Polkadot is a decentralized protocol that tries to break the barriers between different blockchain ecosystems, promoting intermediary-free interaction amid these networks. This breaks the language barrier existing among blockchains and allows them to communicate. Polkadot uses specialized blockchains or parachains with their own tokens and functionality to make this communication possible. Polkadot investing is an excellent move. However, your investment decision shouldn’t be informed by its rising popularity but rather by your goals. Here are seven reasons to buy polkadot.
1. Polkadot’s highly efficient proof of stake
Polkadot’s Proof of Stake, Nominated Proof of Stake, is highly efficient and advanced. It enables fair representation and greater decentralization by issuing stakes evenly, letting all polkadot holders engage in staking. This balances the interests of large and small DOT holders. As a Polkadot holder, you can stake as a validator or nominator to help safeguard the network and get DOT rewards. With Polkadot’s indigenous nomination pools, you can stake and earn rewards with as much as a DOT. Before staking in DOT, analyze a reliable Polkadot price chart like those from Kraken.com to spot opportunities that will enable you to trade like an expert.
2. It provides a solution for interoperability
Many blockchain networks run independently of one another. These blockchains are closed-loop for various reasons, security being a major priority for many decentralized networks. Polkadot promotes trustless communication among blockchains, meaning trust doesn’t have to be put in any third party for effective communication to happen between these networks. Additionally, if you, an investor, wishes to exchange Ethereum for Bitcoin, you must use a centralized service to facilitate the procedure.
Also, many decentralized exchanges will need you to wrap your crypto to close the transaction. DOT is solving this issue by developing a trustless method for blockchain networks to communicate directly. This allows for direct exchanges between you and other investors. Since you aren’t forced to utilize a centralized exchange to exchange or swap crypto, you don’t have to pay the fees associated with the process.
3. It’s energy efficient
A study including proof-of-stake blockchains found that DOT has the least carbon emissions and total power consumption yearly. Polkadot’s Nominated proof-of-stake approach utilizes a small part of the energy other conventional blockchains consume. It performs better than other cryptos, particularly proof-of-work protocols.
4. Polkadot is well managed
Polkadot is ranked high among the best-managed platforms. This is because it utilizes the NPoS (Nominated Proof-of-Stake) consensus algorithm, where validators are backed by nominators using their own stake to show faith in the validator’s good behavior. In addition, Polkadot has an excellent validator distribution, making it nearly impossible for the network to be hijacked. Polkadot’s governance system is sophisticated, and every stakeholder’s voice is valued. Its network upgrades are harmonized on-chain and implemented autonomously without network forking. This ensures DOT’s development stays community-driven and future-proof.
5. It’s secure
Polkadot’s innovative validity scheme and data availability lets chains interact meaningfully. While each remains independent in governance, they’re all united in security.
6. Transactional and economic scalability
Polkadot offers unmatched economic scalability by allowing a common validator set to secure numerous blockchains. This platform also spreads transactions around different parallel blockchains, providing transactional scalability.
7. Growth potential
Polkadot’s price history speaks for itself. It was launched at $2.79 in August 2020 and, after six months, jumped to $8.62, a 208% increase. In February 2021, polkadot got to a 39.70 closing price. Polkadot price predictions indicate it has growth potential, making it a worthy investment.
Endnote
While Polkadot is relatively new in the crypto market, it has great potential. Consider investing in DOT to reap the associated benefits.