What is Polkadot & how does it work?

Polkadot is considered a powerful alternative to Ethereum and is an open-source blockchain, and a decentralized web platform designed for supporting other blockchains. In this newsletter today, we are going to learn what is Polkadot blockchain and how does it work? In our previous article, we learned about Merkle Trees in the blockchain which you can check out here. So what are we waiting for? Let's get started right away!?

What is Polkadot Blockchain?

Polkadot Blockchain is an improved version of Ethereum and is well known as "the brainchild of Ethereum", developed by Parity Technologies, and co-founded by Gavin Wood and Jutta Steiner. It has taken the cryptocurrency market by storm with its native DOT token being amongst the top five digital assets by market capitalization. This is a multi-chain network that is proposed to different blockchain networks into a single unified network. And the blockchains connected to Polkadot are known as "para chains".?

How does Polkadot work?

Polkadot uses NPoS (Nominated Proof of Stake) and forms as proof of authority blockchain. The DOT is the native coin of the Polkadot and regulates all the operations such as validating votes, rights, and interoperability. This multi-chain network is coordinated by a central relay chain and allows data processing & transactions on other chains in parallel called para chains. Polkadot has resolved the scalability issues and provided an ultimate solution to clogged networks, and higher transaction fees.

To understand the working of Polkadot in a better light, it is vital to understand the following terms.

Parachains: As we know that Polkdadot is a popular blockchain that allows hassle-free communication between blockchains and para chain is a layer-1 blockchain that runs parallel within the Polkadot network. Parachains carry the characteristic of flexibility and allow developers to focus on core competencies by avoiding the need to build an entire network from scratch for each use case. Polkadot Parachains have the properties namely Interoperability, Scalability, Cross-chain composability, and?Governance.?

• Substrate: A substrate framework is one of the most revolutionary technologies in the world of cryptocurrencies that allows new blockchains to be added to an existing network in a time-effective manner. It is an application that one can deploy on the Polkadot network and is based on the technology of Rust giving blockchain developers an advantageous edge.?
• NPoS (Nominated Proof of Stake): Now comes the "Nominated Proof-of-Stake (NPoS)" which is a decentralized consensus mechanism participants get rewards for supporting & nominating validators. Its core design focuses on security, user satisfaction, and efficiency. Polkadot uses this extremely fast consensus algorithm that enables lower transaction fees and carbon footprint.??

Significance of Polkadot?

What makes Polkadot so significant? Polkadot blockchain provides scalability solutions due to its distinguished characteristics explained in the points below.??

1. It makes use of the process of sharding that enables quick and cost-effective transactions.?
2. It increases overall throughput by enabling transactions in different shards.?
3. It allows cross-chain functionality that enables the transfer of any kind of data or asset.?
4. It supports compatibility with other existing platforms such as Ethereum.?
5. It does not compete with other blockchain platforms but rather complements them.?
6. Polakdot's infrastructure allows dApps developers to smart contracts functionality.??

Polkadot Vs Ethereum

Overview of Polkadot's Native Token, the DOT

The DOT, Polkadot's native token is currently the 10th-largest cryptocurrency by market capitalization and possesses a variety of distinct roles in the network. It is mainly used for staking and governance and also fosters a security model by facilitating a consensus mechanism. There are three types of stakeholders in the Polkadot proof of stake consensus model as follows:

1. Nominators: They secure relay chains and determine the trusted validators.
2. Validators: They are used for staking DOT, validating proofs from collators, and participating in the consensus.
3. Collators: They are responsible for keeping valid records of para-chain transactions & then sending them to validators on the relay chain.

Final Thoughts

The Polkadot is designed with the aim to support decentralized internet and holds a vision to create a system with no central authority. In today's newsletter, we learned the fundamentals of the Polkadot blockchain, how it works, and more. Apart from the blockchain-based networks, it is also working on creating a governance system that allows the community to make decisions, create policies and enact changes.