Living in the era of blockchain technology, decentralized markets, and the abundance of cryptocurrencies has pushed this field’s experts to look at the bigger picture. What if a network allowed multi-chain communication — a blockchain of blockchains?
It may sound incredible, but it’s already happening. Polkadot is a relatively new project that’s garnering the attention of investors around the world. It’s meant to take the world of decentralized technologies to another level and facilitate transactions even further.
If you’re a Louisiana resident intrigued by this topic, keep reading. This article will discuss Polkadot, its significance, and how and where you can purchase this crypto.
What Is Polkadot?
Polkadot was launched in 2017 by a Swiss organization called Web3 Foundation. It came from Gavin Wood, ex-Ethereum CTO, and the help of Peter Czaban and Robert Habermeier.
Polkadot is much more than a cryptocurrency like Bitcoin or Ethereum. Instead, it’s designed as a blockchain platform (the Relay Chain) — a network that can host other parallel blockchains (parachains) and allow them to communicate with one another.
The idea behind Polkadot is groundbreaking due to the impact it could have on the whole crypto world. By allowing this type of criss-cross communication between different parachains, Polkadot would be making headway toward creating a decentralized web (Web3).
Relevance of Polkadot’s Mission
There are numerous individual blockchains that function separately from one another and are built to support a specific set of features. They all hit different degrees of effectiveness and efficiency regarding decentralization, security, and transaction speed.
Polkadot was designed to bridge these types of gaps. Its mission is to create an ecosystem where numerous blockchains can interact with one another. The establishment of this kind of system would also set standards for all blockchains functioning on it.
Polkadot’s ecosystem would act as a unique foundation where developers can build new blockchains. Instead of carrying out their projects from scratch, they’d already have architectural components to choose from and the possibility to introduce any additional features their project requires. In that way, Polkadot’s network would save them time, energy, and resources.
How Does Investing in Polkadot Work?
Now that we’ve covered the basics concerning Polkadot, we can discuss the process of investing in this protocol. Polkadot, like other blockchains, has its native currency — DOT. You must buy/hold these coins to invest in Polkadot.
Besides being a cryptocurrency, DOT has two other significant features based on which DOT holders can get more involved in the project:
- DOT is stakable — Staking represents the process of collecting and keeping DOT to support and secure the operations on the network. These types of contributions to the project are rewarded with profit.
- DOT plays a role in system governing — DOT holders can have a say in the way the platform is being managed depending on how much DOT they hold. They can voice their opinions on the project’s future through voting.
Process of Staking
Decentralized protocols use different consensus mechanisms to function. Consensus mechanisms, also known as consensus algorithms, allow distributed systems — distributed networks of nodes — to work together and defend themselves from economic attacks.
Polkadot uses a consensus mechanism called nominated proof-of-stake. Proof-of-stake (PoS) uses the process of staking, rather than computing power, as a way of allowing the system to reach a consensus.
The staking process consists of different stages, each carrying a diverse significance level. DOT stakers differ depending on how and in which stage of the process they participate:
- Validators — These stakers are in charge of the infrastructure and security of the blockchain. They can validate new blocks and attach them to the blockchain depending on how much DOT they have and whether they’ve been elected (nominated) to become active. They are rewarded for these efforts.
- Nominators — These stakers participate in the staking process indirectly. They find validator/s whom they trust, distribute their tokens among them, and nominate them to do the staking. Nominators get a portion of the rewards in return for this contribution.
- Collators — These stakers follow the transactions occurring on the main chain and submit them to validators.
- Fisherman — These stakers guard the network by looking for proof of potential misconduct and reporting it to validators.
Polkadot in Numbers
Polkadot has been in the top 20 cryptos globally when it comes to popularity and market cap value for a while now. Its goals, steady project development process, and network stability have proved to be a big enough incentive to attract investors.
A DOT coin was valued at $55 in November 2021 — which is a personal record in terms of price. DOT’s all-time low, $2.69, was recorded in August 2020. The coin currently sits at $18.32.
Even though these oscillations in price prove DOT’s high volatility, this crypto’s ranking hasn’t dramatically changed on the live market cap chart for a long time. It currently ranks 12th with a market cap of over $18 billion and close to 1 billion DOT in circulating supply.
Louisiana Crypto Regulations
Louisiana doesn’t have a clear-cut policy regarding digital currencies. However, the state has passed several regulations in relation to money transmission.
Its Money Transmitters Act requires that all persons who engage in money transmissions acquire a license from Nationwide Multistate Licensing System (NMLS). In addition, the Louisiana Office of Financial Institutions issued a document in 2014 that authorizes the processes of purchasing, selling, and exchanging digital currencies in the state.
The same document denotes persons involved in the business of virtual currency transactions as administrators, users, and exchangers. It further stipulates that exchangers should hold money transmitters licenses to legally engage in the cryptocurrency exchange business in Louisiana.
Where Can I Buy Polkadot in Louisiana?
Louisiana residents can buy Polkadot two ways — using a crypto exchange platform or directly from a DOT holder. The following paragraphs will discuss both of these options in detail to help you make the most informed decision about your investment.
Centralized Crypto Exchange Platforms
The centralized crypto exchanges represent the safest way to buy DOT in Louisiana. There are numerous platforms of this kind that cater to Louisiana residents, so you’ll have a range of options to choose from. Some of the most popular ones that work with DOT are Coinbase, eToro, Kraken, and Paybis.
If you’re thinking of purchasing DOT using a centralized crypto exchange, factor in the following aspects when making your decision:
- Louisiana license — Make sure the exchange you’re planning to join has a valid Louisiana money transmitters license.
- Choice of cryptos — Look into which cryptocurrencies the platform you’re interested in supports. Besides Polkadot, you want to be able to exchange your money for as many other popular and reputable cryptocurrencies as possible.
- Security and privacy — Check security protocols the exchange platform you’re considering to use implements to protect their users’ personal and financial data. Its history of past security breaches is a good indication of how safe or trustworthy an exchange platform is, too.
- Payment methods — Make a note of all the payment companies the platform you’re planning to join works with. Check the transaction speed, limits, and fees attached to these options.
- Liquidity — Pay attention to the liquidity of the platform you’re interested in before you make your final decision. You should be able to exchange your crypto or fiat currencies as soon as you place your order without wasting any time.
You can also buy DOT from a person who holds these coins and is willing to sell them to you. However, this option is not exceptionally safe unless you personally know and trust the person you’re buying from. Regardless of the case, according to Louisiana’s crypto-related regulations, both of you must hold money transmitters licenses to engage in this exchange in a legal manner.
How to Buy DOT in an Exchange — Step-by-Step Guide
If you’re determined to use a crypto exchange to buy DOT, follow our guide below:
- Find a reputable crypto wallet that you can use to store your DOT coins after purchasing them.
- Select a crypto exchange you like. You can use one of the platforms recommended on this page or do your own research.
- Join the platform by opening an account. Fill in the registration form and provide all the documentation the KYC process requires.
- Use the fiat payment method you prefer to transfer funds into your exchange account.
- Acquire DOT by entering the number of coins you’d like to buy and confirming the transaction.
- Send these coins into your crypto wallet or use them for trading.
That’s it — all you need to know about purchasing Polakadot in Louisiana is in this article. Your next step is choosing the way you’d like to buy your first DOT coins — an exchange platform or a person you want to buy this crypto from — and follow our guide. You can decide whether you’d like to hold onto your coins or stake them afterward.