What Is a Polkadot Coin (DOT) and Whether It’s Worth Buying?

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From the time of its inception, everything about Polkadot Coin (DOT) remained under the radar until recently. In late 2020, the Polkadot platform literally shook the whole crypto world. Currently, there are many conspiracies about this platform, and some crypto experts even suggest that it has the potential to become the Ethereum killer. But here, we'll only talk about facts, and according to the current stats and the progress of Polkadot, it actually can transform the landscape of the crypto industry.

Polkadot mainly focuses on web decentralization by allowing blockchains to interact and connect with one another. Not only will it help the crypto users from different communities to collaborate, but it'll also enable countless De-Fi applications to operate beyond their native network. If you're wondering whether it's a good investment opportunity or not, then read this detailed guide carefully.

What is Polkadot?

Polkadot is a decentralized, secure, scalable, and multi-chain substrate platform for the next-generation web. It aims to provide a single-stop solution to develop purpose-built yet compatible blockchains where the primary power is in the hands of users instead of big corporations. The platform seeks to provide the users with an interoperability protocol that’ll use shards or segments in order to achieve network scalability. Polkadot has the ability to connect oracles, public chains, and private networks where independent blockchains using an innovative web type can perform exchange transactions and information in a trusted manner.

History

Polkadot was created by Mr. Gavin Wood, and that's why the platform is known as his brainchild. Moreover, Wood is one of the most influential figures in the early history of Ethereum as he was the core developer, CTO, and co-founder of the Ethereum network. In the summer of 2016, Wood came up with the initial idea of Polkadot, and later in October 2016, the very first Polkadot white paper draft was completed.

In 2018, Polkadot achieved many development milestones such as BBQ Birch testnet, the development of PoC-1 (on-chain protocol for governance), and its upgraded version, PoC-2. Later, in January 2019, the completion of Polkadot's PoC-3 protocol was announced. At that time, the platform didn't have its own mainnet. The platform’s very first phase mainnet chain was launched later in May 2020, when the network was officially launched.

Developers and Governance

The governance structure of the platform is one of the most clearly defined ones, and it's divided into three distinct categories: council, technical committee, and community.

Council

In order to steer the network in the right direction, the members of the Polkadot council (6 to 24) make proposals. Only a holder of DOT (native Polkadot token) can become a council member. The council as a whole can do the following tasks:

  • Elect the members for the technical committee

  • Propose new updates for the network to the community

  • In any technical emergency, the council can fast track referenda to acquire the public vote

  • The council can veto any referendum if the proposal is not suitable for the network.

Any user holding DOT can become a council member. In order to reshuffle the council members, an election is held every other week. Not only does it improve the community, but it also increases the participation of community members greatly.

Technical Committee

The TC (Technical Committee) consists of people who are actively developing Polkadot. The main purpose of this committee is to ensure the seamless operation of the Polkadot ecosystem. Other than that, they can:

  • Make proposals for new updates to the council.

  • TC is the only category that can start a fast-track proposal

  • This committee can also veto any referendum if the proposal poses a security risk

People are added or removed from the TC according to the voting results.

Community

Just like any other crypto platform, the community consists of those people who are holding DOT. All the community member can participate in three different activities, which are:

  • Make proposals

  • Nominate the member for council committee

  • Vote on referenda

Interested in Crypto Trading? - Buy DOT on Binance

How Does Polkadot (DOT) Work?

Blockchains connecting to Polkadot in parallel are known as Parachains, and it uses the concept of Relay Chain. The working mechanism of the platform can be divided into three segments as listed below.

Relay Chains

The Relay Chain is a mechanism to check the transaction address and standardize the data. It enables other blockchains (parachains) to understand the functionality and pool security of the network. In order to achieve better transaction speed, the Relay Chain model keeps the addition and validation of transactions separate. According to the latest stats, because of the Relay Chain model, the network can easily process more than 1000 transactions within a single second.

Parachains

As we discussed earlier, Polkadot is a segmented multi-chain platform. Different blockchains can interact with the Polkadot network to access its security, transactions, and NPoS (Nominated Proof of Stake) validation. A central Relay Chain allows it to process information and complete transactions on a number of different blockchains in parallel. It’s known as Parachains that divides the whole network into singular shards or segments. Not only does it ensure seamless data processing, but it also improves the throughput of transactions.

Bridges

Bridges help different blockchains to interact with the Polkadot network. The development to make these bridges more secure is on the way. Moreover, the developers are also developing different bridges for different blockchains such as Bitcoin, Ethereum, Cosmos, and EOS. It means that people will be able to interact with Polkadot from different blockchains to swap tokens directly without using any central crypto exchange.

What Problems Polkadot solve

Some of the biggest problems that almost all the systems based on blockchain experience are scalability, interoperability, governance, and transaction speed. Along with these features, the Polkadot platform aims to solve the following problems.

Scalability

The Polkadot network comes with a standard set of validators. It allows the platform to interact and operate with a large array of different blockchains. Because of this feature, the scalability of the blockchain can be exponentially increased.

Interoperability

It’s simple to understand that the Polkadot platform aims to improve interoperability. That’s because it offers a single-stop solution to connect a range of different blockchains.

Improved Security

Polkadot platform comes with great security features that all the other interacting blockchains can use for a secure and fast information transmission and transaction exchange. Moreover, each blockchain at the same time also remains independent and can run its own governance model.

Eliminate the Need for Forks

If you don’t already know, the biggest cryptocurrency platforms such as Bitcoin and Ethereum have been split more than once by using forks. It means that their community has been divided multiple times because of conflicts. But Polkadot removes this need completely because it can manage the integration of new features, fix bugs, and deploy upgrades without hard forks.

What is Polkadot (DOT) Token?

DOT is basically the Polkadot token, also known as the native cryptocurrency of the Polkadot platform. It helps the Polkadot users to carry out the core functionalities of the network.

Governance

The DOT tokens provide the Polkadot users with complete control over the network. It’s important to note that all the user rights and privileges that other crypto platforms offer to their miners are available for the DOT holders. Holding DOT tokens also allow the users to determine the new upgrade and fixes regarding protocol.

Staking

If the DOT holders behave honestly, then they're incentivized according to Game theory. Not only does it allow users to earn more DOT tokens by staking, but it also ensures the security of the network.

Bonding

The new parachains on the Polkadot platform are added by boding the DOT tokens. In order to remove the non-useful or outdated parachains, the bonded tokens are removed. It’s a nominated proof of stake mechanism that keeps the system intact.

Currently, the total supply of Polkadot tokens is more than 1 billion DOTs, and the platform has an inflationary monetary model. So, it’s expected that the number of total tokens will be increased by 10 percent every year.

DOT Profile
Ticket XRP

Max supply

n/a

Total supply

1,085,544,023

1-year price low

$3.649

1-year price high

$7.551

Current Price

$41.17

Market cap

$7 203 062 122

Markets

Binance, Huobi Global, Kraken

Polkadot Uses

Within the Polkadot ecosystem, there are hundreds of different projects where each project comes with unique use cases. Here we have discussed only the most popular ones that aim to improve decentralized finance technology.

Moonbeam

Moonbeam is one of the most popular platforms by the Polkadot network. It’s an interoperable network built for the deployment of Polkadot’s smart contracts. It also allows crypto users to use Moonbeam as a bridge between Ethereum and Polkadot. It also has its own native token known as GLMR that users can use to perform transactions on Moonbeam.

Akropolis

Akropolis is yet another innovative, decentralized, and autonomous project launched by Polkadot in order to build economies for the community. Akropolis is considered to be one of the best cross-chain De-Fi (Decentralized Finance) networks. That's because, unlike other De-Fi lending protocols, it uses under-collateralized lending and borrowing instead of over-collateralization.

Edgeware

Edgeware is the very first parachain of smart contracts by Polkadot. It's considered to be the simplest and easiest platform to deploy Polkadot smart contracts. Its native token is known as EDG, and 90 percent of them are already distributed during the Edgeware blockchain genesis block.

Polkastarter

In order to facilitate token pools and cross-chain auctions, Polkadot has launched Polkastarter, which is a fundraising platform and crypto launchpad. It makes it easy for other Polkadot projects to raise funds from a Polkadot-based, interoperable, and decentralized environment.

Kusama

This project is also known as the cousin of the Polkadot platform, and it's used as the testing ground for all the other projects that the platform launches. This project is also created by Gavin Wood based on Substrate and helps the development team to test other projects that Polkadot releases.

How to Mine DOT

The Polkadot platform uses nominated proof of stake mechanism for consensus where anyone holding DOT can participate in choosing the validators. Nominators share the information regarding financial fines and reward with validators that they choose. In return, the nominators are incentivized.

On the other hand, validators ensure the finality of new blocks by creating and validating them. Regardless of the participation of validators, the Polkadot consensus system incentivizes them with validation rewards equally.

Now that you understand how users earn DOT which also means that DOT mining isn’t possible. In order to earn DOT, you’ll first need to buy/hold them.

Best Wallet to Store DOT Tokens

You can store your DOT in any crypto wallet that offers Polkadot support. But you’ll need to use the official Polkadot Wallet if you want to bet your DOT tokens in the most effective way. For that, you can use a dedicated Polkadot.js browser extension where you can create a Polkadot wallet for yourself.

Best Exchanges to Stake DOT Tokens

It’s important to use the right platform (crypto exchange) if you want to stake DOT tokens. The following are the best options that you can use.

Polkadot Coin (DOT) Performance

In recent years (especially after 2020 mid), Polkadot (DOT) has performed extraordinarily and has become one of the best cryptocurrencies around the globe.

The most prominent event in the history of Polkadot was the vote from another community. It allowed the DOT holders to transfer their tokens without using over-the-counter, and it also enabled renowned exchanges such as Binance and Kraken to list DOT.

But it’s important to bear in mind that cryptocurrency is still highly volatile. On 14th January 2023, its market capitalization reached about 45 billion US dollars. But because of high volatility, it declined drastically, and now (on 24th January 2023), it's about 15 billion US dollars.

The following chart also shows the volatility of Polkadot (DOT) that in other words, also explains the associated risk for the investors.

Polkadot Performance

Polkadot Performance

DOT Price-performance
DOT

1m return

14.59%

1y return

-2.69%

Should You Buy Polkadot (DOT)?

It entirely depends upon your financial needs and investment goals. If you're interested in investing in cryptocurrency, then Polkadot (DOT) can be a good investment. It has performed exceptionally well, and it has become one of the top cryptocurrencies in just one year. It shows great potential, and market experts and critics suggest that the price of a single DOT can actually reach 50 US dollars by 2025. So, as compared to the other altcoins which were introduced to the market at the same time, Polkadot DOT is certainly a better option for investment.

But you must keep in mind that in trading, nothing is certain, and because of high volatility, the risk factor is also high. There is no doubt that Polkadot is offering great functionalities and features, but there are also some other platforms with similar offerings and goals, such as Cardano, Cosmos, Tezos, and more. Therefore, investing in Polkadot (DOT) can go in either direction. That’s why it’s critical to follow the right procedure to buy Polkadot (DOT).

How to Buy Polkadot (DOT): 3 Steps Algorithm

If you're wondering how to buy Polkadot, then consider following the three steps algorithm discussed below.

Step One: Market Analysis

Performing market analysis is the very first and by far the most important step that you mustn’t skip. If you're interested in Polkadot (DOT), then not only do you need to understand its current market value and status, but you also need to explore its historical data. The following chart explains the progress of the cryptocurrency since its creation.

Polkadot (DOT) performance since its inception

Polkadot Performance

Polkadot Performance

Step Two: Funding Account

After performing market analysis, the next step is to open your account on the crypto exchange that supports Polkadot DOT. We recommend you go with Binance because it’s the most popular and trusted crypto exchange in the whole world. You can buy, sell, stake, and trade DOT tokens on this platform and access 150 other cryptocurrencies as well.

If Binance is what you choose, then you'll first need to open your account on this platform which is as simple and easy as it gets. All you need to do is to open the official Binance website and click on the big "Register Now" button available on the main page. The system then will open another page where you'll need to provide your email address and choose a strong password. After that, the system will send you an email with an account activation link, and you'll need to go to your inbox and click on that link. That's how your account will be created on Binance.

How To Buy Polkadot

How To Buy Polkadot

Now you’ll need to fund your Binance account either with fiat currency or any other cryptocurrency. For that, you’ll need to click on the “Wallet” option given on the top right corner of the main page. The system will provide you with a dropdown menu, and from there, you'll need to click on the "Fiat and Spot" option.

How To Buy Polkadot

How To Buy Polkadot

From the next page, without changing anything, you'll need to click on the "Deposit" button. You'll be able to see this option on the top right-hand side of the page, as shown below.

How To Buy Polkadot

How To Buy Polkadot

Now you'll have two options. If you want to fund your account with cryptocurrency, then you'll need to click on the "Deposit Crypto" button, as shown below.

How To Buy Polkadot

How To Buy Polkadot

After that, you’ll need to attack your crypto wallet and fund your account with the desired cryptocurrency.

On the other hand, if you want to fund your account with your government-issued fiat currency, then you'll need to click on the "Continue" button. The system then will ask you to enter the information of your bank account and choose the cryptocurrency (which is DOT in this case) along with its amount.

How To Buy Polkadot

How To Buy Polkadot

Step Three: Buying Polkadot Token (DOT)

You can also download the Binance app on your smartphone for easy navigation. The following method can be used to buy Polkadot (DOT) by using the Binance app.

Once your Binance account is funded, you'll need to click on the double arrow trading button, as shown in the image below.

How To Buy Polkadot

How To Buy Polkadot

Now the system will ask you whether you want to buy, sell, deposit, or convert your crypto, and you'll need to tap on the "Buy" option.

How To Buy Polkadot

How To Buy Polkadot

Then the system will give you the list of all the available cryptocurrencies that you can buy, and you'll need to choose "DOT," as shown below.

How To Buy Polkadot

How To Buy Polkadot

Note:

Keep in mind that the prices and base currency of your account will be different.

After clicking on "DOT," the system will give you two options. You'll need to choose the "Cash Binance" option and tap on the "Confirm" button. The selected amount of "DOT" will be added to your account.

Direct Method

Binance also allows you to buy DOT directly, where you don't need to fund your account first. For this method, you'll need to open your Binance account in a web browser and click on the "Buy Crypto" option. From the dropdown menu, you'll need to choose the "Credit/Debit Card" option, as shown below.

How To Buy Polkadot Directly

How To Buy Polkadot Directly

From the next page, you’ll need to choose the amount of money that you want to use in order to buy DOT tokens. Moreover, you’ll also need to choose “DOT” from the cryptocurrency list.

How To Buy Polkadot Directly

How To Buy Polkadot Directly

The next step is fairly simple. After clicking on the "Continue" button, the system will ask you to attach your Debit/Credit card to complete the purchasing process.

Best Exchange to Buy Polkadot (DOT) in 2024

As we have already discussed, Binance is one of the best and top-rated online crypto exchanges. It's used by most crypto users around the world, and it'll suit you the best, especially if you're a beginner. The fee that Binance charges is also nominal. According to your physical location (country), you’ll be charged a 0.1 - 0.2 percent flat fee on your trades. Moreover, the best thing about the fee is that the platform deducts it on the spot, which means that you won't have to deal with any complex fee structure.

Binance is available in more than 180 countries from all corners of the world. But still, there are some countries where this crypto exchange isn’t accessible. Therefore, before you consider creating your account, it’s important to make sure that you can use this platform legally.

Top 10 Best Cryptocurrencies to Invest In

More and more investors and traders are now taking an interest in cryptocurrency because of the recent surge. Still, choosing the right option is not an easy task that requires both time and effort. Moreover, it's not easy for everyone to predict the crypto market by analyzing the currency landscape. That's why we have compiled a list of the 10 best cryptocurrencies to invest in for your ease and convenience. Our crypto experts and researchers have selected these cryptocurrencies after performing comprehensive market research. Not only will it save you time and effort, but it'll also improve your chances of reaching your financial goals.

Cryptocurrency Industry Current price 1y return 1m Return Total score

Binance Coin (BNB)

Cryptocurrency exchange

228.50$

-22.12%

0.26%

9.5

Invest

Cardano (ADA)

Blockchain platform

0.38$

20.46%

25.17%

9.2

Invest

Ripple (XRP)

Payments

0.61$

54.63%

0.66%

9

Invest

Dogecoin (Doge)

Payments

0.08$

-17.87%

21.63%

8

Invest

Polkadot (DOT)

Blockchain platform

5.47$

-2.65%

15.74%

8

Invest

LItecoin (LTC)

Payments

71.57$

-8.17%

2.29%

7.6

Invest

Stellar (XLM)

Payments

0.00$

NaN%

NaN%

7.5

Invest

Uniswap (UNI)

Decentralized exchange

0.00$

NaN%

NaN%

7.4

Invest

Tron (TRX)

Blockchain platform/Media

0.00$

NaN%

NaN%

7

Invest

IOTA (MIOTA)

Internet of Things

0.00$

NaN%

NaN%

6.9

Invest

Summary

Polkadot (DOT) isn't only gaining traction in the decentralized finance field, but it's also improving its status as a digital currency in the crypto world. The whole ecosystem of Polkadot is gradually improving day by day, and it's only one step away from becoming an integral part of smart contract networks and the blockchain field. The team of Polkadot developers has a solid plan for the platform’s future to further improve blockchain interoperability and take it to the next level. We hope this guide will help you to understand what Polkadot is, how it works, and whether it’s worth investing in or not.

FAQ

Can Polkadot (DOT) reach the 50 US dollar mark?

Yes, because of the future plans of the platform and current progress, experts suggest that DOT will hit the 50 US dollar mark by 2025. However, such an outcome is not at all guaranteed, because the crypto market is extremely volatile and changeable.

Can I mine DOT?

No, you can’t mine DOT because of its nominated proof of stake algorithm. You’ll need to hold DOT and participate in its governance mechanism to earn more DOT tokens.

Can I buy DOT with my fiat currency?

Yes, you can use your government-issued fiat currency to buy DOT tokens by using Binance (if it’s available in your country) crypto exchange easily.

What is the frequency of transactions that take place on the Polkadot network?

With the help of the Relay Chain model, the Polkadot platform can process over 1000 transactions within a single second.

Team that worked on the article

Aneeca Younas
Contributor

Aneeca Younas is a math wizard with extensive knowledge in research, data mining, forum commenting, and all types of writing and editing. As a contributor to the Traders Union website, Aneeca’s goal is to help newcomers and experienced users have the best possible information.

Knows about
B2B commerce, crypto, fintech

Alumna of
University of South Carolina Union, Queen Mary, University of London

Dr. BJ Johnson
Dr. BJ Johnson
Developmental English Editor

Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.

The topics he covers include trading signals, cryptocurrencies, Forex brokers, stock brokers, expert advisors, binary options. He has also worked on the ratings of brokers and many other materials.

Dr. BJ Johnson’s motto: It always seems impossible until it’s done. You can do it.

Mirjan Hipolito
Cryptocurrency and stock expert

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO). Mirjan is a cryptocurrency and stock trader. This deep understanding of the finance sector allows her to create informative and engaging content that helps readers easily navigate the complexities of the crypto world.