What is Polkadot?As previously stated, networks that consist of a single blockchain can process a limited number of transactions. If too many transactions are submitted at once, it creates a bottleneck. This causes delays and increased transaction fees.
Polkadot is a sharded blockchain protocol that allows blockchains, designed for specific purposes, to work together efficiently and securely at scale. Polkadot is a diverse blockchain that allows other networks to operate in a single decentralized ecosystem.
To make blockchain technology more accessible to real world usage, Polkadot accommodates software developers, start-ups and enterprises. With Polkadot, you can make blockchain scalable and customizable. At the same time, unlock cross- chain communication, transparent governance and seamlessly upgrade blockchains.
How does it work?Polkadot uses two types of chains to make the network operate smoothly – relay chain and parachains.
The Polkadot relay chain connects various blockchains in a safe and secure manner, so that they can be optimized for a specific use case. This feature allows teams to incorporate the functionality they require and offers greater efficiency and security to the blockchain. Building time is reduced with Polkadot’s customized blockchain framework, Substrate. The development framework, Substrate allows the network to process transactions from all the chains simultaneously and drastically increases scalability.
The relay chain consists of parachains that serve a cross-messaging function. Thanks to parachains, data such as account balance, tokens and info from the real world, can easily be exchanged. A practical example of how Polkadot is driving the use of blockchain technology in the real world is with stock prices and scores from sporting events.
Of course, Polkadot is famous amongst the crypto community for its ability to host Decentralized Financing (DeFi) applications.
Another added bonus of the Polkadot network is its ability to offer forkless on-chain upgrades. When blockchains upgrade, they usually do so with a hard fork. Usually, this causes friction amongst the community who might disagree about a hard fork. With Polkadot’s forkless on-chain upgrades, teams can bring new features to their blockchain without any other protocol.
To keep the Polkadot network truly decentralized, the network is governed by stakeholders who have DOT tokens. Polkadot’s native token, DOT gives stakeholders the right to make proposals and vote on important governance matters.