Utah has been one of the crypto-friendly states right off the bat. The Beehive State has been working on accepting cryptocurrencies as a payment method for state services since 2015. Under RUUPA (Revised Uniform Unclaimed Property Act), virtual currencies are classified as property even though they are intangible.
Meanwhile, the legal system in Utah does not treat virtual currency as money or currency, allowing its residents to freely trade, buy, and sell cryptocurrencies, including Polkadot.
However, it’s essential to understand the basics of the Polkadot platform before investing. In this guide, we’ll talk about Polkadot’s ins and outs, including its meaning and investment potential. We will also explain where and how you can obtain DOT tokens.
Table of Contents
Polkadot is one of the fastest-growing cryptocurrencies. In fact, it was named the ‘’Ethereum killer’’ due to the rapid expansion of the developer community and the value of its native coin — DOT.
Aside from being a cryptocurrency, Polkadot is an open-source multichain protocol aimed at facilitating the transfer and exchange of data between blockchains. That is the reason it’s dubbed the internet of blockchains. It was created by the CTO of Ethereum, Gavin Wood, along with Robert Habermeyer and Peter Chaban.
Polkadot probably got its name because it resembles polka dots, a pattern of circles of the same diameter. Following the analogy, this pattern symbolizes the entire crypto world, while the blocks represent the blockchains.
But Polkadot goes way beyond just being a cryptocurrency. Its interoperability protocol allows transferring data or assets between blockchains. In addition to letting users build blockchains easily through its Substrate framework, it hosts blockchains and handles their security and transactions. Furthermore, it connects individual blockchains, with parachains running simultaneously on the Polkadot network.
Moreover, this network allows the users to interoperate with varieties of blockchains. This is one of the reasons why people gravitate toward it.
The main components of the Polkadot network include:
- Relay Chain — This is the core of the Polkadot network that links all the individual chains together. By doing so, all the interoperability problems are organically resolved. The Relay Chain mechanism separates the addition and validation transactions, thus improving transaction speed. For this reason, the network can handle over 1,000 of them per second.
- Parachains — Polkadot parallel chains are known as parachains, and they each have their own tokens. Parachains can design their own governance mechanisms without impacting one another. Because it is divided into segments, this network provides seamless data processing and transactions.
- Bridges — This chain connects parachains and parathreads to various blockchains that don’t use Polkadot’s governance protocols. Thus, people can exchange tokens directly between the networks of other blockchains without relying on crypto exchanges as intermediaries.
- Parathreads — These are similar to parachains, and they are based on a pay-as-you-go model. As a result, it provides more savings for blockchains that do not require a constant connection to the network to function.
The Relay Chain uses a nominated proof-of-stake (NPoS) mechanism that allows individuals who stake their DOT tokens to tie this cryptocurrency to a special contract. Because of that, they can perform one of the following roles:
- Nominators — By choosing trustworthy validators, nominators ensure that the Relay Chain is secure. They entrust their DOT tokens to validators who get their votes this way.
- Validators — Validators produce blocks for Relay Chains and verify transactions within parachains, which are assigned randomly. They also stake DOT to qualify for nomination, and the consensus is known as the Nominated Proof of Stake.
- Collators — These DOT holders are responsible for keeping track of the entire history of each parachain and the Relay Chain.
- Fishermen — Their job is to observe validators’ misconduct and report it. They are rewarded with DOT for continuously detecting these behaviors.
Polkadot (DOT) in Numbers
Polkadot’s first initial coin offering (ICO) saw the DOT price set at $0.29, and a total of 2.24 million tokens were available. The second ICO was in July 2020, with a DOT price of $1.25. On that occasion, 342,080 DOT tokens were sold.
One month after, Polkadot was redenominated, raising DOT balances by a factor of 100 turning the original DOT supply of 10 million into 1 billion tokens. In 2021, its value increased until it reached an all-time high of $53.88 on November 4.
Polkadot has been among the top 20 cryptocurrencies. Currently, the DOT coin is worth around $22 (as of March 31) and ranks 11th according to CoinMarketCap. Its circulating supply is over 987 million coins, whereas the live market cap exceeds $22 billion.
Why You Should Invest in DOT
The decision to invest in Polkadot depends on your goals and financial situation. It is essential to know that there are no specific reasons for investing in a cryptocurrency. As a result of high volatility and a variety of factors affecting the price, it is difficult to predict what will happen to a
Still, here are a few reasons why Polkadot should be considered:
- The crypto market believes it has great potential to grow and maintain the upward trend despite being relatively young.
- Polkadot rewards DOT owners by giving them governance rights over the entire platform. Moreover, the community can decide whether parachains should be created or removed. They also have a say when it comes to network fees and upgrades. Polkadot has yet another great advantage — it eliminates bad investors by releasing the tokens into the ecosystem.
- Polkadot implements PoS consensus mechanisms, so if you buy and stake DOT tokens, you can potentially double your income by reaping interest on staked tokens.
Where to Buy Polkadot in Utah
Utahns can trade cryptocurrencies just like anyone else in the country because no specific regulation prevents them from doing so. They can purchase Polkadot directly from another Polkadot owner or through a credible crypto exchange. Let’s learn more about each of these two options.
Centralized Cryptocurrency Exchanges
You can purchase DOT coins in Utah via a centralized cryptocurrency exchange, which is one of the safest ways to do so. These platforms enable you to buy and sell cryptocurrencies and other digital assets. To put it simply, they act as intermediaries between buyers and sellers. As they are owned by companies responsible for their clients’ holdings, they are more reliable.
DOT tokens are available on some of the most popular exchanges in Utah, including Kraken, Gemini, Coinbase, and Binance.
In addition to centralized crypto exchanges, there are also decentralized ones. The main difference is that there is no intermediary involved. The exchanges are peer-to-peer, and an escrow service does not hold digital assets.
There are many exchanges in the crypto sphere, but not all are accessible to Utah residents. Therefore, you should always keep these factors in mind when choosing one:
- Availability in Utah — Residents of Utah may not be able to access certain exchanges. Ensure that the one you select is available in your area.
- Accepted cryptocurrencies — The platform you choose must support the Polkadot token.
- Security and privacy — Your top priority should be ensuring the exchange is as secure as possible. To protect your financial data and personal information, check whether your chosen exchange uses cutting-edge encryption and firewalls.
- Reputation — Check if there are any security issues with the platform. Find out if other users recommend it by reading their reviews and feedback.
- Liquidity — It allows for faster, easier, and more efficient transactions without too much price volatility. Basically, the more liquid an exchange or an asset is, the higher is its trading volume. In addition, make sure to look for exchanges that offer locked-in trades or guaranteed pricing.
- Fees — Exchanges impose different charges. Some have a set fee, while others take a percentage of your trade. Also, they vary based on whether you are a buyer or a seller. Still, many exchanges charge a transaction and a conversion fee.
- Limits — Exchanges limit how much you can buy and sell during a specific period of time. Have that in mind before opening an account.
- Payment methods — Crypto exchanges accept a variety of payment options. Make sure to choose one that works with your preferred payment method.
- User interface — The user interface should be intuitive and straightforward on desktops and mobile devices alike. Easy navigation and a good user experience will facilitate the entire process, especially for beginners.
DOT tokens can be purchased directly from another owner if one does not wish to go through the verification process of a crypto exchange. This may be an easier and more affordable option, but it is much riskier.
Just to be safe, you might want to pay attention to a few things when it comes to an exchange like this. For instance, it is advisable to research DOT tokens and buy DOT coins from a person you trust. The individual you are buying from may turn out to be a scammer, so it is better to conduct all the business via exchanges, as they are much more secure.
How to Buy Polkadot in Utah
The process of purchasing and selling DOT tokens on an exchange is fairly straightforward.
Here is a step-by-step guide showing you how to set up an account and get started:
- Set up a wallet — You’ll need to find a wallet that matches your needs to store your DOT coins. Choosing one of the supported wallets is easy as long as you do some research beforehand.
- Pick an exchange — Ensure the exchange you choose is available in Utah, and pick one that matches your preferences and needs. Take a look at our recommendations as well.
- Register an account — Create an account by providing all the necessary documents to complete the KYC process.
- Make a deposit — Choose your preferred method of depositing fiat money that you’ll use to buy DOT coins later.
- Purchase DOT — Fund your account with the amount of money you wish to exchange for the DOT coins. Remember that there will be transaction and conversion fees.
- Transfer DOT to your wallet — Polkadot tokens bought through your exchange account are now in your wallet. It is possible to withdraw them to your wallet (for an additional layer of security) or leave them there, depending on what you plan to do.
It is undeniable that the DOT token is gaining in popularity as a digital currency in the crypto world, despite the volatility factor. This token offers a variety of excellent features, and so far, it has performed exceptionally well.
Hopefully, this guide has been successful in helping you understand Polkadot and how it works. Before making any decisions, however, it is recommended that you conduct your own research. You should also consider the latest market trends and seek advice from a professional.