Polkadot is a lesser-known cryptocurrency you can buy or sell on many crypto exchanges. The Polkadot platform is unique to other crypto assets because it's a next-generation blockchain purpose-built to promote a more diverse multi-chain framework.
The Polkadot protocol facilitates communication between otherwise incompatible blockchains. For example, it allows data to flow between the Bitcoin and Ethereum blockchains. Typically, cross-communication between incompatible networks would require an intermediary. But with Polkadot, that's no longer necessary.
The token for Polkadot is DOT. It launched to the public in 2020 and comes from a group of developers. One developer is the co-creator of Ethereum.
How Polkadot Works
If you use a Polkadot price feed API, you'll see that the value of DOT is relatively low compared to other crypto assets. However, that benefits investors looking to use the Polkadot protocol to their advantage. It serves two primary purposes.
The first is to act as a governance token. DOT gives investors a say in how the blockchain project moves forward. You can vote on changes that affect the future of the protocol.
Secondly, DOT is used for staking. In the Polkadot network, staking is crucial in verifying transactions and creating new DOT. Many investors use a Polkadot price feed API to buy and sell DOT like they would with any other crypto asset.
The Polkadot network includes a relay chain (the main blockchain) and parachains. The parachains are parallel chains created by users. A bridge layer allows data and values to flow between blockchains or databases.
The parachains are what make the Polkadot network so effective. The user-created chains take the brunt of work away from the primary relay chain. Thanks to those parachains, the network can process over a thousand transactions a second. That's significantly faster than Bitcoin and Ethereum, which can only process seven and 30 transactions in the same amount of time, respectively.
Polkadot has the potential to get even faster as the network grows and more users add parachains. Theoretically, it could reach speeds that allow the network to process up to a million transactions a second.
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