Polkadot, founded by Gavin Wood of the Ethereum foundation, is a multi-chain blockchain technology that allows different blockchains to interact with increased security and performance. Before talking about what you can do with Polkadot, a little background on how we got here.
In the beginning, there was Bitcoin, a peer to peer digital currency, secured and propagated by a proof of work consensus algorithm. People saw the utility of this decentralized scheme and wanted to apply it to other areas such as a decentralized DNS, smart contracts, financial agreements, user identity registers, and more using a similar decentralized scheme. The problem is that each new application would need its own blockchain network and would need to get user adoption so that they could secure that blockchain.
Enter Ethereum, which is a blockchain built with a general purpose programming language which allows decentralized applications to be built while letting them leverage the security of a mature blockchain.
So, if Ethereum solved this multi-chain problem, why do we still need multiple chains? There are cases where you might still want your own blockchain. For instance, some big banks and enterprise companies are building solutions involving private blockchains so that they can keep their data on trusted hardware. However, now we have a new problem. Blockchain solutions introduce radical transparency and reduced reliance on trust at the tradeoff of efficiency. So, aren’t private blockchains the worst of both worlds–slow and require trust?
Enter Polkadot. With a system like Polkadot that allows blockchains to be interoperable, you could have a transaction that is first verified by your bank on your bank’s private network, and is then gets published to the Ethereum network. Or, an insurance companies private chain could read from public chains to assess damage for a weather event and distribute a token to pay out damages. You could also have multiple public chains interact and leverage each other’s functionality, for example you could have a decentralized exchange protocol by which a user could deposit Ethereum anonymously using the zero knowledge proofs of the Zcash chain. These are really just the tip of the iceberg for use cases of blockchain interoperability.
Polkadot also has the added benefit of increasing security and performance. Under the hood, Polkadot works by decoupling two vital components of a blockchain network: state transition and consensus. In the Ethereum network, state transition is controlled by the EVM, whereby state is updated by applications making changes to smart contracts. The consensus portion means that once some data is written to a smart contract, then the change must be sent to everyone in the network so that it can be added to the chain. Updating the state and ensuring the transition is valid is computationally intensive, while the consensus portion is not very computationally difficult but requires communication and broadcasting information to other nodes. By decoupling these two vital functions, Polkadot increases efficiency and allows computationally difficult tasks to be done in parallel on a sub-set of the network specializing in computationally intensive tasks, called parachains, and then allow the network to synchronize all these constituent chains by communicating with each other, with what is called a relay chain.
Solutions like Polkadot will allow the decentralized ecosystem to grow and let projects build on top of the advancements of other projects. It will help to secure these applications and speed up throughput in these networks. All these improvements are great for user adoption of cryptocurrency and decentralized applications. Polkadot has recently decided to delay their crowdsale, but they are expected to announce an update around the crowdsale late 2017 or early 2018.
Crypto 2.0 investment fund
What is Augur and why is it cool?
Augur is a decentralized prediction market built on Ethereum. Think of it like a market place where you can bet on future events, like the outcome of the 2020 US Presidential Election. The benefits of this are 2 fold. First, Augur is a peer-to-peer prediction market place with all the benefits of a decentralized system, such as censorship resistance, lower fees, reduced trust reliance on a third party, and more. The second benefit is a little more technical.
According to their website, Matchpool is “a decentralized matchmaking protocol which uses group dynamics to help participants match with each other”. The idea is that anyone can create and cultivate their own matchmaking community and make money doing so. Picture Meetup with a romantic angle and mix in a sharing economy. The online dating space is a billion dollar industry and Matchpool would be the first to be built on the blockchain.
Community building is emerging as a fantastic use case for blockchain technology. Contrary to centralized systems that provide the platform and extract value created from the users of the platform, the blockchain enables decentralized systems where participants in the network create value and also receive value in return. This is the sharing economy in its most basic form and it encourages voluntary, reputation driven communities and group participation.
Matchpool is still in development and they plan on doing a crowdsale in March. Check out their whitepaper here for more details.
The Rudimental is a project that takes the ICO model and applies it to video content creators. The way it works is that you create a project and you can trade shares in your project on an open exchange. This provides a mechanism for alternative funding opportunities and allows users to be compensated for finding a diamond in the rough. Imagine if you could have invested in Justin Bieber when he was just a no-name kid putting music on YouTube? This is the new paradigm that the blockchain enables.
Another interesting aspect of this project is it’s integration with other blockchain projects such as Gnosis (prediction market platform) and Boardroom (blockchain governance suite). This will further these tools and the ecosystem as a whole by providing a real use case that people can learn and build upon for future projects.
The Rudimental will only focus on video media at this time but hopes to expand to additional media types. They also claim full SEC compliance for anyone concerned about the legality of exchanging equity tokens in this way. This project is nearing release and is promising to release some new information to the community very soon, and we will provide updates as that happens.
A new project, otlw, is trying to address one of the fundamental issues in our current education system: assessment and accreditation. In simpler terms, how can we prove that a student has a particular skill and then communicate that to the relevant parties? The current system of standardized tests and degrees from the educational institutions themselves comes with a number of problems.
One problem is when the institutions charged with educating the students are also charged with accrediting them, we have a conflict of interest. The institutions are incentivized to teach for a standardized test, and if they make their own tests for assessments, to mold their tests to fit their teaching. A consequence of this is that it becomes too expensive to cater to the individual needs of the students. To accommodate students individual learning styles or take a deeper dive into various topics is not economically viable if it does not align with the standardized test, or whatever is used as the assessment ‘test’.
otlw wants to use the Ethereum blockchain to create an accreditation reputation system. By separating education and accreditation, students will be able to learn how they see fit instead of being forced down one particular standardized educational track. For example, imaging being able to learn front end web development from any number of free courses available on YouTube, and getting good enough to become accredited through otlw, and then use that accreditation to get a web dev job. It’s sort of a half-way step back to the old apprentice system of old, where reputation is codified in the blockchain.
The way it works is that individuals when someone wants to be assessed, a number of people who have already been accredited as knowledgable on a subject will be selected to perform an assessment. There will be a special Ethereum token used by the system to hold value. The assessors will be rewarded in tokens for giving the same assessment as the majority, and punished by losing tokensfor being very different from the majority. By accrediting individuals themselves, they increase their own reputation, and they are rewarded with tokens that have a monetary value.
As is typical with these systems, the value is created and shared in a circular fashion. The students benefit from being able to engage in self-guided learning of their choosing and can have their skills verified, the assessors are compensated financially and increase their own reputation, and the students benefit from their assessors having a higher reputation. You could imagine such a system being the backbone on which other platforms are built, such as distributed classrooms that could compete with the large education systems from early childhood education, to higher education, and anywhere in between.