The world of digital currency has progressed at an exponential rate including new currencies, software, networks, exchanges, etc. Different cryptocurrencies are traded on various software such as Bitcoin Equaliser. One such innovation is the Polkadot. This article provides complete information about it and how it works.
What is Polkadot?
Polkadot is a software that aims to stimulate a worldwide system of CPUs to run a blockchain on which operators can generate and run their digital currency. Its native coin is denoted by DOT.
Polkadot is one of several challenging blockchains trying to shape a cryptocurrency system. Some of the noteworthy examples of Polkadot include Ethereum (ETH), Cosmos (ATOM), and EROSION (EOS). Polkadot was introduced in 2020. It is one of the newest terms, and it introduces a variety of technical innovations to achieve its huge goal.
Polkadot is built to work with two different types of blockchains. The core of the network, known as a relay chain, offers permanent transactions. On the other hand, user-created networks are known as parachains. Parachains are flexible and can be adapted for various purposes.
How does it work?
Three types of blockchains can be created on the Polkadot network, which is explained below
The Relay Chain
This is the main Polkadot blockchain, and it is the basic platform where the transactions are completed. The relay chain aims to separate the procedure of execution of adding new transactions from validating. This is done to gain higher speed. A test performed in the year 2020 revealed that this architecture allows Polkadot to perform over one thousand transactions per second.
Parachains are user created networks
They are customized blockchains that rely on the relay chain’s computer capability to verify transaction preciseness.
They are used to connect the Polkadot network to other blockchains. Bridges between blockchains like EOS, Ethereum, Cosmos, and Bitcoin are being developed. They allow the tokens to be transferred without the involvement of a third party.
Other working parameters include the following ones:
Validators: They make sure that data entered in para chain blocks are correct. They also take part in linking several blockchains and vote on changes proposed for the network. They are selected by the number of staked tokens.
Nominators: They choose dependable people to verify the transactions. It intends to secure the relay chains.
Collators are nodes (computers) that retain a track record of all parachains and combine para chain figures into blocks for addition in the user-customized relay chain.
Fishermen: They act as security guards and keep an eye on the Polkadot network. They aim to report any suspicious activity on the blockchain system to validators.
Who can operate it?
Three sorts of Polkadot users can operate this software. These include:
Holders of DOT tokens
Anyone who buys DOT tokens can use them to recommend system modifications and accept or dismiss considerable alterations proposed by others.
They are appointed by DOT holders. Council members are in charge of proposing advancements to the program and determining which changes are executed. Ordinary DOT holders’ proposals need fewer votes to be adopted than those offered by Council members.
Technical Committee (TC)
This group, which comprises teams actively constructing Polkadot, can make special proposals in an emergency. They are elected by members of the Council.
How is it different from Ethereum?
There has been a lot of discussion regarding what contradicts Polkadot from Ethereum, provided that they both possess a prominent producer. Polkadot and Ethereum’s updated versions have a lot of similarities in the infrastructure and functionalities.
Both networks have a common blockchain where transactions are carried out. They both develop other smaller blockchains that use their resources. Both networks use a staking consensus method (instead of mining and proof of work).
The question of how to make network transactions compatible is still being studied.
The Bottom Line
Polkadot is software that is used in the crypto world for various purposes. It provides a substitute for the blockchain system. Instead of blocks, it uses parachains, relay chains, and bridges. It is a little different in terms of mining. It follows the staking procedure and the consensus method of proof of stake mechanism. It is quite similar to the new updated version of Ethereum.