How To Buy Polkadot (DOT)?
A common question you often see on social media from crypto beginners is “Where can I buy Polkadot?” Well, you’ll be happy to hear it is actually quite a simple and straightforward process. Thanks to its massive popularity, you can now buy Polkadot on most cryptocurrency exchanges, including Coinbase and Binance in 3 simple steps.
Step 1: Create an account on an exchange that supports Polkadot (DOT)
First, you will need to open an account on a cryptocurrency exchange that supports Polkadot (DOT).
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In order to sign up, you will need to enter some basic information, such as your email address, password, full name and, in some cases, you might also be asked for a phone number or address.
Note: On specific exchanges, you might need to complete a Know Your Customer (KYC) procedure in order to be able to purchase cryptocurrency. This is most commonly the case with licensed and regulated exchanges.
Step 2: Deposit funds into your account
Many cryptocurrency exchanges will allow you to purchase Polkadot (DOT) with fiat currencies, such as EUR, USD, AUD and others. Furthermore, they will also provide you with multiple deposit methods through which you can fund your fiat account, such as credit and debit cards, ewallets or direct bank transfers.
Note: Some payment methods will have higher fees than others, such as credit card payments. Before funding your fiat account on your chosen exchange, make sure to do your due diligence to find out the fees involved with each payment method to avoid unnecessary costs.
Step 3: Buy Polkadot (DOT)
This process is similar across almost every cryptocurrency exchange. All you have to do is find a navigation bar or a search bar, and search for Polkadot (DOT) or Polkadot (DOT) trading pairs. Look for the section that will allow you to buy Polkadot (DOT), and enter the amount of the cryptocurrency that you want to spend for Polkadot (DOT) or the amount of fiat currency that you want to spend towards buying Polkadot (DOT). The exchange will then calculate the equivalent amount of Polkadot (DOT) based on the current market rate.
Note: Make sure to always double-check your transaction details, such as the amount of Polkadot (DOT) you will be buying as well as the total cost of the purchase before you end up confirming the transaction. Furthermore, many cryptocurrency exchanges will offer you their own proprietary software wallet where you will be storing your cryptocurrencies; however, you can create your own individual software wallet, or purchase a hardware wallet for the highest level of protection.
For more in-depth instructions, our ‘Absolute Beginner’s Guide To Cryptocurrency Investing‘ will take you through the process step-by step. In addition to providing instructions for sending and receiving your cryptocurrency.
And if you’re completely new to crypto our beginner, intermediate and advanced level articles will get you up to speed with everything you need to know about the cryptocurrency space starting out.
What Is Polkadot (DOT)?
Any developer, company, or individual can spin up their custom parachain through Substrate, a framework for creating cryptocurrencies and decentralized systems. Once the custom chain is connected to the Polkadot network, it becomes interoperable with all other parachains on the network.
Building cross-chain applications, products, and services should become a lot more straightforward with this design. Cross-blockchain transfers of either data or assets have not been possible on a large scale before.
Securing and validating the data across these different parachains is done through network validators, where a small set of these validators can secure multiple parachains. These validators will also ensure transactions can be spread across multiple parachains to improve scalability.
When did Polkadot launch?
The Genesis block of the Polkadot network was launched on May 26, 2020, as a Proof of Authority (PoA) network, with governance controlled by the single Sudo (super-user) account. During this time, validators started joining the network and signaling their intention to participate in consensus.
The network evolved to become a Proof of Stake (PoS) network on June 18, 2020. With the chain secured by the decentralized community of validators, the Sudo module was removed on July 20, 2020, transitioning the governance of the chain into the hands of the token (DOT) holders. This is the point where Polkadot became decentralized.
The final step of the transition to full-functioning Polkadot was the enabling of transfer functionality, which occurred on Polkadot at block number 1,205,128 on August 18, 2020, at 16:39 UTC.
On August 21, 2020, Redenomination of DOT occurred. From this date, one DOT (old) equals 100 new DOT.
The benefits of Polkadot
There can be many reasons for developers to explore the Polkadot ecosystem. Due to the limited nature of current blockchains, it’s evident there are a few core issues to address: scaling, customization, interoperability, governance, and upgradeability.
On the scaling front, Polkadot checks a lot of boxes. It acts as a multichain network, allowing it to process transfers in parallel across different individual chains. This removes one of the biggest roadblocks associated with blockchain technology today. Parallel processing is a significant improvement and can pave the way for broader global blockchain adoption.
Those who seek out customization can tap into some other features provided by Polkadot. As of now, there is no “one blockchain infrastructure to rule them all”. Every project has its individual needs and requirements, and Polkadot allows every individual chain to have its design optimized for that specific functionality. With the help of Substrate, developers can efficiently adapt their individual chains to suit the needs of the project.
On the interoperability front, having projects and applications share data seamlessly is a big factor. While it remains to be seen what type of products and services this will create, there are many possible use cases. It can create an entirely new financial ecosystem, with every individual parachain taking care of one particular aspect at a time.
Any community associated with a specific parachain will be able to govern their network as they see fit. Moreover, all communities are crucial to the future governance of Polkadot as a whole. Gathering feedback from the community can yield valuable insights that evolve projects over time.
Also, Polkadot makes it very easy to upgrade individual parachains. There is no need for hard forks, as this can splinter communities. Instead, the native chain can be upgraded in a frictionless manner.
The DOT token explained
Similar to most other blockchain infrastructure projects, Polkadot has its own native token. Known as DOT, it serves as the network token, just like ETH is the token for Ethereum and BTC is the token of Bitcoin.
Several use cases exist for this token. First of all, it grants token holders with governance rights of the entire Polkadot platform. This includes determining network fees, voting on overall network upgrades, and the deployment or removal of parachains.
DOT is also designed to facilitate network consensus through staking. Similar to other networks that involve staking, all DOT holders are incentivized to play by the rules at all times. How come? Well, if they don’t, they could lose their stake.
The third option is to use DOT for bonding. This is required when new parachains are added to the Polkadot ecosystem. During a bonding period, the bonded DOT is locked. It’s released once the bond duration has ended and the parachain is removed from the ecosystem.
Staking and bonding on Polkadot
Polkadot’s approach to interoperability goes well beyond just the exchange of data and assets. It is also a way to introduce new concepts, such as incentivizing honest token staking and bonding tokens.
As we’ve mentioned, every new parachain is added by bonding DOT tokens. Bonding refers to committing tokens to the network for a specific period of time. Chains that aren’t useful or projects that are no longer maintained will be removed, and their bonded tokens returned.
Polkadot has four core components:
- Relay Chain: Polkadot’s “heart,” helping to create consensus, interoperability and shared security across the network of different chains;
- Parachains: independent chains that can have their own tokens and be optimized for specific use cases;
- Parathread: similar to parachains but with flexible connectivity based on an economical pay-as-you-go model;
- Bridges: allows parachains and parathreads to connect and communicate with external blockchains like Ethereum.
Polkadot is a sharded multichain network, meaning it can process many transactions on several chains in parallel (“parachains”). This parallel processing power improves scalability.
Custom blockchains are quick and easy to develop through the Substrate framework and can be connected to Polkadot’s network within minutes. The network is also highly flexible and adaptive, allowing the sharing of information and functionality between participants similar to apps on a smartphone. Polkadot can be automatically upgraded without the need for a fork in order to implement new features or remove bugs.
The network has a highly sophisticated user-driven governance system that also helps to secure it. Communities can customize their blockchain’s governance on Polkadot based on their needs and evolving conditions. Nominators, validators, collators and fishermen all fulfil various duties to help secure and maintain the network and eradicate bad behavior.
Official website: https://polkadot.network/