Polkadot - DOT
Updated: Jun 21
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What is Polkadot (DOT) and how does it work?
Polkadot is a software that seeks to incentivize a global network of computers to operate a blockchain on top of which users can launch and operate their own blockchains. Polkadot empowers blockchain networks to work together under the protection of shared security.
Polkadot is one of a number of competing blockchains aiming to grow an ecosystem of cryptocurrencies, other notable examples of which include Ethereum (ETH) and Celo (CELO).
Polkadot was introduced with the aim to achieve the following:
True interoperability - by enabling cross-blockchain transfers of any type of data or asset, not just tokens, and operating with a wide variety of blockchains.
Economic & transactional scalability - by enabling a common set of validators to secure multiple blockchains and spreading the transactions across multiple parallel blockchains.
Easy blockchain innovation - ability to create a custom blockchain by using the Substrate framework, and connect it to Polkadot to get interoperability and security.
Forkless and future-proof - upgrade without the need for hard forks to integrate new features or fix bugs, enabling it to upgrade better when new technology becomes available.
Security for everyone - its novel data availability and validity scheme allows chains to interact with each other, whilst remaining independent in their governance, but united in their security.
User-driven network governance - has a sophisticated governance system where stakeholders have a voice and upgrades are coordinated on-chain and enacted autonomously, ensuring the development reflects the values of the community.
Polkadot introduced parachains, layer-1 blockchains that transcend the limitations of legacy networks by creating specialized and interconnected chains aimed to connect platforms, communities, and economies.
Use cases of the parachains are the following:
Independent token economies - allowing to have their own tokens, fee structures, and economic ecosystems.
Common good parachains - designed to benefit the whole Polkadot community, usually use Polkadot's own token: DOT.
Bridge parachains - allow Polkadot parachains to connect to external networks like Bitcoin and Ethereum.
Parachain hubs - provide a range of functionality to serve a broader community or use case, such as DeFi hubs.
Smart contract parachains - platforms for building and hosting smart contract-based dApps and services, with support for Wasm-VM and/or EVM.
Parathreads - Pay-as-you-go parachains for early-stage networks.
Polkadot also made available a browser extension available for Firefox and Chrome dedicated to managing accounts for Substrate-based chains, including Polkadot and Kusama. It can be downloaded from the official website Polkadot js (https://polkadot.js.org/).
Last update 25/1/2022
Polkadot was originally launched on Binance in mid-August 2020 after seeing a successful ICO, where it sold out nearly instantly. The weeks following its listing on Binance, DOT's price tripled in value, before lateralizing until the end of the year.
The following year (2021) Polkadot's price increased even further, recording incredible gains of over 800%, reaching a new ATH over $49 after starting the year just below $6. After that, the price retraced by 75% all the way down to $12.50. Similarly in the latter part of the year, it reached a new ATH at the end of the year at around $54 and has now retraced by over 66%.
As last year DOT was one of the biggest gainers, together with other coins such as Solana, Polkadot price could be one of the earlier and biggest movers in any broader cryptocurrency return to bull market conditions.
Polkadot price prediction 2022 would suggest that the next few months will be really promising for DOT. Historically after a long period of downwards prices, DOT tends to recover and regain some of the losses within the following weeks. After falling below several different support levels, it has now reached some of the most significant ones, making it a perfect moment to buy.
Polkadot coin could still fall to the next support level around $12.5, however, the current one at $16 is also a really solid one. If prices manage to hold above these levels, it could be likely to see $24 in the coming months.