Since its debut in 2015, Ethereum has played a crucial role in advancing blockchain utility. Specifically, it introduced the concept of programmability, allowing developers to write self-executing code (smart contracts) to the blockchain. In turn, that technology has evolved into decentralized applications (dApps) and decentralized finance (DeFi) products.
Powered by that innovation, Ethereum’s price has skyrocketed 881,500% since hitting a low in October 2015, and it’s currently the largest DeFi ecosystem by a wide margin. For both reasons, Ethereum still looks like a worthwhile investment, but the odds of a repeat performance are virtually nonexistent. So if you’re looking for a cryptocurrency with moonshot potential, you’re better off looking elsewhere.
For instance, Polkadot ( DOT 6.64% ) has an ambitious vision, and an experienced founder backs it. Here’s what you should know.
The foundation of Web 3.0
Polkadot was designed by Gavin Wood, co-founder and former chief technology officer of the Ethereum Foundation. He actually invented Solidity, the programming language used to build smart contracts on Ethereum. Wood also co-founded the Web3 Foundation, a nonprofit group working to build a decentralized version of the internet, known as Web 3.0.
If successful, that technology would allow users to access secure web applications that exist beyond the control of any third party. Just like the internet of today, those dApps could be anything from financial services and productivity tools to video games and social media platforms. But unlike the internet of today, no corporation would be collecting user data in the background. Polkadot is at the heart of that vision.
To that end, the Polkadot blockchain is architected uniquely. At its core is the relay chain, a blockchain that relies on the energy-efficient proof-of-stake consensus. The relay chain is tasked with orchestrating and securing various programmable side chains (called parachains). Polkadot also supports bridges, a special type of parachain designed to communicate with external networks.
That means Polkadot is interoperable with other blockchains, making it possible to exchange data with platforms like Ethereum. That feature is critical because the future of blockchain technology is likely composed of many tailor-made chains, each with a specific use case, all capable of interacting.
The Polkadot ecosystem is growing
In November, Polkadot started auctioning parachain slots to blockchain project developers. Only five auctions have taken place so far, with DeFi platform Acala winning the first and Ethereum-bridge Moonbeam winning the second. On Dec. 17, both parachains are set to connect to the relay chain, marking a pivotal moment in Polkadot’s history, as both Acala and Moonbeam could dramatically accelerate the growth of its dApp ecosystem.
Auctions will continue at regular intervals for some time, with a long-term goal of reaching 100 parachains. At that point, Polkadot’s throughput could …….