Over the past 24 hours or so, Polkadot has been going crazy.
At the time of writing, there doesn't appear to be any apparent reason for why Polkadot has experienced such steep gains in price appreciation.
Visiting the Polkadot Twitter
The pinned tweet on Polkadot's Twitter profile at the time fo writing is as follows:
There are some mentions of parachains on their Twitter page, like what we can see in this tweet here:
More information on 'Rococo v1' is hyperlinked in the tweet above, leading users here:
According to the excerpt above:
"Rococo is the environment for parachain and XCMP testing and will undergo rapid changes, updates and chain state resets as it develops. After the initial tests are successful on Rococo, we envision that in the long run it will be integrated into the Westend test network."
What is Rococo?
Originally, we were going to look at the price of Polkadot, but since we're here we might as well check out what this 'Rococo' thing is all about.
According to their site documentation:
"Rococo is a Polkadot testnet built for testing parachains. Rococo utilizes Cumulus and HRMP (Horizontal Relay-reouted Message Passing) in order to send transfers and message between parachains and the Relay Chain. Every message is sent to the Relay Chain, then from the Relay Chain to the desired parachain. Rococo currently runs three test parachains (Tick, Trick, and Track), as well as several externally developed parachains."
Based on the tweet and what we read above, this indicates that Polkadot is not finished its implementation efforts as far as the 'parachains' go.
This is evidenced by the fact that 'Rococo' is under the "test networks" section on the official Polkadot JS block explorer:
This is a little off to the side, but their wallet generation scheme here is very solid (something to consider when factoring in how well-designed the Polkadot project is).
Check out the screenshot below:
Once the necessary information is filled out (we opted for ed25519 for the key derivation), then we're presented with the following form:
Once the name and password are filled out, users are ready to rock and roll.
Quick Note: *Without looking at the technical documentation, we don't know what the username & password are used for ; must of the time this is used to decrypt / encrypt an encryption key which has encrypted the private key for the user (*so that it isn't just sitting somewhere in plain-text; ultimately, however, leveraging a deterministic wallet generation algorithm might be the best solution)
Once this is done, we're confronted with the following page:
Once the 'next' button is selected, we are taken to the following page:
Users are able to derive additional accounts with relative ease as well.
This, on top of the really effective block explorer (open source), makes it a strong candidate for inclusion in other projects in the blockchain space (remember Polkadot started off as an SDK ; and there is still 'Substrate' to account for as well)
In order for anything written above to make sense, let's start digging into Parachains.
Parachains are defined as:
"Parachain is an application-specific data structure that is globally coherent and validatable by the validators of the Polkadot Relay Chain. Most commonly a parachain will take the form of a blockchain, but there is no take the form of a blockchain, but there is no specific need for them to be actual blockchains."
This setup is most of what we see from Hyperledger Fabric (see below):
However, the big difference here is that rather than a network of entities being attached to one another via the ledger, they are instead attached to one another through Polkadot:
In the picture above, we can see one large circle with something in the middle called a 'relay chain'. This is under the management of the main Polkadot chain ($DOT).
Projects such as Kusama are primed to be parachains, which means that their place in the Polkadot ecosystem (visually) will more than likely look like the following:
Maintaining their reputation as perhaps the most illustrative cryptocurrency project of all time, here is yet another graphic that parses out the difference between the 'Relay Chain' (which we described prior), and a Parachain:
As seen above, parachains are, "Sovereign blockchains that can have their own tokens and optimize their functionality for specific use cases"; just like Kusama.
Being a parachain means that Kusama will be able to adopt the same role as Polkadot for their own ecosystem (branching off into a 'tree' of sorts, if that makes sense - there's no graphic for that though unfortunately).
Polkadot Comes With a Lot of Complexity
If there is one setback to the Polkadot project it would be the complexity of the project itself. Granted, there is a chance that there is no other way for them to accomplish what they're trying to do without introducing a certain level of complexity.
What helps, however, is the fact that Polkadot sticks to the plans that they have ironed out for their protocol. This makes them a unique entity in the blockchain space because often times, you will see projects pursue one direction with rigor (i.e., Ethereum and Plasma; that is now dead) before eventually pivoting from there to setup something else entirely.
Therefore, when stumbling upon other facets of the Polkadot ecosystem it felt more confusing than it probably is because I was looking through the documentation with the assumption that any new information was simply info from the past / already deprecated.
However, this has proven not to be the case; there fore, each additional piece of information that one finds in their question to get a better grasp of this project its more than likely supplementary.
Reason For Polkadot's Price Rise
The raw reason itself is probably nothing more than a pump.
However, there are really strong fundamentals that back Polkadot as a project and as an ecosystem. Ironically, in one of the rare cases where there is a project that has a substantive and legitimate base, their price rise does not appear to be due to the actual technical merits (which means that the market simply hasn't realized some of the greater benefits that come with Polkadot).
That might speak to the supposed 'fleixbility' that the project has.
Polkadot Token Dissection (Brief)
One of the biggest questions that one might have after learning a bit about the project is, "What is the native asset actually used for?"
Fortunately, Polkadot's dreocumentation found here sheds some greater light on this.
Specifically, the website states, "The DOT token serves three distinct purposes: governance over the network, staking and holding"
If anything, this may be one of the shakiest value added proposition for DOT moving forward. Especially in light of the fact that the $DOT token does not need to be adopted, bought or even touched if one wishes to interact with the $DOT ecosysstem (and if I'm wrong on this, please correct me this).
This is not being stated as a criticism of the $DOT token, but this is something that's a bit of a concern for holders / investors of the token moving forward, because while the network itself may expand (which would be good for Polkadot but hold negligile value for actual investors in the protocol itself).
Evaluating Polkadot Governance
Since one of the supposed benefits of using the $DOT token is a say via 'governance'. While this sounds really insignificant (and it just might be), it would not be fair for anyone to make that assessment without ascertaining the true nature of what comes with this supposed 'governance' on the protocol.
A great source for enlightenment on this issue is an article titled, 'Governance', written by the Polkadot team just a few months ago (June 8th, 2020): https://polkadot.network/polkadot-governance/
Evaluating Polkadot's Stance on Governance: Idealistic, Grandiose, and Preachy
This may seem harsh to some, but it is the truth. The first few paragraphs of the write-up characterize blockchain as a landscape fraught with non-stop controversy, which is true.
However, the paper then veers a bit off course by tying in social issues with the organization and management of an open-source project.
Such as in the following excerpt:
"In a nation state, agency could mean having the freedom to make your own future. Much debate over wealth inequality doesn't revolve around inequality per se, but that the system is rigged."
This is then used to make the unjustified statement:
"Blockchains themselves challenge entrenched worldviews, and in order to do so, they need a way to evolve."
This is tacitly false. Blockchains do not "challenge worldviews", nor are they meant to. And it is perhaps this privileged thinking that has poisoned blockchain (as well as the greater San Francisco Valley where these projects originate), into thinking that their job is to re-position their projects in a way that's designed to "save the world".
Ironically, rather than challenging 'worldviews', blockchain would benefit if it attempted to do the exact opposite. By attaching grandiose, manifest destiny assignments (particularly, Bitcoin), we create a dangerous culture in this space (which new users often get sucked up in) where individuals are manipulated into supporting weird initiatives under the guise of "doing the right thing" (i.e., bricking ASIC miners under the belief that their presence in the blockchain space is somehow 'unfair' <-- which is genuinely one of the dumbest ideas ever proposed in this space).
The Idea Gets Exponentially Worse From Here
Polkadot could benefit so much from not having this incessant need to "represent the stakeholder" (as many other projects have claimed they want to do). This is not only pointless, but stupid as well.
- The average user is nowhere near knowledgeable enough to make informed contributions / opinions about what should be going on, on the protocol. That might hurt some feelings, but so be it. Its the truth. There is a level of experience and learning that must be done that the average user simply cannot afford to do (as they more than likely have a full-time job / other career priorities & obligations to tend to). And, yes, that does mean that those making the decisions on the protocol should be those that have the knowledge to do so.
- There has to be a project maintainer - whether that be an organization / entity / person. This is just a limitation of human beings and the universe that we live in. Hopefully that individual has the temperament and maturity to expand the project appropriately so that it would still be able to run in their absence. Immature project leaders are a dime a dozen though, so we must accept the non-zero risk that the owner / founder of a project is a complete megalomaniac dick that, for some reason, thinks that they're God simply because they're a lead developer on an open source project (IRC is full of loesrs like this ; stay away at all costs, even if you feel like you need to be on there).
- To this day, nobody has been able to justify why owning a certain 'stake' of all issued coins should grant one a greater "weight" in what happens on the protocol. The common argument is that such an entity will have more at stake and therefore, will want to push for actions that are in the greaetst interest of the protocol. This is not true. In fact, it is more than likely that the largest stakeholder on a protocol will want to push for actions that benefit them specifically more so than the entire ecosystem. There is a chance that the interests happen to intersect with one another at various points, but overall? No. And that has been exhibited in countless situations.