depending on how users choose to use the Polkadot ecosystem. The generation of more use cases with every development launched going forward and increased adoption of the technology can drive higher transactions in DOT tokens, which could potentially propel its price upwards. On the other hand, the launch of a formidable rival technology that could take the sheen away from Polkadot and drive users away from it could send the Polkadot rate lower.

The DOT rate can also fluctuate based on how the overall crypto market performs as well. When more investors move towards trading cryptocurrencies, it generates greater interest among the community for all digital currencies, increasing the potential for the Polkadot price to make further gains as well.

Trading Polkadot

Numerous digital exchanges offer DOT as an asset to trade, with most of them letting you trade it against other cryptocurrencies. Only a few exchanges may allow you to trade Polkadot's token against fiat currencies directly. To start with, you need to select a reputed exchange or crypto trader that supports trading of Polkadot (DOT) and create an account.

You can then convert your trading capital into DOT and trade it against other available options on the exchange. If you choose to go with a broker, then you can leverage their ideas based on expected fluctuations in the Polkadot rate and try to generate profits.

If you are going it alone and trying to trade DOT without the help of a broker, you need to do ample research to help you analyse the Polkadot chart to come up with your own trade ideas. Pay close attention not only to technical analysis but also fundamental drivers that can specifically impact the DOT rate as well as the overall crypto market before entering into trades in this digital asset.

If you are completely new to the world of cryptocurrencies, you will also need access to a digital wallet that can securely store your DOT tokens. You can choose from web wallets, desktop wallets and hardware wallets, depending on the level of security and convenience that suits you.