Dotty Dot: How Polkadot (DOT) Went From Being a Nobody to a Must-Have Crypto In 2021

As a young child, I absolutely adored polka dots. my clothes, my towels everything had polka dots. And that is what drew my attention to the relatively less-known crypto Polkadot ($DOT) in early 2021. I obviously did my research before buying into it (and you must rigorously research all your financial investments). At that time $DOT did not enjoy the popularity it does today (as of Oct 5, 2021, it has been listed on eToro). Initially, I purchased $DOT on Binance as it only became available on Coinbase in mid-June 2021. This is how relatively obscure $DOT was till a few months ago. But its fortunes seem to have changed and its time seems to be arriving.

What Makes $DOT a Darling Of The Crypto World?

Polkadot is a flagship project by Web3 Foundation, a Swiss foundation, that aims its users to enable decentralised finance (DeFi) via a multi-chain infrastructure and easy-to-use interface. promises a new generation blockchain protocol that greatly simplifies cross-chain communication and interoperability by bringing multiple blockchains into one network. By connecting all these different blockchains, Polkadot promotes unprecedented interoperability between these diverse ecosystems. DOT holders gain access to simplifying the protocols of different blockchains into a decentralized custom blockchain tailored to the investor’s preferences. DOT protocols also strive to help minimize or eliminate transaction fees for different crypto. In practical terms, Polkadot allows chains to interact with each other meaningfully while remaining independent enough to run their unique governance models. This network is secured by a GRANDPA consensus algorithm, tailored for the Polkadot (based on the proof-of-stake; POS algorithm). In order to get acquainted with the Polkadot structure, its important to bear in mind these concepts:

Parachain: This stands for parallelized chains that run through the Polkadot network and the ecosystems' stand-out feature. These help scale up the system by parallelizing operations. Polkadot already provides a simple SDK (Software Development Kit) called Substrate which will make creating and deploying parachains easy. Through this developers can develop functionality-specific parachains- have a parachain that serve as file storage, another chain that will provide decentralized identity management and another one for enabling payments in the whole ecosystem.

Parathreads: Although technically similar to parachains from a technical point of view, however, they are very different from an economical standpoint. While parachains have to compete in auctions in order to become part of the network parathreads can be leased almost instantly and for only a short period of time. This means projects can benefit from trying out the network before purchasing an expansive parachain slot, others can run as parathreads before they win an auction for a slot.

Relay Chain: The base Polkadot chain is the relay chain that connects all these individual chains. As such, they can organically solve interoperability issues between these connecting chains. In a sense, relay chains act as a CPU for the individual parachains.

Bridge Chain: This chain connects different blockchains that don’t use Polkadot’s governance protocols. These are special parachains that connect other already running blockchains into the ecosystem (like a BTC or ETH) and allow for transfers of tokens between Polkadot and outside networks.

Polkadot can lend itself to many real-world applications owing to its multi-functional nature such as for developing payment processors that may require some verification from a private bank chain before accepting BTC payments. Finally, the $DOT system eliminates the need for hard forks by allowing parachains and even its own network to update without any hard forks in a completely seamless manner which allows the network to be gradually perfected. So hopefully $DOT should be able to avoid the network splitting problem $BTC faced a few years ago (which resulted in the formation of Bitcoin Cash).

Buy or Leave?

As I mentioned before, I got into $DOT before it became so well-known. My Maternal Grandmother takes full credit for my acumen even though she knows nothing about the crypto space. I don't regret my decision (and nor do I dispute my Maternal Grandmother's claim). The price action speaks for itself.

Figure: $DOT Price Action From Oct 2020-Oct 2021

While $DOT has been around since 2017, 2020-2021 has been the time period of this blockchain gaining recognition which has translated into very choppy price action. I will not try to predict where $DOT will be in 2025 in terms of its price action but I could certainly see it bouncing back and crossing $50 in a bull run. I see $DOT as a strong project and while most of us missed it on its inception, with the expanding DeFi ecosystem, it could still get a boost in the future.