What Are the Top 3 Things People Get Wrong About DOT?

1) Polkadot is Just a "Newer" Ethereum

Not every blockchain that utilizes smart contract technology is the same. Unfortunately, where Dr. Gavin Wood is one of the creators of the Solidity coding language behind smart contracts, some people view Polkadot as simply a newer version of Ethereum by association. The truth could not be further from this. Vitalik Buterin (another co-founder of Ethereum) even claiming as recently as January 7th 2022 that he does not believe the future will be with cross-chain interoperability.

To say that Polkadot is simply just another blockchain that utilizes smart contracts is a complete misunderstanding of what Polkadot is and is trying to achieve. Polkadot is not the first or only blockchain to work on the problem of interoperability between blockchains. It is however dramatically different in its approach and focus.

How Polkadot works:

Polkadot operates with a proof of stake consensus mechanism with two main chain components, a relay chain, and multiple parachains. An easy way to visualize how Polkadot operates is through a hub and spoke model. In a hub and spoke model there is one center (relay chain) with many different branches (parachains) coming from the center. Each sovereign blockchain will operate independently from Polkadot. These blockchains will then feedback their transactions through a parachain to the centralized relay chain. From here the relay chain will sync all the information back up with the other parachains doing the same function.

Polkadot is a completely different blockchain that is trying to solve a completely different problem compared to what Ethereum and other proof of stake blockchains are designed for. Where Polkadot utilizes a hub and spoke model, other sovereign blockchains often use a stacking or layering of protocols to scale.

2) Polkadot is Less Secure Than Other Proof of Stake Blockchains

It is generally accepted that within blockchain technology the more centralized the consensus mechanism is the more vulnerable it becomes to a potential 51% attack. There is usually a trade-off between efficiency and security when it comes to the degree of centralization. This problem is even more pronounced in a proof of stake model like Polkadot that is trying to become a level 0 blockchain. By centralizing the consensus of all of the parachains into the relay chain, Polkadot is creating a further centralized area for attack.

To solve this problem Polkadot implements a shared or pooled security protocol. One way to scale a blockchain is through a scale by altcoins method. In this method, transaction volumes will be filtered down to lower market altcoins while the larger blockchain fills its blocks. This scaling method is problematic because the lower market cap altcoins will have less economic security built-in and become easier to attack. Polkadot does the opposite. In the shared/pooled security protocol on Polkadot, economic incentives are focused on the central relay chain. Validators participating in the relay chain are required to stake 10,000 DOT.

By centralizing the consensus mechanism into the relay chain with a high economic incentive for successfully securing the blockchain, Polkadot strengthens the security of the parachains. It achieves this by allowing the parachains to tap into stronger guarantees at the genesis. Therefore, Polkadot becomes more, not less secure than other proof of stake blockchains as it scales.

3) Polkadot Solves a Problem That Doesn’t Need Solving

If I can go to a cryptocurrency exchange and trade one coin or token for another, why should I care whether or not the blockchains can communicate directly? This approach to cryptocurrency fundamentally misunderstands blockchain technologies potential. Blockchains are much more than simply the exchange of tokenized value. Blockchain technology is designed to be a trustless system. There is no need for third-party intermediaries because code is law, and blockchain technology is immutable.

The issue of interoperability is simply the next logical step for blockchain technology. By enabling a blockchain ecosystem that overcomes interoperability as a roadblock, the whole ecosystem becomes trustless. When I say trustless, I am referring to the structure of a blockchain being automated and not requiring the need for an intermediary that both sides trust to execute a command.

Not everyone agrees that interoperability is a problem that needs solving. Vitalik Buterin doesn’t believe so. However, as the largest smart contract blockchain around, it could be argued that Ethereum and Mr. Buterin benefit the most from the status quo. Through successfully solving the problem of interoperability, blockchains will be able to increase their scalability and speed more easily and be able to challenge the Ethereum blockchain.

Summary

Polkadot is still in its infancy, with its first test network Kusama only launching in June 2021. There is a long way to go before the problem of interoperability will be solved and even then, there are doubters who don’t believe it is a problem needing solving at all.

There will be a lot of discussion on whether the future of blockchain technology lies in a multi-chain or cross-chain (or some hybrid form) ecosystem. Polkadot was founded with the idea of helping create a cross-chain ecosystem, and its ultimate success will be tied to the success of that ecosystem.