In this post we tell you what DOT is, the Polkadot cryptocurrency, a blockchain that you have surely heard about on several occasions. It is a solution whose main objective is to develop an interoperability infrastructure between different blockchains, both public and private. That is, you want to create a fully decentralized network, giving control to users. DOT will be the next cryptocurrency we add to our portfolio.
What is Polkadot? It is an open source protocol that seeks to promote the evolution of blockchain technology. Its objective is to allow cryptocurrencies or data from different block chains to be exchanged without the need for a centralized exchange. In this way, better applications, products and services can be developed and done between different blockchains. Polkadot’s main chain is called the Relay Chain. It also has individual blockchains called parachains. The idea is to be able to easily exchange information between them.
Nominated Proof of Stake
The Polkadot blockchain is based on a consensus that implements nominated proof of stake (NPoS). This is a kind of innovative scheme that is used to choose the validators that can participate in the protocol. These validators ensure the veracity and security of the parachain data. That is, they verify that the transactions are correct and are transmitted between all the block chains of the network. Additionally, they store DOT tokens to crack down on entities that act detrimental to the network. NPoS consensus is a variation of Proof of Stake (PoS), it requires little specific hardware and also has less energy impact.
What is DOT cryptocurrency?
DOT is the token of the Polkadot blockchain, its main objective being to keep the project running. It was created to make consensus on the network easier through staking, in addition to making the network more secure. It acts as a nexus for new parachains to be added to the network, causing DOT tokens to remain locked for a certain time during the process. Also, users holding DOT tokens have decentralized governance right. This gives them the power to vote on proposed upgrades to the network, or determine network fees.
Invest in DOT
Polkadot is a fairly young but very promising project. It has a market cap of $22 trillion, ranking 11th, according to data from Coinmarketcap. Its token is trading at $22.97 at press time. The Polkadot community grew strongly throughout 2021. The main asset of the project is that it allows interoperability between different blockchains, through NPoS consensus. Since it seems like a good investment opportunity, we will add it to our portfolio by buying $25 worth of DOT. Polkadot is user-oriented and introduces several innovations, which creates important expectations for the future.