What Is Polkadot? DOT Trading Guide

Polkadot has certainly left an impact in the crypto world, with many even calling it "the Ethereum killer." But what is it exactly, and how can you trade it?

TL;DR

• Polkadot is referred to as the "Ethereum Killer."
• Polkadot is an open-source sharded decentralised blockchain offering smart contracts.
• Polkadot was launched in 2016 by Ethereum's co-founder, English computer scientist Dr. Gavin Wood.
• DOT is the native cryptocurrency of Polkadot and can be traded with Plus500's crypto CFDs.

The Meaning of Polkadot

Polkadot (DOT) is an open-source shared multichain protocol that connects blockchains. Sharding is a technique used in blockchain technology, and it essentially refers to the division of an extensive database into smaller fragments called shards. This process intends to ease the load experienced on the database by distributing it to different servers. This, in turn, facilitates the process and quickens query time execution. In other words, sharding streamlines the cross-chain transfer of data and interpolates between various blockchains.

Accordingly, Polkadot's mission is to connect, secure, and facilitate cross-chain data, tokens, and asset transfers to enable interoperability across multiple blockchains. Polkadot, therefore, was created to enable scalable, secure, and trustworthy information transaction across several chains in parallel, a process called "para chains."

Polkadot might be distinguished from other networks because it utilises bridges (connecting layers) that allow data transfer between blockchains and can also be connected to non-blockchain databases. It also uses para chains (parallel chains), relay chains, and parathreads. These four components combined allow for scalability, speed, connectivity, and flexibility.

Compared to its predecessors, the Ethereum and Bitcoin networks, Polkadot can process much more data within a second. While the Bitcoin network can process about seven transactions per second and the Ethereum network can process about 30 transactions per second, Polkadot can process over 1000 transactions within the same timeframe.

A Walk Down Polkadot's History

• 2016: Polkadot was the product of Ethereum's co-founder, English computer scientist Dr. Gavin Wood, who released the first white paper that year.
• 2017: Dr. Wood partnered with Peter Czaban to found the non-profit Web3 organisation, which aimed to provide research and development grounds for Polkadot and hosted the initial token sale (ICO) for Polkadot. The ICO in 2017 yielded fruitful gains of over $140 million, while 5 million DOT tokens were also sold.
• 2019: An early version of the polkadot code was released by Parity Technologies.
• 2020: The mainnet of Polkadot was released in May, and in August DOT transfers went live.
• 2021: Polkadot parachains were released, and the first parachain slot auction took place (and won by Acala).
• 2022: Polkadot released its XCM format and OpenGov (the blockchain's iteration of governance).
• 2022: Gavin Wood was replaced by Bjorn Wagner as Parity Technologies' CEO.
• 2023: Polkadot released Polkadot 1.0.

Polkadot and Crypto: What Is Dot?

Like Axie Infinity, Polygon, and Ethereum, Polkadot has a native token called DOT, which is used for staking. In other words, it is used to verify transactions and create new DOT tokens on the Polkadot network. Additionally, DOT is a governance token. Governance tokens grant ownership in decentralised protocols. Thus, DOT token holders get voting rights on changes that can occur on the Polkadot blockchain in the future.

How to Trade Polkadot (DOT)

Traders who want to gain exposure to Polkadot (DOT) can do so through trading CFDs with a provider like Plus500. By trading CFDs on cryptocurrencies, you can trade on downward and upward Polkadot prices with leverage. Leverage means that you get to potentially increase your gains if the price aligns with your trading position. Simultaneously, you should be aware of the fact that leverage can also potentially increase your losses if the price moves against you.

Trading crypto CFDs allows you access to the crypto market without granting you actual ownership of the cryptocurrencies. This means that you don't have to worry about storing the cryptocurrency in a safe crypto wallet in order to shield it from possible hacking attempts, nor do you need to wish for its price to only go up, since you can also trade on its falling prices.

Conclusion

In conclusion, ever since its inception Polkadot has proven to be an altcoin worthy of consideration. This cryptocurrency can be traded with Plus500's Contracts for Difference (CFDs).

Ready to trade Polkadot with Plus500? Start now!