Everything you need to know about ‘Ethereum alternative’ Polkadot
Ethereum is the second-largest cryptocurrency by market cap and this does not seem very likely to change soon when considering the considerable first-movers advantage that it has over competitors.
Ethereum is the second-largest cryptocurrency by market cap and this does not seem very likely to change soon when considering the considerable first-movers advantage that it has over competitors. Nevertheless, there is always talk about ‘Ethereum killers’ and potential ‘Ethereum alternatives’ that could potentially alleviate issues such as scalability and energy usage. One project that has had steady momentum is Polkadot, and in this article, we will go through all the essential details you need to know.
What is Polkadot?
Gavin Wood put out a white paper in 2016 that outlined the vision and objectives for Polkadot. In this paper, he noted the possibilities that blockchain technology could harness, but also considered various obstacles that existed for real-world deployment. Wood is one of the co-founders of Ethereum, and in recent times he has taken a few swipes at the project, calling out its lack of ‘agency’ and the low upper limit for transactions per second. Polkadot is a multi-chain blockchain that aims to achieve scalability and interoperability.
What is the aim of Polkadot?
The goals of Polkadot are fairly clear. It sets out to be more scalable than the competition and uses shards known as ‘parachains’ that can process transactions in a parallel manner. This allows for more transactions per second in comparison to Ethereum. Scalability is a key aspect of Polkadot and the fact that multiple blockchains are able to co-exist and communicate with each other in a secure manner is a promising development.
Polkadot has a significant system of governance that allows holders of the DOT token to have their say. There is also a council of 13 members that have terms of 7 days in which they are responsible for representing passive stakeholders and submitting significant proposals. Proposals can be suggested by token holders and council members, with decisions being agreed through a stake-weighed referendum.
Ethereum vs Polkadot – Key differences
The aim of both projects is similar, which is to allow the development of decentralisation applications on their ecosystems. Ethereum does this through the use of ‘smart contracts’. Developers can build and test their apps on the ecosystem, and the DeFi sector has largely been built on Ethereum. Meanwhile, Polkadot allows this through the creation of apps that communicate with other ledgers through a relay chain.
Even though Polkadot is newer, it has still attracted major developers such as Advanca and Airgap. The design goals of both projects differ. Ethereum is focused on smart contract execution whereas it is the aim of Polkadot to help people build entire blockchains and integrate them with one another.
Could Polkadot overtake Ethereum?
The development of the project has led some to ask whether Polkadot could eventually replace or overtake Ethereum. Firstly, it should be noted that some of the problems that Polkadot aims to address are also being addressed by the highly anticipated Ethereum 2.0 upgrades.
The EIP-1559 upgrade is set to go live later this month and will overhaul the fee structure of Ethereum, and could potentially make it a deflationary asset. But, overall with the differences of the projects, they could easily co-exist. The headlines about ‘overtaking’ can be misleading, and instead, we can look at the development of both projects and their wider contributions to the cryptocurrency space.
But, Ethereum 2.0 as a whole does not appear to be close to being rolled out. There are various challenges ahead, and it could be a significant wait until Ethereum 2.0 goes live. Ethereum is the dominant ecosystem for development, and many of Polkadots aims remain untested. Adoption will be crucial for the project to move forward. There are only so many developers out there, and with new projects in the pipeline, the Polkadot team will need to make a strong case for why developers should opt for their ecosystem. Polkadot receiving more traction will allow us to see how the architecture is able to cope with increased demand. Until then, it is difficult to make direct comparisons between the two projects.
Overall Polkadot may be considered as a promising project that has lofty aims, but it is not the only Ethereum competitor out there. You should now have a clearer idea of what its specific goals are, and how it could help solve some of the issues that have been prevalent within the Ethereum ecosystem.