Back in august 2017 bitcoin got split
part of the community wanted to increase
the block size while another part didn't
want to
not everybody agreed and this
disagreement gave birth to
bitcoin cash this is a perfect example
of protocol limitations and how a
community deals with it
the key issue here is that a one
blockchain application can only handle a
limited amount of transactions
meaning that if too many transactions
happen you can get bottlenecks
bottlenecks can result in delays and
high fees
another point is the governance they
weren't able to reach a consensus
so they opt for a fork a fork is when
developers take the source code and
start independent development on it
this literally forks the chain in two on
the one side you had
bitcoin and on the other side new chain
was born
being bitcoin cash so how can issues
like these be
prevented well the main issue here is
that you have
one blockchain that has to solve
everything so basically this blockchain
has to be good at everything
but what if instead of building a
one-size-fits-all blockchain we could
just take
multiple blockchains link them together
and let them communicate
so every blockchain in that chain can be
designed for
one specific task or purpose this is
where polkadot comes in
it unites all sorts of different
blockchains into one single ecosystem so
what are the benefits of
polka dots well polkadot offers
cross-chain communication
this basically means that if we take
multiple blockchains and we link them
all together
all the transactions can happen and be
calculated in parallel which means
we can prevent bottlenecks polkadot is
future proof
the example of bitcoin that i used i
discussed a fork
with polkadot you will have the
possibility to do on-chain
upgrades but i'll go into more detail a
little bit later
the third point i wanted to discuss is
the transparent governance
this basically means that everybody who
owns the dot
token this is polka dots native token
will be able to propose
changes to the protocol or vote on
existing proposals
this means that polka dot is governed by
the community
so how does all of this work well to
explain it i'm going to keep it
as high level as possible i'm not going
to go into any technical details
i'll just use this illustration that
polka dot used in their
white paper so this ring in the middle
is the polka dot
relay chain this is basically the heart
of the polka dot
network i told you before that one of
the core concepts of
polka dot is that you connect multiple
blockchains together
this way they can communicate and
exchange functionality
so you have the relay chain and on this
relay chain you connect
power chains a para chain is basically a
sovereign blockchain
polkadot called it parachains because it
allows transactions from all the chains
in the network at the same
time which is called parallel processing
so
parallel processing parachain and
finally the third element
in this illustration are the bridges
this basically means that you can have
special
blockchains that are connected with
external networks like ethereum or
bitcoin polkadot uses a cross-chain
messaging scheme for communication this
allows a secure exchange of any type of
data
the data that they used as an example
are tokens account balances
stock prices etc the biggest benefit of
connecting multiple blockchains
and letting them communicate and share
functionality is that each of these
blockchains can be optimized for
specific use cases this means that the
develop team can really
focus on making their blockchain excel
in something
this of course improves efficiency and
security and it brings down development
time by
a lot one of the bigger issues in the
cryptocurrency world has always been
scalability once too many transactions
happen
you get bottlenecks which result in
delays and high
fees with the relay chain of polka dots
you can allow transactions from all the
chains in the network at the same
time like i said before this is called
parallel processing
if we look at this chart of transactions
per second and
we'll take visa as example which handles
about
1700 actual transactions per second this
was in 2020. we see that bitcoin and
ethereum are
really far behind this bitcoin with
seven transactions per second maximum
and ethereum with a 15 to 20
transactions per second
maximum one of course can say that the
point of bitcoin is not having a lot of
transactions
bitcoin excels at a specific use case
and that is the one of
store of value so does it really need a
high number of transactions
ask the people of bitcoin cash so back
to business on top of all of this we see
polka dots polka dot has a theoretical
capacity of over 166 000
transactions per second the founder of
polka dot gavin wood even mentions
getting this up to a million
transactions per
seconds and this of course is because of
the parallel processing
so the idea of polka dot really tackles
one of the major
issues a lot of the cryptocurrency had
being scalability
another really interesting point about
polka dot is governance
in the past there were two ways of
governance regarding networks
the first way of governing a network was
that once it was launched
that was going to be the way that it was
going to be forever
the second example is where one person
or the original team of developers
only has the ability to make changes
with polka dot it's
different polka dot is governed by all
the stakeholders who wish
to participate so it all boils down that
the polka dot network
is ruled by the community itself
the governance part ties really close
together with the next point that i
wanted to make
being upgradability so a lot of
blockchains use
forks to make upgrades this can be a
long process
sometimes it can even take months and it
can split the community like we saw with
bitcoin and bitcoin cash
in the traditional blockchains when an
update happens all the nodes have to
download and install this
update this means that when some nodes
don't agree with the update or some
people
just aren't aware of the update that you
can get a split
this results into two groups one group
of nodes that will have the correct
updated version and another group that
refuses
or does isn't aware of the update this
way you can get a split
in the chain polka dot solves this issue
by having forkless on chain
upgrades this means that the notes so
all the computers where a copy of the
blockchain is stored on
they don't have to do an upgrade they
just keep on participating in the
network
and once the chain is upgraded your node
will just start following the new
logic the reason why i said that
governance is tied
together with the upgrade ability is
because that there will be a rigorous
voting system deciding if an upgrade
gets implemented
or is even needed to start with so that
was it for
this video i basically took the polka
dot
white paper and light paper read it
through and tried to boil it down and
keep it as
simple and high level as possible the
main takeaway of polka dot is that
instead of having a one size fits all
blockchain
you can now just chain blockchains
together which means that every
blockchain
in the chain can focus on one specific
use case
your blockchain doesn't need to be good
at everything anymore because there's
another blockchain already on the chain
that is good at the specific thing you
need
to me this sounds like a really nice
idea and it really tackles one of the
bigger issues in cryptocurrency which is
scalability i also really like the idea
of governance
where everybody who owns dots is able to
cast a vote or
make decisions this really brings the
feeling of decentralization
back to cryptocurrency which i kind of
felt
that i was missing lately there's so
many
centralized companies popping up left
and right and i really feel that the
idea of polkadot is something that i
can support so anyway that was it for
this
video i think polka dot has a lot of
potential and i look forward
to seeing how this project unfolds again
i tried to keep it as high level
as possible if anything wasn't clear
please leave a comment and i'll try to
reply to it as fast as i can
if you enjoyed this video please leave a
like and subscribe
i also want to add that i have a discord
server i'll add the link to the
description
here we can discuss cryptocurrency and
investing in general
so i want to thank you for watching and goodbye
