What is Polkadot? Technology to solved blockchain problem
One of the cryptocurrencies whose growth is quite surprising in 2020 is Polkadot. DOT is the symbol for Polkadot at seventh according to Coinmarketcap's ranking at the time of writing.
This is something that comes as a surprise because it didn't make the top 100 before this cryptocurrency.
What Polkadot is and why can it soar so rapidly to surpass even the large cryptocurrencies that have been popular before?
DOT jumped into the top 10 cryptocurrencies in less than 1 month. Surely there are important events that make Polkadot experience a very sharp increase.
A breakthrough in blockchain technology that allows various blockchain technologies to transfer messages, with unique features, and gather security.
Polkadot can be said as a multi-chain technology that can be used heterogeneously. In simple terms, Polkadot connects several kinds of blockchains in one network.
Polkadot was built by the We3 foundation invented by Dr. Gavin Wood, Co-Founder of Ethereum and Robert Habermeier, and Thiel Fellow.
The unique nature of Polkadot is that it is heterogeneous and flexible not only makes assumptions about the nature or structure of the chain in the network.
In certain rules, non-blockchain data structures can become parachains if certain criteria are met.
Polkadot is intended to be a blockchain that connects many different blockchains.
Polkadot's founders have a goal with the design of solving several major problems in the existing blockchain. The main problem that occurs in the blockchain that polka dots can solve is
To put it simply, current blockchain technology cannot execute the number of transactions in an envisioned decentralized world. Currently, network nodes process transactions one by one, forming a bottleneck that limits higher volumes.
Blockchain networks keep to separate and independent, lacking intercommunication and interoperability.
How do Polkadot solve problems that occur on the blockchain, Polkadot has three structure cores, they have the following structure.
Relay Chain - the main Polkadot chain to be linked with all individual blockchains
Parachain - stands for 'parallelized chain' or parallel chain where the blockchain will run in parallel through the Polkadot network
Bridge Chain - A bridge chain created to connect blockchains that do not use the Polkadot governance protocol.
How does it work?
The way Polkadot works is to connect to the Relay Chain to solve interoperability problems with a smart contract feature that ensures that every transaction between individual chains is executed properly.
This blockchain network is connected using the presence of the Bridge Chain, where Ethereum or EOS and other networks can interact with each other using Polkadot.
Meanwhile, Parachain can solve scalability problems by processing transactions in parallel.
This means that Polkadot offers a range of applications that are starting to be built on its platform.
With the interoperability solution offered by Polkadot, it will facilitate data exchange and parallelize workloads between blockchains, solve the throughput problem that has been an obstacle to DApp adoption, and increase network scalability on several blockchains.
What chain can connect Polkadot?
There is no limit to the blockchain that Polkadot is connected to, but to be able to connect to the existing Polkadot blockchain requires two criteria that must meet
The blockchain can provide lightweight, concise, and fast client proof of block validity and status change information.
The blockchain has a way in which a large number of independent authorities (perhaps up to a thousand) can authorize transactions. This can include recognition of threshold signatures, such as a Schnorr schema, or smart contracts capable of constructing logic against multi-signature conditions.
Referring to the two existing criteria, Polkadot can run on the Bitcoin blockchain and the Ethereum Blockchain.
Through Polkadot's official website, we can find a whitepaper page that provides a framework and narrative related to how Polkadot works.
There are 21 pages of whitepapers that contain a heterogeneous vision of multichain networks. The whitepaper was written by Dr. Gavin Wood
Founder of Ethereum and Parity Gavin @ Parity.io.
In the whitepaper, there are four basic roles in the maintenance of Polkadot network
The collator collects transaction parachutes from the user, which is then followed by the validator, which is then followed by the roles of the nominator and fishermen in the final stages.
Polkadot Coin (DOT) token
The DOT token is Polkadot's native network token which has a number of different roles:
Governance over the network
Polkadot token holders have full control over protocol governance. Included in this governance function are determining network fees, auction dynamics and the schedule for adding parachains as well as upgrading and repairing the Polkadot platform.
These functions are not formally assigned to DOT holders but rather the basic Polkadot code that allows DOT holders to participate in governance.
This function relies on DOT holders to take an active role in the polkadot network, with the aim of comprehensive valid transactions.
Holders can stake their own DOT. Token holders who behave honestly will receive an incentive. Good, honest participants will be rewarded while bad ones will lose their stake in the network.
This ensures the network will remain secure. The number of DOTs required to participate in the network varies greatly according to the activities undertaken, the duration of DOTs staked, and the number of DOTs staked.
This function allows the ability to add new parachains by binding the DOT in a process called bonding. The DOT will be locked during the bonding period and will be released again after the bonding duration has elapsed and the parachain is cleared.
Polkadot price prediction
Polkadot has soared into the top ten cryptocurrency rankings, becoming a question mark of some crypto investors and traders, why the DOT suddenly ranks 7th on Coinmarketcap and with a market cap of around $ 3.7 billion.
There is crypto news that says the reason DOT suddenly rose in the top ten cryptocurrency rankings is because DOT experienced redenomination on August 21, after the community voted.
This event is the reason that the supply of DOT tokens in circulation is 10 times more.
A kind of stock splitting process in which the stock value increases substantially but small investors will see the price getting more affordable.
Before, this event has never occurred in the history of cryptocurrency. However, seeing the fact that this method has turned out to be effective, the total DOT supply which was originally only 10 million tokens has now become 1 billion on Genesis.
However, this redenomination only increases the number of tokens and does not change the total value of ownership
This events gives the impression that the DOT becomes "more ergonomic". Befpre Polkadot's supply was limited to just 10 billion and this was considered a reckless decision.
And in the end Polkadot needed a referendum for the people to vote in solving the problem.
As a result, since July 86% of the community agreed with the DOT redenomination.
The DOT token had experienced dramatic gains.. Polkadot highest price occured in September 1 became the highest increase of $ 6.84. And, at press time, the DOT price is $ 4.35 according Coinmarketcap.
Another reason the DOT position has suddenly shot up, is because the Project is worth starting for battle, so they can fund a strong team considering Polkadot is a fairly new project compared to Ethereum, for example.
Should to buy Polkadot?
From several prediction sites, there are different predictions for Polkadot's long-term price.
At present time writing, Polkadot's price is $ 4.35 with a market capitalization of $3,705,246,273 and a daily volume of $ 411,989,824. From the open price, it decreased by minus 2.10%.
Chart by Coinmarketcap.
The cryptocurrency prediction predicts that the DOT token could increase higher than the current price. By the end of December 2020 they estimate the DOT price to reach $ 5.49, and the prediction for December 2030 is $ 65.30.
While the prediction from Walletinvestor predicts that DOT is not good for long-term investment, he thinks DOT could experience devaluation in the future.
Short-term predictions also show a decline in prices at the end of 2020, as well as long-term predictions that will decline significantly.
Short term DOT price prediction.
Image source Walletinvestor
Long term DOT price prediction 2020,2021.
Image source Walletinvestor.
Based on the analysis by Walletinvestor, the DOT price will not increase, it will even drop by around 93% and the price will fall to $ 0.286.
A similar prediction is from Gov Capital, they predict that the future DOT price can be bad. Based on the analysis of the algorithm they use, DOT is not good for the long term even they predict the worst price of the DOT value is $ 0.0000 aka minus 100%.
Based these prediction if you currently invest $ 100 then in the future the value will be $ 0.
14 days prediction by Gov Capital
Image source Gov.Capital
One year prediction by Gov Capital
Image source Gov.capital.
Polkadot short term technical analysis 30 September 2020
Tradingview platform chart shows DOT tokens starting from August 22nd, this means that only about a month of price history can be seen on the platform.
So that there is not enough data to be explored for technical analysis, the use of MACD and RSI is not much relevant to the minimum data to be used.
But broadly speaking, since the $ 10 hike, the value has gradually declined and is currently at the $ 4.35 price level on the Bittrex exchange.
Chart by Tradingview.
From the chart above, it shows that price movement tends to be sideways marked with daily candlesticks lined up indicating low volume.
The first support is $ 3.8, which in this scenario if a break occurs it will cause the bearish trend to dominate the market, so that the price may fall again amid the lack of market sentiment.
When referring to the MACD indicator, the signal line has broken the MACD line from the top down indicating a downtrend. While the RSI value is 43.40 which is an indication of a downtrend as it is below the 50 level.
Polkadot Coin is new and surprisingly has surpassed the rankings of other major coins, such as Litecoin, Bitcoin SV.
But will the DOT token value continue to increase from day to day and from year to year? This is still a big question mark because it seems that the spike that occurred was only a temporary result.
There are indeed differences in the prediction of future DOT prices, and perhaps as investors will take cautious steps to invest in large amounts.
Because often the initial spike does not reflect the same future conditions, even DOT still has to compete with other tokens which also always increase public trust.