Although the crypto horizon is experiencing a winter phase (poor performance of market), at the time of writing this article, plenty of investors still consider there are tons of opportunities in the future for cryptocurrency’s growth in general, and Polkadot in particular.
Based on the market capitalization of nearly USD 7B, Polkadot is ranked among the top 15 cryptocurrencies in the market – Hence we intend to share the key information, performance spectrum, and how to invest in Polkadot in this article.
A brief history
Connected with different blockchains, Polkadot is a dynamic protocol created by the co-founder of Ethereum (ETH) Gavin Wood in 2016. Essentially designed to work as a bridge between various blockchains to allow cross-chain operations. For instance, Polkadot can establish communication between Litecoin (LTC) and XRP through a smart contract.
Before Polkadot blockchains had this significant and long avoided problem of lack of interoperability i.e. absence of cooperation. Polkadot allows blockchains and decentralized apps to exchange information and communicate among themselves.
The native token of Polkadot is known as DOT; can be used for governance, staking, and bonding. Skating is a process whereby the investor can earn a stable passive income without selling his/her tokens. The best part about Polkadot is that every single investor has the right to vote on governing matters; upgrades, etc. The impact of the vote is measured against the number of tokens held by the investor.
Places to buy Polkadot
If you are interested to invest in Polkadot you may acquire DOT tokens via a decentralized exchange such as PolkaSwap or 1Inch Network. Depending on how you are paying for the DOT(s) the process may vary. Here we will explain the process assuming USD, as it is the most widely used fiat currency.
Exchanges such as Binance.US, Coinbase, and Kraken are the best places to procure Polkadot for USD and other major fiat currency investors. If your chosen exchange allows, Polkadot can be pegged with USD Coin (USDC) which is a stablecoin; KuCoin and Bybit are two such exchanges that allow the pairing of Polkadot with USDC.
Creating an account
This step is particularly for first-time investors i.e. creating an account on a cryptocurrency exchange. Just like fiat currency exchanges, a crypto exchange is a marketplace where cryptocurrency is traded among investors. However, a crypto exchange is intangible and exists digitally.
How you choose an exchange will depend on the fee, trading commission, and flexibility of the platform; an investor should thoroughly research these factors before choosing and creating an account.
Creating an account is simple. You may be asked to submit proof of residence, nationality proof, a bank statement, and other such documents. Once your account is verified, it is made operational. It usually takes around 24 to 48 hours for the verification process to be completed, depending on the platform.
Buying Polkadot
Your account on crypto-exchange can be connected to your bank account (in the US and a few other countries) or your credit/debit card(s). Buying through a credit card comes with an additional cost as the card issuer system may consider it as a cash advance and such will apply a premium which is usually 100% of the amount; a US$ 100 cash advance may have a hundred US dollar fee added to it in the bill!
As you establish a funding method you are ready to buy your first stash of DOT; simply mention the amount you wish to invest and hit the buy button, make sure you choose the right ticker symbol which in our case is DOT.
Securing your purchase
As with regular currency, crypto to needs a storage place. Places where crypto is stored, are known as wallets. And there are many types of wallets that you can use; each serving a different function and offering a different level of security and accessibility.
Here are the types of wallets from which you need to choose one or multiple, based on your usage and desirability.
Hard wallet
Appearing as a flash USB drive a hard wallet is a tiny device that can be plugged into any PC or laptop. It stores the private and public keys to your crypto and can only be accessed through the right password and keys. Also known as a ‘Cold wallet’ as it is not connected to any network or the internet. Though safe, the accessibility is very fundamental and limited.
Paper wallet
May be considered a primitive way to secure your crypto. As it’s simply a piece of paper that holds the public and private key to the crypto assets in the form of a QR code.
Software wallet
Applications and programs specifically created to store and manage your crypto assets are collectively called software wallets. The software is connected to the internet and is sometimes referred to as a “hot wallet”. Less secure though allowing high accessibility.
Uses of DOT
As stated earlier, investors holding DOT have the right to vote in governing matters of Polkadot. The impact of the vote depends on the volume of DOT held by the investor. Other uses of Polkadot can be staking and bonding.
