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polkadot vs ethereum

Polkadot (DOT) and Ethereum (ETH) are two tokens with their blockchain. They let users collaborate on projects and conduct fast transactions. The question is: what’s the better token to invest in? That’s what I’ll answer in today’s Polkadot vs Ethereum feud.

Both tokens’ chains are attempting to improve the usability of crypto in distinct ways. 

Due to price gains and the social media buzz surrounding their initiatives, both tokens have become extremely popular.

Let’s have a closer look at their key differences and how they’re similar.

Polkadot 101

The Polkadot ecosystem is a multichain network that processes transactions across multiple parallel chains or parachains.

The network is linked to over 100 chains, allowing up to 1,000,000 transactions per second. 

In a range of situations, these chains can be beneficial.

It promotes decentralization by allowing you to speak with people on different chains. 

The loan business is one of DOT’s most essential applications.

Centrifuge is a Polkadot project that is currently being developed.

Its ultimate goal is to stitch the gap between real-world currency and DeFi by offering crypto loans. 

You’re then free to utilize mortgages, invoices, and other tokens as collateral.

The goal is to use Polkadot to propagate the system all over the blockchain.

Polkadot uses Substrate, a development framework for building Polkadot-compatible blockchains, with levels of abstraction based on the developer’s needs. 

Substrate was used to build Polkadot.

It markedly reduces the time, energy, and money required to establish a new blockchain.

Compared to smart contract systems like Ethereum, Substrate provides a considerably bigger canvas for developers to explore.

It gives you complete control over the blockchain’s underlying storage, consensus, economics, and state transition rules. 

You usually can’t do these things on a typical smart contract platform.

Polkadot’s design, which allows for shared security inside its network, is another plus.

There are two significant advantages to sharing security.

First, delivering security-as-a-service from the Polkadot relay chain alleviates the burden on parachain slots and builders.

Other networks like Cosmos take a different approach, with each zone being responsible for its own security.

This shared security simplicity reduces builder friction and streamlines the introduction of a new parachain.

Plus, shared security provides a framework for parachains to communicate with one another.

This allows parachains to specialize in the long run. 

It’s reminiscent of the old Unix idea of building tools that perform one thing well.

Then, by combining these purpose-built tools, you can attain higher-order goals. 

A comparable thing appears to be occurring in the Polkadot environment.

This makes up the brawn of the Polkadot design goals, which should result in significant network effects.

I’ll paraphrase an old real estate adage: The Polkadot developers’ top three obstacles: adoption, adoption, and adoption.

Ethereum is the most popular development platform, with any developer-focused platform’s most fantastic developer community. 

Furthermore, a slew of new platforms on the horizon aims to compete with Ethereum for developer attention.

There are just so many developers available right now.

The Polkadot developers’ primary hurdle is gaining enough traction and establishing a large ecosystem.

These are required to develop a community for the network benefits of their architecture to begin to manifest.

Related Reading: Best Platform To Buy And Sell CryptoCurrency – Click Here To Find Out.

Ethereum 101

Ethereum aims to provide large-scale financial services.

Ethereum transactions can be sent to anybody, anywhere.

The Ethereum 2.0 development team is putting a lot of emphasis on scalability. 

They intend to provide fast and efficient transactions for everybody.

This is useful in various situations, from retailers to investment banks.

The fundamental strength of Ethereum is its extensive and well-established ecosystem of developers, users, and businesses.

It also has an extensive range of development tools, tutorials, and other resources. 

Because of the ecosystem’s substantial network effects, have become the de-facto smart contract platform to innovate on.

In many cases, Ethereum standards, like the ERC-20, constitute industry standards.

The Ethereum network offers a high level of economic stability based on the total value of the core Ether coin. 

The DeFi space, one of the most developer-friendly regions in the crypto realm, is mainly built on Ethereum.

It takes advantage of the composability of distinct Ethereum smart contracts that may communicate with one another.

This all happens in the single Ethereum virtual machine that drives Ethereum 1.0.

Scalability is Ethereum’s biggest problem.

The success of the CryptoKitties application exposed some of Ethereum 1.0’s scalability issues.

One popular application was able to impair network performance and throughput drastically.

Ethereum’s other issue is its high gas fees.

Gas payments are essential for the overall security of the system.

It’s also critical in preventing runaway programs from stalling. 

However, as the value of Ether has increased, so have the gas fees for operating smart contracts.

In effect, specific use cases have become prohibitively expensive.

These costs are linked to scalability because the fees for each transaction could be reduced if there was more capacity.

Ethereum 2.0 intends to address all of these scalability challenges.

However, it has a multi-year plan for the execution risk of a multi-year re-platforming project. 

The majority of Ethereum’s core development effort is focused on Ethereum 2.0.

So there’s little room for upgrades and improvements on the existing Ethereum 1.0 chain architecture.

Related Reading: How Crypto Staking Works – Click Here To Find Out.

Polkadot vs Ethereum – Which Has The Better Growth Trajectory? 

DOT has greater room to grow in terms of market capitalization.

It is presently trading between $30 and $40 with roughly $34 billion market capitalization.

On the other hand, ETH is currently trading between $3,000 and $4,000, with a total market cap of $415 billion.

This could be due to Polkadot’s immaturity, as it has only been in operation for a year.

While DOT tokens have more room for growth in crypto prices, ETH has more real-world applications in 2022.

That’s due to its focus on finance, gaming, and art. 

In the long run, Ethereum’s extensive ecosystem may prove to be a competitive advantage for the network.

The Biden administration released a plan to handle the crypto sector’s hazards in early October 2021.

The rule is primarily focused on stablecoins, which are cryptocurrencies backed by a non-digital asset (gold, USD). 

According to the government, stablecoins can turn risky if many investors opt to sell their positions suddenly.

Despite measures to potentially regulate cryptocurrency, the United States is committed to being the global leader in digital assets.

Many people believe that cryptocurrency will have a future influence and that the United States will be the global leader. 

What Are Smart Contracts Anyway? 

On the blockchain, smart contracts keep data, run code, and automate processes.

They can facilitate transactions and make blockchain processes more efficient once they’ve been programmed and placed on the blockchain.

The programs are frequently written in their proprietary programming language to ensure smart contract functionality.

On a public blockchain, anyone can create a smart contract.

You can also include elements from other smart contracts into your own.

Smart contract actions are irreversible, and users cannot delete smart contracts. 

Smart contract platforms are comparable to vending machines in that they can run on their own with one person operating them. 

Smart contracts are available on both the Ethereum and Polkadot blockchains.

They both work similarly; however, Polkadot focuses more on innovation, while Ethereum focuses on scalability.

So What’s The Better Token Here? 

It’s a bit of an apples-and-oranges situation for development teams looking into these two platforms for your decentralized application.

Here are the conditions where Ethereum might be a better fit for you:

  • if you don’t need a substantial amount of transaction throughput or control over your system’s underlying economics
  • if your use case is economical in terms of gas fees
  • if you require interoperability with other Ethereum ecosystem projects at launch
  • If your application can be conveyed easily as a smart contract

On the other hand, here are the conditions where Polkadot might be a better fit for you: 

  • if you want to use your logic and have complete control over the environment
  • if you are willing to accept higher implementation complexity
  • if your application requires higher transaction throughput performance, state transition function, storage, and economics
  •  if you have use cases that require integration across blockchains

Where Do People Buy These Tokens? 

Because Ethereum and Polkadot are so popular, they may be found on nearly any cryptocurrency exchange.

Coinbase, BlockFi, eToro, Interactive Brokers (IBKR), and SoFi are among the most efficient and fastest exchanges. 

Each platform has its benefits and downsides, so choose the best exchange for your needs.

IBKR is an excellent option if you’re looking for the lowest costs.

Related Reading: Best Crypto Savings Account – Read The Full Post Here.

Final Thoughts – Polkadot vs Ethereum

Each token is one-of-a-kind in its own right.

Polkadot intends to link chains together, while Ethereum aims to provide a secure beacon chain for high-value transactions.

In terms of traction, Ethereum is the clear winner.

It now has a lot more practical applications.

DOT, on the other hand, may have greater potential. It’s a relatively young token that has already experienced significant price fluctuations.

This might be the start of something bigger.

In either case, both tokens can potentially alter the direction of cryptocurrency.

It’s up to us, crypto investors, to do our research, keep learning, and see what’s in store for the near future.