Polkadot (DOT) crypto review: Buying guide in 2024

Our Verdict

Our Verdict

Polkadot (DOT) is a next-generation blockchain protocol that aims to enable a scalable, interoperable, and secure network of specialized blockchains, known as parachains. Developed by the Web3 Foundation and spearheaded by Dr. Gavin Wood, co-founder of Ethereum, Polkadot aims to solve the limitations of existing blockchains by facilitating communication, interoperability, and data transfer between diverse blockchains in a seamless manner.

Pros

• Sharding model
• Bridges to other networks
• Cross-chain communication
• Stakeholder participation

Cons

• Competing platforms
• Development challenges
• Control by Web3 foundation

4.6

Our ratings take into account a product's cost, features, ease of use, customer service and other category-specific attributes. All ratings are determined solely by our editorial team.

Price

$ 0.29

Provision of shared security

Yes

Facilitation of interoperability

Polkadot's core function is to enable interoperability between different blockchains

Interested in crypto investment? Opt for well-established options, like those in the top 20 globally by market capitalization. This metric often indicates robust foundations and investor trust. Polkadot, a prime example, embodies these qualities. Curious about Polkadot's nature, purchasing process, and future outlook? Dive into our comprehensive guide for insights.

Understanding Polkadot (DOT)

Polkadot operates on its blockchain, with its native coin, DOT, driving its ecosystem. Currently positioned 12th globally by market capitalization, exceeding 6.5 billion euros, Polkadot trades at approximately four euros. But what distinguishes Polkadot? It's not just another blockchain; it's a layer 0, or level O, blockchain, a unique classification in the blockchain realm. While some blockchains are categorized as layer 1, such as Bitcoin, Cardano, Dogecoin, and Ethereum, which function independently, Polkadot's layer 0 architecture allows for chain compatibility. Unlike layer 1 blockchains, which may incorporate layer 2 solutions like Polygon, Polkadot serves as a foundation for building interoperable parachains. In essence, Polkadot facilitates the construction of chains that seamlessly interact with each other, setting it apart from competitors like Cosmos and Algorand.

Polkadot's evolution

The inception of Polkadot traces back to 2016 when its cryptocurrency white paper was released. At its helm stands Dr. Gavin Wood, renowned as the co-founder of Ethereum. Wood, also the creator of Ethereum's Solidity language, partnered with Jutta Steiner, another Ethereum alum, to establish Parity Technologies, overseeing Polkadot's development. The Web3 Foundation oversees Polkadot's network management. Notably, Polkadot's journey intersects with Kusama, its "canary network," akin to miners' use of canaries to gauge mine safety. Kusama serves as a testing ground for Polkadot's updates, with both now functioning as distinct but related blockchains.

Understanding the mechanics of Polkadot

As elaborated earlier, Polkadot's ethos revolves around linking numerous blockchains, termed parachains, through a bridge to ensure interoperability. How does this mechanism function? Polkadot acts as a central entity, abstaining from direct intervention in parachain operations. Essentially, each parachain functions autonomously, adhering to the validation and consensus system designated by developers.

Polkadot steps in solely when a parachain seeks to engage with another. Acting as an intermediary, Polkadot oversees interactions between these chains, assuming the role of arbiter. It verifies the proper execution of smart contracts, such as ensuring accurate fund transfers. This function is executed by verifiers within the Polkadot network.

Now, let's delve into Polkadot's validation system. The consensus protocol employed is Nominated Proof-of-Stake (NPOS), a variant of the widely known Proof-of-Stake (POS) mechanism found in cryptocurrencies like Cardano, Solana, and Ethereum. Unlike traditional POS or its derivative, Delegated Proof-of-Stake (DPOS), NPOS enhances security measures.

In NPOS, individuals, known as Nominators, vote for validators. Unlike DPOS, this vote is binding. Consequently, if a Nominator selects a dishonest validator, resulting in fraudulent activities, they face penalties, including token forfeiture. NPOS thus fosters accountability in voting, emphasizing the reputation of validators over mere profit promises.

Where can I purchase Polkadot?

Wondering how to purchase it? The easiest method is through an exchange platform. As cryptocurrencies operate in a decentralized manner, traditional banks don't facilitate their purchase. Instead, exchange platforms act as crypto banks, enabling buying, selling, and trading of cryptocurrencies.

So, how do you buy DOT on an exchange? Regardless of the platform chosen, the process remains consistent. Firstly, you need to sign up on the exchange, a straightforward and free procedure usually requiring basic personal information and email verification.

Once registered, you link your crypto wallet to your account. This wallet functions as a digital bank account for your cryptocurrencies. There are two main types of wallets: cold wallets, which are hardware devices resembling USB keys, offering enhanced security by keeping your cryptocurrencies offline, and hot wallets, which are mobile apps or browser extensions storing cryptocurrencies online.

Once these preliminary steps are completed, you're all set to purchase Polkadot. Here are two methods available to you:

Direct purchase: You can buy Polkadot directly with fiat currency using your bank card or through a bank transfer. Note that this option may not always be available on every exchange.

Deposit and trade: Alternatively, you can deposit funds onto the exchange and then purchase Polkadot by selecting the appropriate trading pair, such as EUR/DOT.

Given Polkadot's status among the top 20 cryptocurrencies globally, it's widely available on most crypto exchanges. Here are three popular platforms where you can buy Polkadot:

Binance: A global leader in the crypto space, Binance offers not only crypto exchange services but also various other crypto-related services such as Binance Earn, Binance Academy, and the Binance Card. Additionally, Binance has its blockchain, BNB.

Coinbase: Established in 2012 and boasting nearly 89 million users worldwide, Coinbase is a prominent name in the crypto industry. The exchange went public in April 2021.

Kraken: With over 6 million users globally and a market capitalization of $10 billion, Kraken, founded in 2011 and headquartered in San Francisco, is another well-known exchange. In addition to crypto exchange services, Kraken also offers staking opportunities.

Should you invest in Polkadot in 2024?

Polkadot holds significant potential as a cryptocurrency of the future, and the value of DOT often seems undervalued. Its all-time high occurred on November 4, 2021, surpassing fifty dollars per coin. However, at the time of writing, the price of Polkadot in USD has experienced a notable decline, as indicated by the Polkadot chart on Trading View.

Looking ahead, what can we expect for Polkadot's value? Forecasting for Polkadot remains optimistic, with many predictions suggesting a potential surge to several hundred euros.