I ‘m activated about the future of cryptocurrency and blockchain technology and the function they will play in our lifetimes. I ‘ve been following Bitcoin since the early days, have seen over 4000+ coins enter the grocery store ( many of which did not withstand the screen of clock ), watched pump and dump ICOs make people rich, and watched blockchain engineering go from a misunderstood sci-fi discussion to an every day depart of an investor ‘s vocabulary .
I ‘ve been along for the drive, felt the highs and lows of buying and selling at the wrong time, and made more than a few mistakes along the room. ( Fine, I ‘ll admit it… I bought Cryptokitties a few years ago ! )
I wo n’t claim to be a blockchain or crypto adept because I ‘m not — but who very is ? We ‘re all in this together speculate, wishing, hoping, and figuring things out as we go. so while I ‘m not here to be your crypto investment adviser and will never tell you to buy a mint, I ‘m happy to plowshare the coins that I ‘m personally invested in and give you my reasons why I chose to invest in those finical coins. One of those coins, which we ‘re going to talk about today, is Polkadot ( DOT ) .
I put together this Beginner ‘s Guide to Polkadot because many of my friends and family were asking me how to get involved in the plan after hearing me talk about it — and writing a web log post one meter is easier than sending the lapp e-mail 20 times. I decided to publish this tutorial on Travel is Life since we regularly discus engineering on this web site .
disavowal : Before continuing with this tutorial, please know that this is a tutorial not investment advice. You should constantly perform your own due application before investing in a cryptocurrency ( or anything for that matter ) .
What is Polkadot?
Polkadot is a newly type of cryptocurrency and blockchain engineering that aims to solve the technical foul and logistic problems of its predecessors Bitcoin and Etherium. Polkadot was announced in Nov 2016 and released for sale in Oct 2017. It was developed by Gavin Wood, the same ridicule who created Etherium, which is presently the second largest cryptocurrency in the world by commercialize capital .
From the Polkadot Wiki web site :
Polkadot enables scalability by allowing specialize blockchains to communicate with each early in a secure, trust-free environment .
Polkadot is built to connect and secure singular blockchains, whether they be populace, permission-less networks, secret consortium chains, or oracles and early Web3 technologies. It enables an internet where independent blockchains can exchange information under common security guarantees .
In other words, most former cryptocurrencies were built to support ONE single blockchain, which is both limiting and non-scalable. So Polkadot comes approximately and says, “ How about rather of trying to create the one and alone blockchain, we create an clear engineering that allows other blockchains to communicate and connect with each other ? ”
What is a blockchain?
A blockchain is a publicly accessible digital ledger ( like an code spreadsheet ) that stores every transaction ever made with a cryptocurrency. For case, if I pay you $ 20 in Polkadot to mow my lawn, that transaction is written on Polkadot ‘s blockchain for everyone to see. ( Although it does n’t show our names. It good shows that one digital wallet paid another digital wallet $ 20. )
Blockchains are stored on thousands of computers around the worldly concern — you can even download and host one yourself — so that no-one can fake a transaction. For example, if I tried to pretend that you gave me $ 5,000 in Bitcoin, the rest of the blockchains would say, “ LIAR ! liar ! ”, and not validate the transaction since it would n’t match up with the other populace ledgers .
It ‘s quite an innocent engineering because it adds transparency to fiscal transactions that were differently historically hidden behind the individual fortress walls of banks. Bitcoin started the revolution in 2010 and since then over 4000 cryptocurrencies have been developed ( most of which are reasonably worthless ) .
So if there are over 4,000 cryptocurrencies, how do you know which ones to invest in?
At this point, I only invest in coins that have functional application such as VeChain (VET), Basic Attention Token (BAT), and Polkadot (DOT) — to name a few.
In the previous days, ( a few years ago, LOL ), thousands of copycat coins were minted that did nothing but provide an exchange of value, or in other words, serve as a currency — but how many Bitcoin and Ethereum copycat does the world need ? Most of these “ shitcoins ”, as they ‘ve come to be known, either died or never got off the ground .
Enter coins with functional application like VET and BAT.
For model, Vechain ( VET ) is designed to help international companies with supply chain management ( i : monitor and tracking inventory as it travels around the worldly concern ). basic Attention Token ( BAT ) is designed to track consumers ‘ time and attention on websites and distribute advertising money between advertisers and publishes .
Coins with functional applications are n’t fair built to be a currentness substitution, but rather provide a decentralized digital service to the global .
Coins with functional application inactive have a fiscal value because blockchain technology requires an incentive for people to host the blockchain. Otherwise why would I want to dedicate my resources to pay for the memory, Internet bandwidth, and electricity that it takes to host a blockchain ? A value associated with the coin promotes adoption, which in turn, adds to the value of the mint. And these are the types of coins that I like to personally invest in .
Why do you invest in Polkadot over other coins with functional application?
here ‘s why I ‘m a big believer in Polkadot :
- The dev team has experience. Although the technology is public and open source, it all starts with a core group of dedicated developers to get things off the ground. The developers behind Polkadot are experienced in the world of cryptocurrency and have a history of launching successful coins.
- Polkadot’s got big backers. Polkadot is the flagship project by Web3 Foundation, a Swiss Foundation founded to facilitate a fully functional and user-friendly decentralized web. It’s got the credibility and financial backing to get itself off the ground.
- Polkadot offers grants. Rather than wait for developers to raise money and start launching projects all on their own, Web3 Foundation offers grants for developers to build on their blockchain. This is why there are already several hundred projects in development around Polkadot (and counting). Remember, adoption = success = value in the world of blockchain technology, and Polkadot isn’t leaving adoption up to chance, but instead sponsoring and fostering a community of development projects around its technology from day one. As of today, they’ve provided grants to 200+ projects in 50+ countries.
- Polkadot is 100% open source. Anyone can contribute to the codebase, run a node, or build services on Polkadot. Unlike some other not-to-be-mentioned crypto coins which feel about as centralized and secretive as your average bank.
How much is Polkadot worth?
At the time of writing this, Polkadot has a $ 26 billion market cap and each coin sells for around $ 27/each. however since that changes by the second, below is a doodad that displays the latest Polkadot pricing .
How much will Polkadot be worth in the future?
Well is n’t that just the MILLION DOLLAR question ! I ‘ve done calculations on how much I think DOT could be worth in the adjacent few years, however, I do n’t want to speculate a DOT price prediction with you because this article is n’t meant to encourage you to purchase, but rather help facilitate your leverage if you decide on your own to do so. Please do your research and only invest an sum that you can afford to lose, as crypto currencies are notoriously a bad play. I personally have a healthy sum invested in the mint as a long term play ( internet explorer : 5-10 years ) and recommend that you invest with that same timeline in mind .
How to buy Polkadot in the USA
If you notice, this tutorial says “ in the USA ” everywhere — and that ‘s because the march will differ from country to country. Some exchanges ( which are websites where you go to buy coins ) alone work within USA while others merely work outside of USA. When I first started buying DOT coins, I was in Ecuador, and when I got back to USA, I had to find new exchanges which I ‘ll foreground below .
To purchase Polkadot coins you ‘ll need to create accounts with two different exchanges ( both free ) — Coinbase and Kraken Both of the links above are referral links which mean I earn a little bonus for recommending those services — however I would recommend them anyhow, and there truly are n’t any other good options right immediately in the USA. It just makes business feel to use my referral links since they offer them, therefore thanks for supporting my bring with this web site by using them. You ‘ll earn $ 10 in free BTC when you sign up to Coinbase with my connection above, as will I .
Coinbase is what you ‘ll use to deposit dollars ( USD ) and convert them into Bitcoin ( BTC ). then you will transfer the BTC to Kraken, where you will convert your BTC into Polkadot ( DOT ) .
technically you can deposit USD immediately to Kraken, however, their lone situate option is cable transfer which typically costs $ 20-30 depending on your bank. By going through Coinbase beginning, you can deposit USD for free via ACH Transfer, purchase Bitcoin, and then pay a small transaction fee to transfer it to Kraken. You ‘ll save a fortune of money in fees by using the organization I outline below ( which is how most people do it ) .
How to setup an account with Coinbase
Step 1: Visit the Coinbase sign-up page and enter your name, e-mail address, state, create a password, and click the augury up button .
Step 2: Next you ‘ll receive a verification electronic mail to confirm your address. Clicking confirm will redirect you back to Coinbase to finish creating your account .
Step 3: Enter your earphone number, which Coinbase will use to verify your purchases in the future using 2-step authority. ( They ‘ll text you a seven finger code to confirm your transactions. )
Step 4: Submit extra information to create your profile like your legal name, birthday, and forcible address .
Step 5: Verify your identity with your drivers license. You ‘ll use your web cam to upload a photograph of the front and back of your ID. It may take a few minutes to confirm your identification .
Step 6: once your ID has been confirmed, you ‘ll be directed to the payments screen and presented with options to deposit funds. Connecting your depository financial institution score and doing ACH remove is my commend method acting because it ‘s spare — however it takes a few days to verify your report. If you ‘re in a haste, you can use a unlike method like debit card or PayPal deposits, but take note of the transaction fee before you go those routes .
Step 7: once your deposit is cleared, you ‘ll see a USD balance within your Coinbase report. You can now use this to purchase cryptocurrency .
Step 8: Click the BUY/SELL blue button at the circus tent of the screen and manipulation either your deposited USD funds on Coinbase or your now connected checking account to purchase BTC. This may take a few minutes to show up in your account after you purchase .
That ‘s it for the moment. You now own BTC that is being stored in your Coinbase score. next step is to create your Kraken account so that you can buy Polkadot. If you ‘re waiting for Coinbase to verify your checking report ( which takes a few days ), you can go ahead and setup your Kraken account below sol that it ‘s ready once your Coinbase account is fix .
How to setup an account with Kraken
Step 1: Visit the Kraken sign-up page to enter your e-mail address, create a username, and a password. then select your nation of residency and snap “ Create Account ”.
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Step 2: You ‘ll receive an activation code via electronic mail which you can enter at the following screen along with your newly created login credentials to activate your account .
Step 3: now you ‘ll need to verify your account. There are three levels of history verification, but for the moment, you ‘ll lone need to do the Starter verification, unless you plan on buying a distribute of crypto to which you ‘ll need the Intermediate. Start by clicking “ Get Verified ” under the Starter confirmation .
Step 4: Enter your full name, electronic mail address, physical address, and call number in order to begin the process .
And that ‘s it ! You ‘re now quick to transfer BTC from your Coinbase to your new Kraken account and use it to buy Polkadot .
How to transfer BTC from Coinbase to Kraken
Step 1: Within your Kraken splashboard, click the “ Funding ” yellow journalism in the top main menu. You should see zero balances for everything .
Step 2: Find where it says “ Bitcoin ( XBT ) ” under “ Crypto Assets ” on this page. XBT is the new acronym for Bitcoin, but it ‘s the same as BTC, indeed do n’t be confused. Click “ Deposit ” on the right following to Bitcoin ( XBT ) .
Step 3: On the future page, you ‘ll be prompted to click the “ Yes, I acknowledge ” push button before you can deposit Bitcoin for the first time. You are acknowledging that it ‘s up to you to copy/paste the decline Bitcoin wallet address and that Kraken is not responsible if you screw up and send your Bitcoin to person else .
Step 4: Click the “ Generate New Address ” button which appears after the step above. You ‘ll now see a long string of about 34 random characters appear. This is your new Bitcoin wallet on Kraken. copy that long string of characters entirely .
Step 5: Switch check to your Coinbase dashboard and click the “ Send/Receive ” clitoris in the upper right corner .
Step 6: Paste your 34 character wallet address in the first field that says “ To : Enter electronic mail or cover ”. then choose “ BTC Wallet ” under the “ Pay With ” airfield and click Continue .
Step 7: Verify that you ‘ve entered the discipline wallet address and amount on the adjacent screen and then click “ Send now ” .
Step 8: You ‘ll receive a 7 digit ratification code via text, which you ‘ll need to enter on the next blind to confirm the transfer .
Step 9: Switch back to your Kraken dashboard. Within 10 minutes you should see your Bitcoin libra appear in your available Balances. This sometimes takes up to an hour or longer depending on network handiness, but normally just takes a few minutes. ( The transaction I made to create this tutorial took 74 minutes. )
And that ‘s it ! You ‘ve now successfully transferred your BTC from Coinbase to Kraken. last thing to do is use your BTC to purchase DOT on Kraken .
How to purchase Polkadot (DOT) on Kraken
Step 1: Click “ Buy Crypto ” within your Kraken Dashboard in the top menu .
Step 2: Select the “ Convert ” check and then select “ From : Bitcoin ” and “ To : Polkadot ”. You can either choose the sum you ‘d like to convert or click “ Convert Max ” to exchange all your BTC for DOT .
Step 3: Select “ Preview Convert ” and review your transaction. then chink “ Convert now ” .
Congratulations ! You are nowadays the proud owner of DOT coins .
BONUS: Stake your DOT coins and earn interest
Staking your coins is the march of committing your coins to the Polkadot ecosystem for the function of validating transactions. By doing indeed, you earn a advantage for your bet on in the form of interest ( which they call rewards ). This is the Polkadot equivalent of mine Bitcoin .
Step 1: Click the “ Staking ” tab in the top menu of Kraken .
Step 2: Scroll down until you see Polkadot listed. It ‘s probably the first coin listed .
Step 3: Enter the come of your coins you ‘d like to impale. I hit “ Max ” to venture all of them. No indicate in having your coins fair sitting there on an exchange. Leave “ Grow Rewards ” choice enabled, which is basically alike DRIP with stocks where you reinvest your rewards back into the stake for compounding pastime .
And that ‘s it ! You ‘ve now successfully staked your DOT coins and are on the way to earning 12 % matter to in the shape of DOT coins — which should besides go up in prize over time which means you ‘ll be earning a set more than 12 % .
What you should know moving forward.
If this is your first clock time purchasing cryptocurrency, then there are a few things you need to understand .
1. You’re storing your coins on an exchange.
If you followed the steps above precisely as written, you are now storing and staking your coins on the Kraken exchange. This comes with the implicit in risk that you are n’t the official holder of your coins — Kraken is .
Whereas other cryptocurrency holders take their coins off the switch over they bought it from and store them on their own computer, USB unvoiced wallets, or simply as cold paper copies. Each of those options come with their own implicit in risks a well .
personally I have faith in Kraken as an switch over. They are the 4th largest commute in the populace, a US based ship’s company, were founded in 2011 ( which is a life in cryptocurrency years ), and have a history of helping their users recover lost funds .
I do n’t have ALL my DOT coins on Kraken, but I ‘m comfortable with having some in holy order to stake with their exchange. It ‘s besides possible to post DOT coins on your own, directly on the Polkadot blockchain, however, that ‘s a much more complicate tutorial and requires a minimum measure of DOT coin ( presently 164 coins or about $ 4500 USD at the time of writing this ) .
I ca n’t promise that your coins will be safe on Kraken because no-one can promise that. Same as I could n’t promise that your coins would be safe if you took them off Kraken and stored them on your calculator. There are risks with both repositing methods. I merely aim to make you mindful of the risks so that you can take them into consideration with your storage method acting and investment amount .
Be certain to have a identical guarantee password for Kraken that you do n’t use anywhere else and secure your account using their extra security methods available such as Two Factor Authorization ( 2FA ) .
2. The value of your coins could plummet.
veracious now, as I write this tutorial, Bitcoin just broke past $ 50,000 for the first time and took many of the elevation coins up along with it. ( Historically other crypto coins heighten and precipitate with Bitcoin. )
When I inaugural started buying Polkadot coins, they were about $ 17. then I returned to America and tried to buy more, and the exchange I was using said, “ We do not support USA customers. Your score will be deactivated in 14 days. Please remove all your funds. ” So I had to switch exchanges .
By the time I got apparatus with Kraken and validated my accounts, the value of DOT coins had already risen to $ 24. I waited a few days hoping they ‘d dip rear down, and they rather rose to $ 29-30. This late Bitcoin rally has destroyed my dollar cost average .
There ‘s a two sided risk with waiting to fourth dimension the market. By waiting for a dip, you could be waiting constantly while the value exponentially rises and never returns to the degree at which you started. however by purchasing now, the coins could plummet in value and waiting a week would have allowed you to buy twice equally many coins for the like price. If I had the proper answer for you on how to time the marketplace, I ‘d be a billionaire already .
The lone thing I ‘ll say about this subject is that I believe in Polkadot ‘s future and think that getting involved at double digit values is a commodity long condition investment. You ‘ll need to decide for yourself though based on your own assessment and risk allowance .
3. If I lost everything I put into Polkadot, I would still survive.
Cryptocurrency for me falls into the notional sphere of my investment portfolio. I like real estate and ( some ) stocks. Those are my less hazard antipathetic investments, however, since I ‘m 36 years old and have time to recover financially from bad decisions, I allow myself to put some peel in the game with inquisitive investments like cryptocurrency — for better or worse.
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Again, I ‘m not an investment adviser, and this is a technical tutorial, not investing advice. I equitable wanted to end this by encouraging you to invest responsibly and assess the risks consequently .
Questions? Suggestions? Feedback?
drop a gloss below or e-mail [ e-mail protected ] I will update this article in the future with newfangled information to respond to your questions and keep it up to date .