Polkadot
Enter web3
What is Polkadot?
Like we’ve been talking about in the newsletter, we’re very early in the blockchain and cryptocurrency industry. Bitcoin is only 12 years old. We’re still laying the foundational layers for the new Internet.
Polkadot is one of the foundational building blocks hoping to enable human beings, enterprises and governments to use private and secure applications that don’t rely on trusting 3rd parties. It will do this by creating layer one standards for interoperability between blockchains.
What’s Web 3.0?
Web 1.0 — static images, basic webpages, and dial up.
Web 2.0 — web applications like social networking platforms like Facebook and eCommerce platforms like Amazon. This web introduced more interactivity, video sharing and more dynamic engagement with the Internet. However, this Internet has some downsides like centralized data control, privacy concerns and ultimately trust issues.
Web 3.0 — is a decentralized web, undoing the centralized applications and returning ownership and value to users through trust-free protocols.
Current Problems with Blockchain
Blockchains do a great job of interacting with their own chain, however not so much with other chains. This is very similar to the beginnings of the Internet protocols that we use today. There were many networks of computers across different geographical locations doing different things, but were separate from one another until protocol standards we’re introduced.
TCP/IP
Transmission Control Protocol / Internet Protocol launched in 1978 that set the standards for communication between individual computer networks.
SMTP
Simple Mail Transfer Protocol launched in 1982 that set the standards for email communication.
HTTP
Hypertext Transfer Protocol launched in 1989 that set the standards for webpages and data communication for the Internet.
We have the Bitcoin blockchain that’s great at storing value online. Ethereum and Cosmos are blockchains enabling smart contracts to build web 3.0 applications. Right now these blockchains generally operate by themselves and Polkadot is attempting to create the protocol connecting them so they can communicate and work together through secure standards. Other issues Polkadot is trying to solve.
Scale — the ability to handle traffic and process transactions. Bitcoin does 7 transactions per second. Visa does 65k transactions per second. Polkadot hopes to do 166k-1M transactions per second.
Security — not all blockchains are secure especially younger chains. Bitcoin and Ethereum networks are extremely secure, but we need to provide instant security for new chains providing important services. Polkadot introduces security standards for new chains building on their platform and for cross chain communication.
Governance — some chains don’t have governance or have centralized governance, people deciding the future capabilities and characteristics of the blockchain. Polkadot allows for token holders to vote on Polkadot’s future.
Customization — since Polkadot solves interoperability, security and governance for new projects building on top of Polkadot then these projects are able to focus on being specialized.
Why Polkadot?
This project has a lot of hype and for good reason. Right now interoperability is an important part of user adoption and moving the space forward and Polkadot has the team to solve it. It’s founder is Gavin Wood who was also the co-founder of Ethereum and help create fundamental components of the blockchain industry. Other founders include Robert Habereier who’s a Thiel Fellow and core developer at Parity Technologies and Peter Czaban who’s the Technology Director at the Web3 Foundation. Parity and Web3 are essentially developer studios consisting of the best blockchain wizards on the planet.
DOT Token
Polkadot’s native token (DOT) was released publicly on August 18th 2020 and is being rolled out in phases. The company has raised $183.7M in funding over 9 rounds including venture, private sales and initial coin offerings. Investors include Polychain Capital, Kenetic, IOSG Ventures, Fundamental Labs, HashKey Capital and 6 others. DOT tokens can be purchased on centralized exchanges such as Kraken, MXC and Hotbit. Other ways to get exposure and benefit from Polkadot outside from holding DOT is via their test network’s token Kusama and the other projects building on Polkadot.
Polkadot and the projects using its network should all do very well in this bull market. Interoperability is a huge theme.
Cheers,
Verks
***This is not financial advice. Investing in bitcoin and cryptocurrency is extremely risky. Please do your own research. The ideas and news presented in this newsletter are my personal opinions and meant for informational and entertainment purposes only.
