As we step into the next generation of blockchain technology, we have an extremely scalable and highly secured blockchain network called Polkadot. Polkadot explains that it efficiently meets the user's needs and makes a crucial change in the blockchain and cryptocurrency world.
The days of single-chain blockchains have ended. Now, we can create a single network by connecting multiple chains to solve the issues that existing blockchain technologies like Bitcoin and Ethereum face. And this has made a revolution in the blockchain ecosystem.
To understand this better, we first have to understand what blockchain is.
What is a Blockchain?
A blockchain is a decentralized, distributed, oftentimes public, digital ledger consisting of records called "blocks". From the name itself, blockchain is a chain-like structure where blocks are connected. Blocks contain information, and each of them contains a cryptographic hash and the hash of the previous block.
A hash is like a password that consists of a series of hexameric characters that is the encrypted form of an arbitrary set of data. You can verify this hash to the original data but cannot be decrypted back to its original form. The previous hash is the hash of a previous block. Through the previous hash functions, blocks are tied with other blocks. Using this technology, users can perform transactions without the need for a central certifying authority.
For example, A and B are participants of a blockchain network. If A wants to send money to B, the transactions are represented online as a “block”. The block is broadcasted to every party in the network for validation. After getting the approval, the block can be added to the chain. Then the money can move from A to B.
Bitcoin or Ethereum or ……?
Don't be afraid of these words. They are just cryptocurrencies. Yes, Bitcoin is the first decentralized digital currency, not backed by any government or organization. All the transactions are peer-to-peer, with no need for trusted third parties.
Coming to Ethereum it occupies the second position after Bitcoin. But Ethereum and Bitcoin are completely different kinds of blockchains. Bitcoin acts solely as a peer-to-peer currency network. Ethereum is a smart contract platform.
Blockchain developers can deploy decentralized applications(Dapp) on the Ethereum network, and create their own tokens. For carrying out these transactions, the network charges a transaction fee called gas. This fee is paid in Ethereum native currency called Ether(ETH) and distributed to users that validate transactions on the network.
The downside here is that Ethereum has a very low transaction capacity. When the network traffic increases, it causes congestion, and the transaction fees skyrocket. Also, blockchains cannot communicate with other blockchains without a trusted off-chain intermediary. This means that blockchains like Ethereum are not very scalable.
This is where the Polkadot blockchain comes in.
Tech legends say that Polkadot will achieve a place after Ethereum. Founder Gavin Wood of Polkadot explains that it has several unique features compared to already existing blockchains.
Like Bitcoin and Ethereum, Polkadot is an open-source, decentralized public digital ledger but also creates a combined network by connecting several specialized blockchains.
Apart from others, Polkadot provides unprecedented economic scalability by enabling a common set of validators to secure multiple blockchains.
Who invented this heterogeneous multi-chain architecture?
Gavin was the chief technology officer and co-founder of the Ethereum project. Gavin Wood designed and stewarded the “Solidity language,” and was the project chief of the Ethereum IDE. Additionally, he designed and implemented the “Whisper protocol”.
His new invention is the Polkadot protocol, which will connect public and private blockchains so that they can inter-operate. The Polkadot explains that, makes it frictionless for corporations that wish to work in private blockchains to connect with public blockchains. He is the founder and current director of Parity Technologies Ltd.
Before we go any further, you need to understand the words parachain, relay chain, and validators. The central chain of Polkadot is the relay chain. For selecting the validator set Polkadot uses the NPoS(nominated proof-of-stake) mechanism.
These validators will play a crucial role in adding new blocks to the Relay Chain, maximize chain security, and by extension, to all parachains. This allows users to complete cross-chain transactions via the Relay Chain. Parachains are the diverse individual layer-1 blockchains that run in parallel on Polkadot, connected to the Relay Chain.
Why are blockchains isolated from each other? What do you think happens if the isolated blockchains are joined together? Yes, it makes a connected network of blockchains. This revolutionary concept has been adopted in the Polkadot ecosystem. Let's look at how Polkadot explains this feature.
The web3 foundation focuses on intercommunication between various ecosystems. Apart from tokens, Polkadot enables cross-blockchain transfers of any type of data and assets within the Polkadot ecosystem.
The relay chain provides Internal interoperability between parachains. Specialized parachains are called bridges to facilitate external interoperability to other chains.
Polkadot provides unprecedented economic scalability. It enables a common set of validators to secure multiple blockchains. Transactional scalability is achieved by spreading transactions across multiple parallel blockchains.
Polkadot explains that many transactions can process on several chains parallelly because it is created as a sharded multi-chain network. This overcomes the issues that occur on legacy networks that process transactions in sequence.
This parallel processing improves scalability greatly, and thus creating the right conditions for increased adoption and future growth.
Technically, Polkadot is a blockchain. Apart from that, it is a blockchain that connects other blockchains. There is a base blockchain upon which other blockchains are deployed and work together. This feature is known as the heterogeneity of Polkadot.
Polkadot explains how to achieve this feat by using the relay chain and parachains concepts. The relay chain acts as a hub that connects different chains; the connected networks are called parachains.
Polkadot is built with a sophisticated governance system where all stakeholders have a voice. It is the uniqueness of Polkadot. Blockchains weren’t conceived with an easy means for governance in the early days. Bitcoin Cash and Ethereum classic are such examples.
Community governance is a key feature of Polkadot. Polkadot explains it is the first blockchain to have a governance process built into the ecosystem. Any upgradation to the network is coordinated on-chain and validated autonomously.
Polkadot uses a proof-of-stake algorithm where any user can nominate validators to validate transactions. Shared security means that all DOTs staked in the system are essentially backing all of the projects in the ecosystem.
Connecting your chain to the Polkadot relay chain will provide you with interoperability and security instantly. The cost for strong security is reduced because Polkadot uses the pooling resource for building projects.
The Substrate Framework
The substrate is an important component of the Polkadot project. It is a framework for creating cryptocurrencies and other decentralized systems using blockchain technologies.
Polkadot is built with Substrate and projects built with Substrate can be run natively on Polkadot. Polkadot explains that using the Substrate framework, you can create a custom blockchain in minutes.
You can upgrade Polkadot without any hard forks. The upgrade works on the meta protocol level. Depending on the votes, the upgrade happens. If the outcome is positive then the meta protocol will change the Polkadot protocol depending on the positive outcome. Otherwise, nothing will happen.
Once the voting window is closed, the code gets deployed. In this manner, forks are avoided. Why because there is a governing process that every DOT holder can agree on. In this way, the Polkadot blockchain explains forkless upgrades.
Now you have an idea about what Polkadot is. These several features make Polkadot more unique than other blockchains. Many of them consider Polkadot to be one of the most promising and well-thoughted blockchains. Many of them are waiting for what Polkadot does in the feature.