Polkadot (DOT) is one of the top cryptocurrencies by market cap.
It was created by one of Ethereum’s co-founders and its first Chief Technology Officer Gavin Wood.
What is Polkadot?
To understand Polkadot’s value proposition, let’s first cover some basic concepts.
Decentralized Applications (Dapps)
Decentralized applications are similar to the applications we use today like Youtube, Uber and Paypal.
What makes Dapps unique is that they are not controlled by a central authority. Instead, control is distributed across a network of hundreds and sometimes thousands of computers globally.
This makes these applications more robust and less susceptible to corruption and attacks.
You may recall not too long ago when Whatsapp, Instagram and Facebook all went down on the same day.
This was only possible because Facebook is a centralized organization with a limited number of redundancies.
On the other hand, Bitcoin has almost never gone down despite the efforts of many including the Chinese government. The last reported Bitcoin outage happened in 2013 when it was a much smaller network. The resiliency of the Bitcoin network is largely because it has no one headquarters. Instead, It has a network of more than 10 thousand nodes distributed globally and the number of nodes is increasing all the time.
The resiliency of Decentralized Applications causes many to believe, myself included, that they will be much more commonplace in the future.
To build these Decentralized Applications you need decentralized, programmable stores of data. Enter what is known as programmable blockchains.
You may have heard of some of these blockchains such as Ethereum, and Solana.
The wrinkle that the creators of Polkadot introduced is that they observed that no single blockchain can serve all purposes efficiently and that different blockchains were better at different use cases.
So they built the Polkadot network to bring all the different blockchains under one umbrella.
With polkadot different blockchains can connect and exchange information with one another.
This is why Polkadot is often referred to as the internet of blockchains.
This fundamentally seems like a good idea and a pretty logical next step in the development of the blockchain ecosystem.
I am comfortable with Polkadot as an investment for the simple reason that I think building a more decentralized world is fundamentally a good thing.
Am I Buying Polkadot?
Polkadot is not without competition. Cosmos is another blockchain that wants to be the internet of blockchains.
That said, given the all-star team Polkadot has assembled I like their odds.
However, with so few decentralized applications running on Polkadot, how much greater its valuation will become compared to the $40 billion valuation it already has is tough to ascertain.
I’d like to see Polkadot gain more traction with Dapps before I buy any.
The theory is great, I’d just like to see it confirmed more extensively in practice.
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