Home Press Releases Will A Blockchain-Based Internet Generate More Value For Polkadot (DOT)?

Will A Blockchain-Based Internet Generate More Value For Polkadot (DOT)?

Blockchain adoption is happening at a faster pace than ever, which means that soon enough the internet of value will take off. However, for it to be successful, it will need different blockchains in existence that will require inter-connectivity and this is why a project such as Polkadot comes into play.

What is Polkadot?

Polkadot is a blockchain network designed to facilitate interconnectivity between different blockchains. It was created by Ethereum co-founder Gavin Wood who also created the Solidity programming language. Wood realized that the number of blockchains would continue growing over time as more projects come alive, both private and public projects.

A lack of interoperability would be a major problem in the future because it would hinder the exchange of value. Wood realized the need to eliminate the fragmentation and facilitate blockchain interoperability, thus the idea of a bridge to link all blockchains was conceptualized.

How does Polkadot work?

Here’s an example of how Polkadot is supposed to enable interoperability. An Ethereum network-based smart contract can facilitate payment on the Litecoin network or any other blockchain, or facilitate a cross-chain swap of Ethereum for Bitcoin. It can achieve such without the need for an intermediary and in a trustless, as well as a decentralized ecosystem through the Polkadot network. Polkadot can also provide price data to all the blockchains at the same time. Polkadot can achieve this interoperability through its parachains, relay chain, and connecting nodes called bridges. The relay chain is Polkadot’s core network layer that oversees all the transactions on the network.

Parachains are the second layer that facilitates the simultaneous running of multiple chains while enabling high transaction speeds and scalability. Companies can buy parachains to facilitate their interoperability requirements. Bridges use break-in and break-out smart contracts to make it possible for the Polkadot network to interact with established blockchains.

DOT’s role in the grand scheme of things

DOT is the native token on the Polkadot blockchain and it has various uses. The first use is staking where DOT holders lock up their tokens on the network as validators who facilitate block minting and nominators who act as backup for the validators. The second use is governance where token holders vote on things like upgrades on network fees. The third major use case for DOT is bonding, where the token is bonded to relay chains as soon as a new parachain is added.

DOT is trading at $21.66 in the current bear market which saw it plummet from an all-time high of $49.78 in May. However, it has recovered substantially from its May low of $13.63.

DOT USDT
 Source- Binance

DOT’s price performance is currently heavily influenced by the overall market performance. However, one cannot help wonder about its potential given its important role in facilitating blockchain interconnectivity. It is a project whose developers foresaw a potential problem in the future and decided to create a solution before the problem gets out of hand. But what does that say about the future of DOT and is it a good investment?

If demand for blockchain solutions continues to grow, it will create more demand for Polkadot as an interoperability solution. This means higher demand for the network, which translates to higher demand for DOT to run the network’s operations while also facilitating bonding. Adoption is the most important growth driver when it comes to token value. Polkadot currently has more than 350 projects built on its network including Dapps.

Polkadot’s current fast-paced adoption is important for the future of DOT. There are just over 945 million DOT tokens in supply which means it is relatively limited compared to competing tokens and as such, it still has a lot of room for growth.

Read more about:
Share on

Sydney Ifergan

Sydney has 20+ years commercial experience and has spent the last 10 years working in the online marketing arena and was the CMO for a large FX brokerage.

Crypto newsletter

Get the latest Crypto & Blockchain News in your inbox.

By clicking Subscribe, you agree to our Privacy Policy.