Polkadot (DOT) is a cryptocurrency and an open-source blockchain network. Ethereum co-founder Gavin Wood developed it. It has a revolutionary protocol that makes it unique among other cryptocurrency networks.

Polkadot allows multiple blockchains to operate on the network simultaneously. Its goal is to establish a decentralised network where control lies in the hands of the users.

1

The Polkadot Network

The Polkadot Network works on Nominated Proof of Stake (NPoS), a consensus mechanism used by specific cryptocurrencies to validate transactions. In this system, users have to stake their DOT tokens to contribute to the network.

In other words, cryptocurrency holders can use the currency to create various nodes, which help the network to function correctly. These nodes check the transactions added to the blockchain.

DOT holders have to be honest, even if they have a personal interest when verifying a particular transaction. If it turns out that the information on a block is wrongly validated, DOT tokens are deducted from the validator nodes. 

2

Maintaining the Blockchain

Blockchain is a protocol where information is stored in units called blocks. As more and more transactions take place, blocks are created. These blocks line up together to form chains. Whenever a transaction takes place, a new block is created. But before this block is added to the ledger, peer nodes have to verify the information on the block.

There are various roles in the Polkadot Network that DOT holders have to undertake. All these roles help in maintaining the Polkadot blockchain:

  • Validator roles have to verify the information added to the blockchain.
  • Nominator roles nominate the validator nodes in the network.
  • Collector roles collect the complete data for parachain transactions. Moreover, these nodes add this information to the relay blockchain.
  • Fishing nodes fish out problems in the network. If they report that a transaction has not been appropriately verified, the validators who check it lose some of their staked coins.

But maintaining the Polkadot blockchain is entirely in the hands of the PolkaDot users. Therefore, the protocol delegates a lot of power to the users, making it one of the most popular cryptocurrency networks in the market.

3

Mining Polkadot

Mining a cryptocurrency refers to the process of creating more digital money for yourself. To do that, users are usually expected to contribute to the mining process. When users contribute to uploading information on the blockchain network, they are rewarded with cryptocurrency. This increases the availability of cryptocurrency in the market.

But with Polkadot, it is not possible to mine it if you don’t own Polkadot beforehand. Polkadot uses a nominated Proof of Stake consensus, so all DOT holders contribute to the network.

If you have DOT in hand, there are three ways to mine Polkadot:

  1. Specialised Hardware: Nowadays, the most popular hardware for DOT mining are ASICs. They are highly specialised computers that offer a high hash rate. You could also use CPUs or GPUs if you are a beginner, but they are not as efficient as ASICs.
  2. Cloud Mining: Cloud mining makes use of a remote data centre. The processing power is shared among the users. It enables users to skip managing the hardware. You can use Miner Pro or STE Primo, among others, for DOT mining.

Pool Mining: A group of miners agree to ‘pool’ their resources and split the rewards.

4

Polkadot's Value

Polkadot is an inflationary cryptocurrency. It means that the buying power of DOT decreases with time because of the unlimited supply of DOT in the market.

But other factors also contribute to the value of DOT. The Polkadot protocol allows multiple blockchains to be operated on the network. It is beneficial to many people, so they wish to invest in DOT, which, on the other hand, increases the price of the currency.

Moreover, the success of the parachains has made the network greatly popular among users. So everyone wishes to be a part of the network. Since it is a variation of a PoS network, you need to hold DOT tokens to participate in the workings of the network.

FAQ

What is PoS? 

PoS stands for Proof of Stake, a consensus mechanism to verify cryptocurrency transactions. Only cryptocurrency owners can participate in the network when they stake their digital money.

How does Polkadot differ from other Cryptocurrency networks?

Polkadot is a cryptocurrency network that allows multiple blockchains to function simultaneously. Besides the main blockchain, known as the relay chain, there are parallel chains, also known as parachains.

What is a parachain?

A parachain is a blockchain that runs simultaneously with the primary blockchain on the Polkadot network. The users operate parachains.

Can I mine Polkadot at home?

Yes, you can mine blockchain at home, using mining hardware. But you need to own DOT to be able to mine more of it.

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