Polkadot is a protocol for network support that enables interoperability between blockchains. This means that it allows for the transfer of data, both off-chain and on-chain, to be moved from one blockchain to another, whether it is public or private. With numerous new blockchains appearing continually, interoperability is becoming more important, reinforcing the need for protocols such as Polkadot. If you are wondering if Polkadot would be a wise investment, read further to obtain sufficient information to make the best decision for your investment portfolio.
Gavin Wood, a computer scientist and co-founder of Ethereum, established Polkadot in 2016 and presented the whitepaper. In May 2020, the protocol was launched. Wood is well-known in decentralized communities for creating the Ethereum Yellow Paper, developing the Solidity programming language for smart contract writing on Ethereum, and establishing Parity Technologies.
Polkadot’s goal goes beyond facilitating the scalability of Ethereum or any singular blockchain. Wood has set his sights on achieving a fully decentralized internet, known as Web 3.0. Currently, the internet is in its Web 2.0 phase, but Web 3.0 presents an opportunity to enhance applications into decentralized protocols by enabling users to take greater control of their data instead of it being dominated by tech giants such as Facebook and Google.
The Basics of Polkadot
Polkadot initially operated as a Proof of Authority (PoA) network but eventually made the switch to a Nominated Proof-of-Stake (NPoS) consensus method. This method includes nominators and validators, where nominators propose potential validators who are responsible for securing the Relay Chain through DOT token staking.
Although Polkadot is technologically advanced, its fundamental purpose is uncomplicated – to enhance the functionality of blockchains by enabling secure communication between them. This will eliminate the need for isolated functioning of blockchains similar to Bitcoin and Ethereum, and potentially render them more pragmatic in practical applications.
Also, blockchains have the ability to further enhance their performance for their particular applications, such as identity administration or document preservation, and continually improve their operations. This offers the advantage to users of being able to keep authority over their personal data instead of being confined to one network’s limits.
If you now have a good understanding of the Polkadot protocol, you may be contemplating how to purchase Polkadot coin. As the native cryptocurrency of the Polkadot project, DOT can be bought and traded like other cryptocurrencies, similar to how Ether fuels the Ethereum network. Fortunately, finding a place to buy Polkadot coin won’t be too challenging for you, since DOT is a major token with a high market capitalization that is traded on some of the world’s largest cryptocurrency exchanges, such as Binance, Huobi, Coinbase, Kraken, and others. In the first 10 months of 2021, the DOT token experienced a 350% increase, indicating its potential in the decentralized web of Web 3.0. As a result, investors who believe in this decentralized internet may consider Polkadot as a part of their long-term investment strategy, such as a crypto IRA.
Key Concepts of Polkadot
- Relay Chain: The Polkadot protocol consists of a number of elements and structures, chief among which is the Relay Chain, which is responsible for maintaining consensus and transferring information across chains.
- Parachains: Parachains, or shards, are akin to what sidechains are on Ethereum. Parachains are the multiple blockchains that are interacting with one another on Polkadot.
- Smart Contracts: While Polkadot itself doesn’t have native smart contracts, the parachains that build on the platform do. Parachains are Polkadot’s answer to smart contracts.
- Parathreads: Parathreads are similar to parachains except they use a “pay-as-you-go” approach and do not require 24/7 access to the network.
- Bridges:? Bridges are what facilitate the connection between parachains and parathreads so they can communicate with other blockchains, such as Bitcoin and Ethereum.
- Substrate: Substrate is another key concept. It is akin to a menu that developers use to build and tailor their blockchains with the features they want.
- Auctions: Not every blockchain will qualify for Polkadot. To do so and to be included in the Relay Chain, a blockchain must win what’s known as a parachain auction slot, of which there is a limited supply. Polkadot is targeting 100 of these auction slots. Teams that are vying for auction slots must hold and lock up DOT tokens for a period of time, which creates greater demand for the token and which could potentially fuel the price higher.
- Kusama: Polkadot’s Light Paper describes Kusama as Polkadot’s “wild cousin.” Kusama is a network on which developers including parachains can experiment with their technology before deploying to Polkadot and break things without having to worry about it.
Polkadot’s distinctive approach of restricting auction slots generates enthusiasm among projects seeking inclusion as a parachain and generates buzz around the protocol. As the auctions are a crucial aspect of the project’s plan, the heightened demand and focus could potentially boost the DOT price. If you’re searching for a place to purchase Polkadot coins, our platform is the perfect destination.
BONUS: Best Crypto IRAs
A crypto IRA may be a beneficial option for those seeking to increase their crypto wealth. By keeping your investments in a cryptocurrency IRA, you can avoid being taxed for capital gains. Despite being a volatile investment, the performance of cryptocurrencies has surpassed almost any other asset class over the past ten years. These investments have a record of undergoing cycles of bullish and bearish markets, often followed by severe crashes. However, excluding the recent decline, the crypto market always recuperates and reaches new record highs. If you are a believer of a decentralized future and plan for the long term, it may be wise to explore opening an investment retirement account that offers cryptocurrency access without capital gains taxes.
Best Crypto IRAs
After familiarizing yourself with the basic guidelines and restrictions for a cryptocurrency IRA, it is worthwhile to explore the top contenders. Although these platforms usually charge higher fees than traditional crypto exchanges, the tax advantages more than compensate for the discrepancy. Compare several available options before making a decision.
1. iTrustCapital: The Best Crypto IRA for Beginner Cryptocurrency Investors
iTrustCapital is a top platform for IRA trading in digital assets, which permits direct purchase and exchange of cryptocurrencies and tangible gold in real-time within retirement accounts.
Their pricing is entirely transparent, where the trade fee for crypto stands at 1% and gold is $50 above spot. Additionally, they offer the following services:
- IRA setup at iTrust Custodial Services
- Facilitation of any transfers to your IRA
- IRS and tax reports by iTrust Custodial Services
- Unlimited storage with institutional custody partners
- Platform support and maintenance
2. Bitcoin IRA
Bitcoin IRA is a comprehensive option that enables you to utilize your IRA to invest in cryptocurrencies such as Bitcoin, Ethereum, Ripple, Litecoin, Bitcoin Cash and Ethereum Classic. This is a remarkable array in contrast to the majority of Bitcoin IRA’s rivals. The company strives to streamline and enhance the intricate procedure of investing in digital currency.
BitGo Trust, utilizing the technology of BitGo Inc., secures and insures your digital assets for a maximum of $100 million. BitGo Inc. is the top processor of on-chain bitcoin transactions worldwide, being responsible for 20% of all global bitcoin transactions and having a wallet containing over $2 billion in assets.
Opening an account with Bitcoin IRA can be done within a few minutes, regardless of whether you require assistance with a rollover, traditional, or Roth IRA.
3. Broad Financial: The Best Crypto IRA for a Variety of Alternate Assets
With its flexibility, Broad Financial gives you the freedom to steer your IRA in the direction you desire. The trust for crypto IRA has a straightforward fee structure, with no transaction or asset-based fees to worry about. You have the chance to invest in a variety of tokens, with an infinite amount of options to select from, and can use whichever exchange suits you best for handling trades.
Broad Financial has a noteworthy edge over its competitors, thanks to its ability to allow you to possess your private keys. This advantageous feature grants you specific benefits that other businesses cannot furnish, such as:
- Choosing the storage format you prefer
- Using an existing wallet
- Customizing your security for your own peace of mind
By having such a high degree of adaptability, it is possible for you to transfer your retirement savings to your desired locations, ultimately conserving your time and energy, as well as enhancing your total assets.
4. My Digital Money
My Equity Trust has joined forces with My Digital Money to offer self-directed crypto IRA products in the United States. By paying a setup fee of only $50, you can utilize your IRA funds to invest and increase your retirement portfolio’s tax-advantaged or tax-free revenue.
A variety of IRA accounts are available to be opened, such as:
- Simple IRA
- Traditional IRA
- Roth IRA
- Simplified Employee Pension Plan (SEP) IRA
Begin trading by creating a cash account and utilize the MDM platform to conduct trades independently of current market conditions, thereby decreasing risk and enabling you to obtain optimal prices. Additionally, you may utilize limit orders to purchase or sell at predetermined prices or following particular price fluctuations.
You possess full authority over your IRA funds and can freely engage in cryptocurrency trading on the same platform outside of your IRA, if that is your preference.
5. BitIRA
Unlike most crypto IRA companies that absolve themselves of all responsibility pertaining to the security of your crypto, BitIRA provides complete insurance coverage for your account.
You will receive genuine cold storage for your cryptocurrency, which entails securely storing it on a hard drive inside a vault that is constantly monitored by physical guards. In addition, you will receive exceptional customer service that will ensure your comfort, even if you are new to cryptocurrency investment.
BitIRA offers a variety of cryptocurrencies to choose from, including Bitcoin, Bitcoin Cash, Litecoin, Ethereum Classic, Ethereum, and Ripple.
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