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What is Polkadot (DOT)?

illustration of DOT tokens in front of pink background

Originally launched in 2020, Polkadot promises to be an integral part of building the infrastructure for Web 3.0. It’s a next-generation blockchain protocol that offers the ability to connect multiple blockchains into a central network. The goal is to allow blockchains that have been designed for different and specific purposes to work together efficiently and securely. This guide will explore the current issues with blockchains and how Polkadot addresses these issues. It will also look at the infrastructure of Polkadot, how it works, and some of its weaknesses.

Current issues with blockchains 

Blockchains are the underlying technology of all cryptocurrencies. The first blockchain created was the Bitcoin blockchain. While they’re instrumental to the cryptocurrency system as a whole, this does not mean they’re without faults.

As it stands, blockchains remain impractical for many real-world cases. As networks are also combined with a single blockchain, they can experience delays when too many processes try to run at once, creating a bottleneck, and significant increases in transaction fees.

The most common issues with blockchains are interoperability, scalability, governance, and data privacy.


Interoperability is the ability to see, share, and access information across different blockchains. The entire blockchain ecosystem is made up of siloed chains. One of the most common desires is to exchange the value of one blockchain for another. This can be done via an exchange but it has also meant that certain blockchains have accumulated a disproportionate amount of wealth.


Interoperability can be tricky to grasp, so let’s break it down a bit further. Imagine you had a computer with all of your files and information on it, but you couldn’t transfer those files or share them with another computer or device. That’s the problem that faces many siloed blockchains today. Interoperability connects that computer to lots of other computers and allows the sharing of information and data.


Decentralized application (dApp) usage and development largely depend on tokens created off certain blockchain protocols. Naturally, then, developers typically make these on blockchains that have the largest user base, which is problematic for two reasons. One, it makes it harder for new chains to scale and grow. Two, it puts increasing strain on existing networks.


Decisions on the operation of a blockchain are typically made by a small group of stakeholders. While these decisions should be transparent, they also affect the entire network who has little to no say in decisions.

Data privacy

Data transacted across the majority of blockchain networks is public. This creates a lot of inherent privacy issues. One way around this is for organisations to create and manage their own blockchains but, again, this creates interoperability issues.

How does Polkadot work?

The concept for Polkadot was initially developed by Web3 Foundation president, Gavin Wood, who perhaps is better known as a co-founder of Ethereum and founder of Parity Technologies.

According to their website, Polkadot “unites [an] entire network of diverse blockchains into a single ecosystem.” The goal of Polkadot is to make it easier for software developers, startups, and enterprises to make use of blockchain technology efficiently, in a way that specifically benefits their products.

Polkadot is referred to as a “multi-chain” network, simply meaning it connects different chains into one. Polkadot’s network standardises data across its relay chain so it can be understood across every system.

Individual blockchains connect to Polkadot and work parallel to it in what is referred to as “parachains”. Parachains are able to access the Proof-of-Stake (PoS) validation of the network.

Polkadot infrastructure

Polkadot’s infrastructure (Figure 1) is quite complex. This section breaks down the most important elements of how the Polkadot protocol operates.

Figure 1 – Polkadot structure

Relay chain

The relay chain is the main Polkadot blockchain where transactions are finalised. The main responsibility of it is to coordinate the entire Polkadot network including parachains, parathreads, and bridges. The relay chain helps create interoperability, consensus, and shared security across the network. Validators, nominators, collators, and fishermen are the names of various roles that help secure and maintain the network.


Parachains are independent chains that act as custom blockchains. They rely on the relay chain’s computing resources to validate transactions. These chains can be optimised for different use cases and can each have their own individual tokens.


Parathreads act similar to parachains except with more flexible connectivity. They provide different projects with pay-as-you-go access which lowers the economical barrier to entry.


In Polkadot, bridges connect to the relay chain and allow the Polkadot network to communicate with external blockchains like Ethereum.

How does Polkadot address major blockchain issues?

Interoperability is one of the major issues that sparked Polkadot’s inception. The idea is that any kind of data or data structure can be transferred across blockchains. So coins from one blockchain could hypothetically be fed through an oracle network and be transferred to a dApp to be used to purchase in-app items.

Parachains themselves also help spread out the load of transactions across multiple nodes. This means less energy (and cost) executing smart contracts.

On that note, the ability to spread transactions across nodes means more can be executed at a time, helping address the scalability issue.

Unlike standard blockchains, Polkadot is governed by any and all stakeholders who want to participate. They propose and vote on referendums using the native token of the Polkadot network, DOT.

In regards to data security, running permissioned chains on top of Polkadot should be fairly straightforward. Parity, which allows individuals on the Ethereum network to run nodes publicly, has worked on permission chains and private transactions to help address data concerns.

Key Takeaway

Polkadot uses technology like parachains and and services such as Parity to address interoperability and scalability concerns. This will allow Polkadot to coordinate data and information sharing between multiple blockchains in a scalable manner. Polkadot also uses DOT as a governance token that allows all DOT holders to govern Polkadot democratically.

What is DOT?

DOT is the native token of the Polkadot network. It can be used in a variety of ways, for instance, it provides network governance by granting the DOT holders the right to create and vote on proposals within the network. The tokens also help with network consensus through staking and bonding, further incentivising holders of the DOT token to abide by the rules. If they don’t, they can lose their staked tokens.

Weaknesses of Polakdot

Polkadot isn’t without its own issues. It has been hacked twice now, resulting in millions of dollars of loss. Polkadot is also not entirely unique. There are several other Proof of Stake or smart contract blockchains that address many of the same issues. With so much competition, this does mean Polkadot and DOT can be volatile – though the same could be argued of any cryptocurrency.

How to buy Polkadot (DOT)

You can buy Polkadot (DOT) from most big cryptocurrency exchanges. Swyftx is a popular crypto exchange in Australia and New Zealand where users can buy Polkadot with low fees and store it in their personal crypto wallet.


Polkadot was created to address issues relating to interoperability and scalability with cross-chain communication. It also promises more transparent governance with a diplomatic approach to its operation, including voting rights for DOT holders. Whether Polkadot will maintain its position as a market leader in this space or one of the various PoS or smart contract blockchains overtakes it, remains to be seen but it continues to be an interesting space to watch.

To learn more about blockchain technology or anything else crypto-related, continue exploring Swyftx Learn!

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