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How to Buy Polkadot – Forbes Advisor

By on June 21, 2022 0

Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.

Despite the onset of crypto winter, many investors believe there are plenty of opportunities for future growth in the cryptocurrency market, especially when it comes to Polkadot.

Polkadot is among the top 15 cryptocurrencies based on a market capitalization of around $7 billion. If you want to buy Polkadot, here’s what you need to know.

What is Polkadot?

Created in 2016 by Gavin Wood, the co-founder of Ethereum (ETH), Polkadot is a protocol that connects different blockchains.

This platform is designed to provide a bridge between separate blockchains, enabling cross-chain interoperability. For example, it can link communications between Litecoin (LTC) and XRP (XRP) with a smart contract.

Polkadot’s blockchain addresses some important outstanding issues with blockchain technology: interoperability and scalability. Crypto allows other blockchains, public and private, and decentralized applications (dApps) to communicate with each other under a single umbrella.

Polkadot is also fast and scalable, processing over 1,000 transactions per second (TPS). This is impressive considering that Bitcoin can only process about seven, and Ethereum can only process about 30 per second.

With these advantages, Polkadot could extend the usability of certain cryptocurrencies.

“Polkadot’s mission is to securely enable Bitcoin and Ethereum to interact with each other in a scalable way,” says Bilal Hammoud, CEO and Founder of National Digital Asset Exchange. “Imagine if you store your wealth in Bitcoin and use that Bitcoin on an Ethereum dApp [decentralized application] take out a loan for a house quickly and safely.

Polkadot has its own native token, DOT, used for governance, staking, and linking. For those looking for yield, staking is a way to have your cryptocurrency earn passive income without having to sell your tokens.

All DOT users are eligible to vote on governance, such as upgrades, but votes are weighted by the number of tokens the user owns.

Initially, Polkadot allowed 10 million DOT to be created, and there was no supply cap. Redenomination of the network in August 2020 changed it to an allocation of 1 billion DOT tokens.

Where can I buy Polkadot?

If you want to buy DOT tokens, you can do so through a decentralized exchange like PolkaSwap or the 1Inch network.

If you are going to buy Polkadot using US dollars or another form of fiat currency, you can use cryptocurrency exchanges. A few exchanges that allow users to buy and sell DOT are:

Some cryptocurrency exchanges offer trading pairs that allow customers to trade DOT with USD Coin (USDC), a top stablecoin. Exchanges that allow investors to buy and sell DOT and USDC include:

How to buy peas

To purchase the Polkadot token, follow these three steps:

1. Select a cryptocurrency exchange

If you are new to cryptocurrency investing, you will need to open an account with a cryptocurrency exchange. Crypto exchanges are market platforms that facilitate transactions. Some are very basic and easy to use, while others are aimed at more advanced investors and have features like margin accounts and crypto-staking.

If deciding between exchanges, pay attention to platform security features, account minimums, and additional fees.

2. Submit your Polkadot order

Once you have an account, you can fund it by linking your bank account or entering your debit card information. Some exchanges allow you to use a credit card, but think twice before using credit. When you buy cryptocurrency with credit, the card issuer will likely treat the transaction as a cash advance and charge a higher annual percentage rate (APR) and fee.

Although you can purchase DOT with a credit card, we strongly advise against it. This is because credit card transaction fees on crypto exchanges are often high. If you use a credit card to buy cryptocurrency, it will generally count as a cash advance and be subject to a higher interest rate than what you pay on regular fees.

When you’re ready to buy Polkadot, enter the ticker symbol — DOT — and the amount you want to buy, such as $50 or $100.

3. Put away your Polkadot

Whenever you buy cryptocurrencies, you have to manage the storage yourself. Properly storing your investment is key to keeping your tokens safe. There are several storage options:

  • Rigid Wallet: A hard wallet looks like a thumb drive or thumb drive. It is a small physical device that plugs into your computer or laptop and stores your private and personal encryption keys. They are considered “cold” because they are not connected to the Internet or a network when not actively in use.
  • Paper wallet: This form of storage is less popular than before, but can be a viable storage option. With a paper wallet, you write keys or apps to download a QR code. If you lose it, you can recover your cryptocurrencies.
  • Software portfolio: Software wallets are applications or programs that you can download to manage your cryptocurrencies electronically. Because they are connected to the internet and networks, they are less secure, but they make it easier to trade your holdings.
  • Crypto Exchanges: Some cryptocurrency exchanges, such as Coinbase, integrate storage into their platforms and store your cryptocurrency on your behalf. But relying on an exchange for storage can be risky, and you might want to consider other solutions for long-term storage.

What you can buy with Polkadot

Polkadot’s token can be used as a governance token, and people holding DOT tokens can provide information about the future of the Polkadot protocol. Polkadot can also be used for staking, which is how Polkadot verifies transactions and issues new DOT tokens.

Like all cryptocurrencies, Polkadot prices can be volatile. Only invest what you can afford to lose and be sure to research the risks.

“If you are new to the [cryptocurrency] space, you need to invest your time reading and investigating projects that interest you,” Hammoud advised. “Remember, the space is young and there are plenty of opportunities to learn and make the right investment decisions.”