• Polkadot is the best-performing blockchain in terms of developer activity.
  • PolkaBTC is set to go live in February 2021.

What is Polkadot

Polkadot is a blockchain ecosystem created by Ethereum's co-founder Gavin Wood together with the Technology Director of the Web3 Foundation Peter Czaban and Robert Habermeier, announced a Thiel Fellow in 2018. 

Based on a sharded protocol, Polkadot promises a fully functional and user-friendly decentralized web where blockchain networks to operate together seamlessly. The native token of the project, DOT, is used for staking and bonding purposes. Apart from that, it serves as a governance token. 

To put it simply, Polkadot aims to become a link that will unite independent blockchains into a global ecosystem. Currently, numerous private and consortium blockchains, public and permissionless networks, oracles operate separately. They are mostly incompatible, and users cannot move data from one chain to another seamlessly and securely. Polkadot is here to solve this issue. It serves as a bridge that connects decentralized applications, services, and institutions.

Polkadot is in vogue among developers

According to the report issued by the research company Outlier Ventures, the number of monthly active developers on Polkadot increased by 44% in the 12 months ended in May, while other protocols experienced a decline in the activity.

Developers' activity on major networks

Source: Outlier Ventures

Instead of using smart contracts, Polkadot's developers can create their own blockchains and decide on the transaction fees and speed. This feature attracts projects that cannot be built within the smart contracts infrastructure.

We are going to see a lot of different innovative products that can't exist in a smart contract environment. Game blockchains, ensuring gamers don't cheat. Blockchains within consortia. They are difficult to deploy in a smart contract environment, Polkadot's founder Gavin Wood said in an interview from Berlin (cited by Bloomberg).

This differentiating characteristic allows the project to stand apart from the competitors and work within its niche. According to Dan Morehead, founder of Menlo Park, California-based Pantera Capital Management, Polkadot is currently trading at 10% of Ethereum's value. Still, it has a good chance of becoming a strong competitor to the second-largest blockchain network.

Bitcoin comes to Polkadot in 2021

The developers of Polkadot blockchain announced that the wrapped Bitcoin would go live on the platform at the beginning of 2021. Notably, Wrapped Bitcoin already exists on the Ehereum blockchain. Currently, over 141k BTC worth over $1.6 billion are circulating in the ETH network.

BTC on ETH

Source: Dune Analytics

PolkaBTC will be based Proof of Concept consensus algorithm. The Alpha testing will be launched in November, while the fully functional mainnet will go live in February 2021. 

According to the official press release, the token will be issued by the Interlay team with the financial support from Web3 Foundation. Polkadot's based Bitcoin parachain will be decentralized and governed by the cryptocurrency community.

Moreover, the new chain is promoted as open and accessible to anyone.

In the spirit of permissionless systems like Bitcoin, anyone can participate in operating the bridge: contrary to other approaches, you do not need permission or any additional token to become a maintainer and start earning fees.

PolkaBTC can remain on Polkadot indefinitely, while the holders can redeem it for Bitcoin at any time.  

PolkaBTC's life cycle

Source: Polkadot.network

DOT/USD: The technical picture

Polkadot jumped into top-10 coins by market capitalization following redenomination from the original sale. Denomination took place on August 21 and resulted in creating a new DOT, 100x smaller than the old DOT. Basically, the coin price became 100x lower, while the holders' balance increased proportionally, meaning that their total value position remained unchanged. 

At the time of writing, Polkadot (DOT) takes the 8th place in the global cryptocurrency market rating with the current capitalization of $3.45 billion. The token is changing hands at $4, mostly unchanged on a day-to-day basis and down over 7% on a week-to-week basis. 

DOT/USD: daily chart

From the technical point of view, DOT/USD is initially supported by $3.7. This area stopped the decline on numerous occasions since the beginning of September. Once it is broken, the sell-off may be extended towards a psychological $3, followed by another technical support of $2.7.

On the upside, the local resistance comes at $4.6. This barrier is reinforced by the short-term moving average on a daily chart. Also, it has been limiting recovery since the end of September. Once it is out of the way, the upside is likely to gain traction with the next focus on $5.5.


Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Recommended content


Recommended Content

Editors’ Picks

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.

More Altcoin News
Shanghai court confirms legal recognition of crypto ownership

Shanghai court confirms legal recognition of crypto ownership

A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.

More Cryptocurrencies News
BTC hits an all-time high above $97,850, inches away from the $100K mark

BTC hits an all-time high above $97,850, inches away from the $100K mark

Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.

More Bitcoin News
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.

More Shiba Inu News
Bitcoin: New high of $100K or correction to $78K?

Bitcoin: New high of $100K or correction to $78K?

Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP