After my post on Algorand, I was surprised to see how many people reached out and requested I do the same type of post for other cryptocurrencies, but most specifically- Polkadot. This is not meant to be an overly technical analysis, or a hate-post on competing coins. This one is for you Supah Fish, here it is.
Initially, coming from a developer/software engineering background, my main question was “how is this useful?”. Para-chains, para-threads, side-chains, etc. At a cursory glance it was not easy – or really possible – to know what the project was trying to achieve. I also saw DOT first mentioned in a Forbes Article, which made me think at worst it was another coin with little more than marketing, and at most it was geared towards institutions and the banking industry- which generally rubs me the wrong way. Lastly, and completely superficial, why ‘Polkadot’??
I was confused when I kept reading people saying it was a block-chain that connected other block-chains, like Ethereum or VeChain (and others), you could write an application on Polkadot and utilize these other chains. “That’s really cool”, I thought- but also, “Literally how the hell is that supposed to work?”
Inflationary, by design? I had a healthy amount of skepticism going into my initial research.
Once I decided to look into DOT, I watched a couple videos that gave a broad overview that gave me the ‘why’. Polkadot is meant to be an abstracted layer for building apps generically that can utilize multiple block-chains using their development API that they call PDK, called Substrate (best name in the project, kudos).
The error I had was thinking that the previous examples (Ethereum, VeChain, etc) were literally being used beneath Polkadot, when in fact those mentions were just part of the analogy. Parachain’s are created after buying an available slot at auction, and hooked into Polkadot via the Relay chain. The Relay chain is how each of the Para-chains and Para-threads communicate, and their state is reconciled onto the Relay chain, for Para-chains at every block, and for Para-threads only when needed.
This is the main differentiation between Para-chains and Para-threads. Certain applications might require the lock-step block validation of the Relay chain, while many other application use-cases do not. This results in lower transaction fees for the threads. Dr. Wood with the Ethereum background lends a lot of credence that the project is tackling real world issues and providing a solution that isn’t available already.
The documentation is great, and the white paper exists. I was able to get started with the PDK in very little time. They will likely only be toy examples, but I’m going to give the PDK a whirl to see how the different approaches work. After all, experience is everything.
The marketability and use-cases of a block-chain that provides the infrastructure to create versatile applications is clear. Providing an easy mechanism to create stand-alone block-chains without having to create and handle the infrastructure to do so is a major boon. Not only that, but having the ‘heavy-weight’ option of Para-chains combined with the lighter-weight Para-threads, as well as pure smart-contracts (if you don’t want contracts on top of the former two) give developers a lot of flexibility.
Supporting the web assembly standard allows support for all developers that don’t have a specialization in more complicated languages. The use of Rust throughout much of the project shows that they are using current technologies and are, most importantly, conscientious of security. Rust is well-known and gaining a lot of popularity – not just in the block-chain ecosystem – providing a current and stable language for the platform that developers actually use, instead of ones that they don’t (Haskell, anyone?).
All-in-all, Polkadot seems to be a very sound investment with a bright future. Of the newer coins, Polkadot and Algorand are my top two picks. I’m bullish on both, and I think that if the bull cycle continues this year there is no way Polkadot won’t exceed its current all-time-high (~$48 USD). I encourage everyone to give it a look. It’s an excellent choice for DCA (or lump sum), and the 12% staking reward is hard to argue with.