According to Oregon Money Transmitter Act, chapter 717, those who sell, trade, or engage in operating virtual currency exchange businesses must obtain a money transmitter license. So, the residents of the Beaver State who want to purchase, sell, or trade Polkadot and other cryptos as individuals should first consult their lawyers to be sure if they need this license.
Apart from the legality aspect, this article will also discuss what Polkadot is, what makes it stand out, whether it is a good investment, and how you can buy it in the State of Oregon.
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Peter Czaban and Robert Habermeier co-founded Polkadot alongside Gavin Wood (the co-founder of Ethereum and former CTO of the Ethereum Foundation) in 2020. Web3 Foundation, a non-profit organization also founded by Gavin Wood and Peter Czaban, maintains Polkadot’s code, whereas Parity Technologies works on the Substrate framework based on Polkadot’s code.
What makes Polkadot unique is the fact that different cryptocurrencies can be linked into one network, and users can easily move between different blockchains. As a web platform, Polkadot provides the foundation for Web3 and enables censorship-resistant internet, thus allowing decentralized applications to thrive and run freely on its stage.
Polkadot is one of the fastest-growing cryptocurrencies in spite of being relatively young. In the beginning, the DOT value was $2.8. In November 2021, it reached its all-time-high value of $53.44. It currently ranks 11th according to CoinMarketCap.
Polkadot has been called “the internet of Blockchains,” as it allows the communication and exchange of value (data, tokens, and so on) between different blockchains. Its main components include the Relay Chain, parachains, parathreads, and bridges.
- The Relay Chain — This is the main blockchain of the Polkadot network. In addition to ensuring security and establishing consensus, it aims to attain interoperability across blockchains. It doesn’t support smart contracts, thus reducing the workload and ensuring faster processing of transactions.
- Parachains — These are individual blockchains that rely on the Relay Chain for security. This way, separate security systems are not necessary for each chain, and yet, every chain retains the ability to control its own validity and data availability. Moreover, parachains have clear boundaries, and they can all run simultaneously without colliding. Polkadot achieves a high level of scalability by relying on parachains.
- Parathreads — They are similar to parachains. But unlike them, parathreads are designed for one-time events via a pay-as-you-go model.
- Bridges — They facilitate connectivity between parachains and blockchain networks such as BTC, ETH, and others.
Polkadot uses Nominated Proof-of-Stake (NPoS) for validating transactions and achieving consensus regarding its ledger. The NPoS protocol involves four main parties:
- Nominators — Essentially, these are DOT holders who stake their tokens for the right to support validating candidates. Those who support a validator with their DOT tokens also get shares of the rewards if the validator is selected.
- Validators — Their role is crucial, as they help the system evolve. Validators use their DOT coins to secure the Relay Chain. In addition to validating transactions on parachains, they verify block data coming from collators, trades, and messages. Their behavior can result in either rewards or confiscation of tokens.
- Collaterals — They work in collaboration with validators. Collaterals are responsible for maintaining a specific parachain. In addition, they collect and link transactions into a block that is then verified by the validator.
- Fishermen — They are the last layer of security in Polkadot, and their job is the easiest. Fishermen don’t participate in creating blocks. Instead, they need to monitor and report malicious activity on the network, for which they are rewarded.
Polkadot’s native token is called DOT. The network uses it for staking, which implies earning cryptocurrency in exchange for storing funds in a digital wallet, thus keeping the blockchain active. In staking, tokens are locked for a certain amount of time.
Polkadot’s token has three main functions:
- Governance — The DOT coin allows the owner to make changes to the program code. No major event will take place on the Polkadot blockchain without the approval of Polkadot coin holders.
- Staking — Polkadot incentivizes the DOT holders for good behavior by rewarding them with the DOT tokens. Bad actors are punished by losing their stake in the network. This is how Polkadot secures the network.
- Bonding— The Polkadot cryptocurrency uses bonding to add new parachains and remove inactive ones.
Why Invest in Polkadot?
Like all cryptocurrencies, Polkadot is also highly volatile. No one can predict what direction it will take in the future, but it certainly attracts investors for numerous reasons.
Here is why you should invest in the DOT token:
- Polkadot solves the interoperability problem — Polkadot allows communication between blockchains without requiring a third party to be involved, thus enabling direct token exchanges between investors and token holders. It creates complex services using simple components by working with specialized blockchain systems.
- It is engaged in innovative partnerships — Polkadot also boasts a number of innovative partnerships, which is one of the reasons you should consider investing in it. Polkadot has recently partnered with Chainlink to make use of its Oracle network. This network enables real-world data to be accessed by blockchains. Polkadot was also launched on Ankr (CRYPTO: ANKR) StakeFi, which allows crypto holders to stake their coins and earn rewards on the Ankr parachain. Therefore, staking DOT is also a crucial element for investors looking to generate passive income and receive long-term returns.
- DOT has implemented sharding — Blockchain can only perform a limited number of transactions per second, just like a toll lane on the road. As such, investors would be limited by the number of lanes the road had the moment they wanted to initiate many transactions. The sharding of Polkadot can easily resolve this issue. To enable separate processing of transactions, Polkadot splits the blockchain into multiple, independent “shards.” Data transactions are facilitated by creating additional lanes on the road.
Where to Buy Polkdot in Oregon
The residents of Beaver State can obtain DOT tokens through a licensed and official cryptocurrency exchange. There is also the possibility of purchasing these tokens from another holder directly, but we will focus more on the former since this method is unsafe.
Centralized Cryptocurrency Exchanges
A centralized cryptocurrency exchange is a platform where there’s a middleman responsible for conducting and overseeing trades and managing assets. Centralized exchanges do not involve direct contact between the two parties. Instead, they manage the trade.
A centralized exchange offers more reliability since it is controlled and operated by a company. The reputable ones tend to support more than 20 currencies. Coinbase, Binance, Gemini, and Kraken are some of the most popular ones.
On the other hand, there are decentralized crypto exchanges. A DEX facilitates peer-to-peer exchange. It lets you hold your assets rather than rely on a third party to manage them. You should be aware, though, that decentralized exchanges don’t accept fiat money such as the dollar, euro, and more.
Several CEXs are available to Oregon residents, so you can select the one that fits your needs best. It is crucial to keep in mind the following things when buying Polkadot:
- Oregon availability — Your area may not have access to all crypto exchanges, so pick the platform that won’t limit you in any way. It is most likely impossible to load or register with an exchange that isn’t available in Oregon.
- Polkadot supported — All exchanges support the major tokens, such as BTC or ETH. Since there are thousands of cryptos out there, some small ones may be left out. Make sure your exchange supports Polkadot tokens.
- Overall reputation — You should check what others say about the exchange before joining. Many have an unfavorable reputation among users for a variety of reasons, such as the absence of adequate security, poor customer support, and repeated hacker attacks.
- Security — Ensuring the exchange is secure enough is paramount. You should prioritize those platforms that offer 2-factor verification, cold storage for storing funds, a KYC policy, multi-level security, and biometric face recognition.
- Liquidity — Liquidity enables transactions to be completed faster and without too much price volatility. An exchange is more liquid if its trading volume is high. It is also advisable to choose the one that offers locked-in trades or guaranteed pricing.
- Regulation — Crypto exchanges must obtain operating permits and demonstrate their stability and competence to financial regulators in their countries. Make sure to check if your chosen exchange holds a necessary license.
- Ease of use — It is important to find an exchange with an easy-to-use interface that allows you to trade, buy, or sell in a matter of seconds.
- Fees and limits — Since exchanges impose transaction and conversion fees, you should understand the fee structure. Some may also include withdrawal fees, so double-check whether there are any hidden costs. You should also see if the exchange imposes daily or monthly limits.
- Payment methods — Some platforms accept bank transfers or PayPal as payment methods, while others take credit and debit cards. Some only accept cryptocurrencies. Select the payment method that is the most suitable for you by studying the various options that these platforms offer.
Buying Polkadot Directly in Oregon
Buying the DOT coins from another DOT holder is an option. However, we don’t recommend it, as it is not safe. It may be more convenient to purchase this way since there are no fees and third parties involved, but there is a risk of being scammed. You have to be extremely cautious when buying directly. That is why we suggest that you stick to a CEX, especially if you are new to the crypto market.
Step-by-Step Guide on How to Buy Polkadot in Oregon
We have created a short step-by-step guide to help Oregon residents purchase Polkadot via a centralized crypto exchange.
- Get a wallet — Once you purchase the DOT coins, you need a wallet to store them. The easiest way to pick one is to go to the official website of the wallet you have chosen and check if it supports Polkadot.
- Select an exchange — We have mentioned some popular exchanges before, so you can pick one of them or opt for another one that suits your needs better. Find the platform that supports DOT, but bear in mind that it needs to cover all the necessary aspects we have discussed.
- Open an account — You need to go through the registration process by supplying the necessary information and documents. After you’ve done that, you’ll have to verify your account.
- Deposit fiat funds — Transfer your fiat money to the exchange, and use it to buy the DOT tokens and cover the fees.
- Buy Polkadot — Once you fund your account, you will be eligible to purchase the desired amount of DOT coins.
- Withdraw DOT to your wallet — Polkadot is now stored in your exchange account. However, it is best to withdraw it to your wallet for maximum security.
As we’ve already said, Polkadot is highly volatile, which means it could potentially bring you high gains — but it could also lead to significant losses. Invest your time in learning as much as possible about the entire crypto ecosystem and Polkadot. Follow the latest trends and the DOT’s worth, and act wisely. Never invest more than you can afford to lose. If necessary, consult a financial expert.