Estimated reading time: 3 minutes, 51 seconds
The rise of blockchains over the past couple of years has made one thing clear. There is no singular blockchain. Bitcoin is of course the most popular, but the market has exploded with several other options.
A blockchain enabled world will likely have more than one blockchain. In order to optimize these networks, these chains are going to have to communicate. Furthermore, scaling concerns are holding back the full potential of blockchains.
And that’s where Polkadot comes in. Their mission is put simply and plainly,
“Polkadot is a network that connects blockchains.”
Like other networks that are looking to connect blockchains, they have pointed out a few key challenges that they aim to conquer in order to become the bridge between blockchains.
The first is pretty simple. Polkadot’s main goal is to create interoperability between chains. Polkadot is designed to enable applications and smart contracts on one blockchain to seamlessly transact with data and assets on other chains.
But none of this matters if we don’t have a scalable solution. Polkachain’s scalability solution is really interesting.
What is a parachain?
There are three main components that make up a Polkadot network. The first are parachains which are gather and process information. That information then passes to a relay chain, which passes information to other parachains, or the last part of the network known as Bridges. These bridges connect back to a main chain, such as ethereum.
The idea is that if parachains are able to help limit the data that each chain has to process. They essentially take the load off of the main chain via parachains, crunch some numbers, and send abbreviated information back to the main chain via the bridge.
Polkadot has done some research, and said that if transactions are processed linearly, you’re going to max out at about 1000 tx/s. Parachains process data in a parallel manner, which theoretically should increase processing speed exponentially.
Polkadot has a really interesting vision. According to their mission statement,
“We envision a Web where our identity and our data is our own – safely secured from any central authority. Our aim is to reshape the existing internet structure into what we are calling Web3: a completely decentralized web.”
The ecosystems exists, we just need something to connect these blockchains. Seamless integration of bridge systems like Polkadot can bring about an internet where we truly control our own data, where we’re no longer the product. Polkadot envisions that the future will bring forth multiple blockchains doing different things. Instead of sacrificing privacy by letting your identity just float along in the internet. Polkadot lets your pick and choose which chains you want to be a part of.
The Polkadot ecosystem uses the DOT token for three primary reasons. First, tokens are used as a mechanism for governance. This allows token holders to make decisions as a whole by voting or staking. The introduction of the DOT token also allows for certain incentives to be put in place that make the ecosystem secure. Since no one wants to lose out on their staked DOT, they are incentivized to act in the correct manner. If they act maliciously, well goodbye staked DOT.
A huge part of the Polkadot ecosystem is what is known as parachains. DOT tokens are bonded in order to set up a parachain. If and when the parachain outlives its use, then the parachain can be abandoned and bonded tokens are returned.
The tokens are set to be released with the genesis block somewhere in the 3rd quarter of 2019. At genesis there will be 10 million DOT tokens. 3 million goes to the web3 foundation, founded by Dr. Gavin Wood. 2 million will have been sold in presale, leaving 5 million, or half of all tokens at genesis, for a second price dutch auction. Instead of a normal dutch auction where you put in a bid for a certain amount of tokens, this auction will have you simply put up how much money you’re willing to pay, and then use a predetermined structure to figure out how many coins you’ll receive.
WTF IS is our series where we explore some of the most frequently asked questions about blockchains, cryptocurrencies, and the technology surrounding these fields. Want to acquaint yourself with blockchain? Then WTF IS is the perfect series for you!
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