How to Buy Polkadot in Canada
Polkadot is a new entry into the cryptocurrency world. Released in 2020, this crypto coin is gradually moving up the ranks in terms of its market value. As of early 2022, Polkadot’s market capitalization is $22.41 billion, while the price for a single coin is $22.69. If you are thinking of buying Polkadot but are not quite sure where to begin, then this article is for you. We will show you how to buy Polkadot, as well as answer some frequently asked questions about this cryptocurrency. But first, here is a quick overview of Polkadot.
Note: The currency used in this article is CAD (Canadian Dollar).
What is Polkadot?
Polkadot is a network protocol that allows data and tokens to be transferred across both public and private blockchains. This means that unrelated blockchains can freely exchange token and data with each other. This is called interoperability. For example, data can transfer between the Bitcoin and Ethereum networks without any intermediary. Prior to Polkadot, two separate blockchains could not exchange information.
There are many components behind Polkadot. At the centre of the network is the Relay Chain. Unlike other blockchains, which focus on a single network, the relay chain allows Polkadot to host various blockchains. These separate blockchain are called parachains. Parathreads are related to parachians, except they have a pay-as-you-go model. Lastly, bridges let parachains and parathreads connect and communicate with external networks.
Polkadot has a proof-of-stake mechanism, which is a method of validating crypto transactions, securing the network, and creating and distributing new coins. Proof-of-stake has four roles for Dot holders:
- Nominators: They secure the Relay Chain by staking (supporting) DOTs and choosing reliable validators.
- Validators: These users secure the network by verifying the Relay Chain plus staking their Dot tokens.
- Collators: These users maintain the history of the Relay Chain and their corresponding parachain nodes. This is important for blockchain messaging.
- Fishermen: These are users who operate full parachain nodes. Their main responsibility is to detect invalid transactions.
The Polkadot cryptocurrency, also called DOT, has several functions:
- Dot users can vote on future projects using the Polkadot governance mechanism.
- Users can use DOT to pay network transaction fees.
- DOT is used for staking, which is how the Polkadot network verifies transactions and issues new DOT.
Outside of these three uses, you can use DOT to pay for goods and services, as a store of value, or as a monetary gift to friends and family.
How to buy Polkadot
Before you start buying Polkadot, get yourself a crypto wallet. There are two types of crypto wallets, hardware and digital wallets. Hardware wallets are physical pieces of technology like external hard drives or USB thumb drives. Digital wallets store cryptocurrencies on your computer or on cloud-based apps or websites. We recommend you select a hardware wallet to store your DOT. Compared to digital wallets, hardware wallets are more secure.
You can view various hardware wallets by clicking this link.
Once you have selected your wallet, select where you want to buy Polkadot. Cryptocurrency exchanges are the most common place to buy crypto coins. Some popular examples include Binance, Kraken, and Coinbase. Peer-to-peer (P2P) crypto exchanges are another place to buy DOT. In these exchanges, buyer and seller transact directly with each other without the involvement of a third party. Over the counter trading (OTC) occurs outside of exchanges and is a more discreet form of buying cryptocurrency.
Now that you have found a platform to buy Polkadot, decide how you want to pay for the coin. Most people pay for cryptocurrency with a debit or credit card. Some exchanges allow you to pay with a bank transfer. Other times, you can fund your account with traditional currency and use it to buy crypto. Lastly, you can trade for DOT using other cryptocurrencies.
Best practices for storing Polkadot
As soon as your transaction goes through, place your Polkadot into your crypto wallet. As we mentioned earlier, you should use a hardware wallet to hold your Polkadot. Even though digital wallets have security measures like Multi-Factor Authentication, there is still the danger of someone hacking your wallet and stealing your crypto. This risk is almost non-existent with a hardware wallet.
All crypto wallets come with a private key. They are set of numbers that are the password to your crypto wallet. An equivalent would be the pin number to your debit card. It is important that you keep your private key in a secure place that only you can access. A safe or safety deposit box are two good examples of where you can store your private key.
Frequently asked questions about Polkadot
How many Polkadot are there?
Polkadot has an unlimited supply. Currently, there are $1.25 billion worth of Polkadot in circulation, and that figure is expected to grow even more.
Is Polkadot a good investment?
Compared with other cryptocurrencies, Polkadot is not the best investment option. Because of its unlimited supply, Polkadot is an inflationary cryptocurrency. This lowers it value, which means you will not see a large return if you choose to invest in Polkadot. Instead, you should use Polkadot to purchase goods and services, as a store of value, or as part of a short or long-term trading strategy. With that being said, you can still invest in Polkadot if you want to. Just be aware that you should not expect an immediate return in your investment. Rather, you are more likely to net a profit several years down the road.
What are the short and long-term price predictions for Polkadot?
Currently, Polkadot is in the midst of a downward trend; the price fell from $68.43 in November 2021 to its current price of $22.69. However, DOT’s price is expected to take an upswing. According to multiple financial websites, Polkadot is forecasted to trade around $31.00 for 2022. By 2025, DOT might reach $106.98. And by 2027, Polkadot is expected to cost around $118.44.
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