Table of Contents
Show more
Show less
Polkadot is among the top 15 cryptocurrencies based on a market capitalisation of around £7.8 billion ($10 billion). If you want to buy Polkadot, here’s what you should know.
The UK financial regulator, the Financial Conduct Authority, has issued repeated warnings about the risks faced by those who invest in cryptocurrency, stating that all funds are at risk and investors could lose everything. Cryptocurrency trading is largely unregulated in the UK and no compensation arrangements are in place.
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, allowing cross-chain interoperability. For example, it can tie the communications between Litecoin (LTC) and XRP (XRP) together with a smart contract.
Polkadot’s blockchain tackles some significant outstanding issues with blockchain technology: interoperability and scalability. The crypto allows other blockchains (public and private) and decentralised applications (dApps) to talk with each other under one umbrella.
Polkadot is also quick and scalable, processing more than 1,000 transactions per second (TPS). That’s impressive when you consider that Bitcoin can only process about seven, and Ethereum can only process about 30 per second.
With those advantages, Polkadot could expand the usability of some cryptocurrencies.
Bilal Hammoud, CEO and founder of National Digital Asset Exchange, says: “Polkadot’s mission is to securely allow Bitcoin and Ethereum to interact with each other in a scalable manner. Imagine if you store your wealth in Bitcoin and use that Bitcoin on an Ethereum dApp to take a loan for a house quickly and securely.”
Polkadot has its own native token, DOT, used for governance, staking and bonding. For those looking for yield, staking is a way of making your cryptocurrency earn passive income without needing to sell your tokens.
All DOT users are given rights to vote on governance, such as on upgrades, but votes are weighted by the number of tokens held by the user.
Initially, Polkadot allowed the creation of 10 million DOT, and it didn’t have a cap on supply. The network’s redenomination in August 2020 changed it to an allocation of 1 billion DOT tokens.
Where Can I Buy Polkadot?
If you want to purchase DOT tokens, you can do so through a decentralised exchange like PolkaSwap or the 1Inch Network.
If you’re going to buy Polkadot using Sterling 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 Great British Pound Token (GBPT), a leading stablecoin. Exchanges that allow investors to buy and sell DOT and GBPT include KuCoin.
How to Buy Polkadot
To buy Polkadot’s token, follow these three steps:
1. Select a Cryptocurrency Exchange
If you’re new to investing in cryptocurrency, you’ll have to open an account with a cryptocurrency exchange. Crypto exchanges are marketplace platforms that facilitate trades. Some are very basic and easy to use, while others are for more advanced investors and have features like margin accounts and crypto staking.
If you’re deciding between exchanges, pay attention to the platform’s security features, account minimums and added 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 we strenuously advise against it. That’s because credit card transaction fees on crypto exchanges often run high. If you use a credit card to buy cryptocurrency, it generally will count as a cash advance and be subject to a higher interest rate than you pay on regular charges.
When you’re ready to buy Polkadot, enter the ticker symbol – DOT – and the amount you want to purchase, such as £50 or £100.
3. Store Your Polkadot
Whenever you buy cryptocurrencies, you have to handle storage on your own. Properly storing your investment is essential to ensure you keep your tokens safe. There are several storage options:
- Hard Wallet: A hard wallet resembles a flash drive or USB drive. It’s a small, physical device that plugs into your computer or laptop and stores your private and personal crypto keys. They are considered “cold” because they aren’t connected to the internet or a network when not actively in use.
- Paper Wallet: This form of storage is less popular than it used to be but can be a viable storage option. With a paper wallet, you write down keys or apps to download a QR code. If you lose it, you can recover your cryptocurrencies.
- Software Wallet: Software wallets are apps or programs you can download to manage your cryptocurrencies electronically. Because they’re connected to the internet and networks (and therefore “hot”), they’re less secure, but they make it easy to trade your holdings.
- Crypto Exchanges: Some cryptocurrency exchanges, such as Coinbase, build in storage to their platforms and store your cryptocurrency on your behalf. But relying on an exchange for storage can be risky, and you may want to consider other solutions for long-term storage.
What You Can Purchase With Polkadot
Polkadot’s token can be used as a governance token, and individuals holding DOT tokens can provide input on 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’s pricing can be volatile. Only invest what you can afford to lose, and be sure to research the risks.
Mr Hammoud says: “If you are new to the [cryptocurrency] space, you have to invest your time reading and investigating the projects you are interested in. Remember that the space is young, and there are many opportunities to learn and hopefully make the right investment decisions.”
