Why is Blockchain Network Polygon in News?
Polygon Matic is making India proud in the crypto world.
Recently, Polygon, a blockchain network made-in-India, made the news headlines for having received investment from US-billionaire entrepreneur Mark Cuban.
In the last one month, it has gained a lot of attention, and the value has increased by around 120%, currently at Rs. 135.55 and reached a high of Rs. 191.46. In fact, MATIC hit a valuation of $14 billion, and now it is among the top 20 cryptocurrency coins. Cuban’s portfolio reads -
“Polygon is the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development.”
Um, what? That sentence was definitely not “easy-to-understand”. What exactly is Polygon, and what does it aim to solve now?
Well, read on. Let us understand this whole ecosystem, block by block.
Bitcoin came in as the starry-eyed dreamer with a vision to change the fate of finance forever. It was built to decentralise finance and change the concept of money as we know. It aimed to be a medium of exchange and a store of value while removing all the drawbacks of fiat currency. In this attempt, the world got Blockchain as a by-product.
Now, Blockchain was a whole different world. Once people were introduced to the potential of this decentralised network, they put on their creative hats, and got to thinking. Among these people was Vitalik Buterin. And, he gave us Ethereum. Ethereum was more aspirational, it wanted to be more than just a cryptocurrency.
Launched in 2015, Ethereum is a decentralised, programmable software platform that facilitates many more applications of Blockchain via its own cryptocurrency, Ether. It enables smart contracts and decentralised apps to be built and run.
Woah! Wait a second. You understand contracts and you understand apps. But, smart contracts and decentralised apps?
Yes, Ethereum takes it to a whole other level. Here’s how.
Smart Contracts - how smart are you?
Simply put, a smart contract is a contract that is… just smart. How so?
Let’s take a vending machine full of drinks. Now, you want to buy a can of Coke that costs $2. You have $3, and you put it all in. The output of this digital vending machine will be a can of Coke and the balance $1. How did it know if an adequate amount was entered, and how did it get that balance? Programming. The machine makes decisions using pre-coded algorithms and conditions and does not require any intervention from outside.
Similar to this vending machine, a smart contract can be self-executed without the need for intermediaries. It is a program (collection of code and data) that runs on the Ethereum Blockchain. It contains a set of predefined rules for the agreement, and when these rules or conditions are met by both the parties of the contract, the contract gets automatically executed. You do not need any gawaah (or witness). Also, since every piece of information on the Blockchain is secure, the smart contracts cannot be altered by a third party.
Smart contracts can automate many processes, releasing them from human decision-making, and hence, biases. They remove the need for banks in peer-to-peer transactions. If you send money to your friend using a smart contract, it directly reaches your friend. No banks in the middle to verify, transact, bla bla. Moreover, these transactions take place in minutes as compared to the hour-long operations of traditional banks. Time, after all, is currency.
Decentralised Apps
Now, the applications that you use on your smartphones run on centralised servers. All your data goes to the creator of the application, to the business, whose services you are consuming. Decentralised apps are just like regular applications, except they are built on a decentralised network. The smart contracts form the backend for Dapps. Once the smart contracts are deployed on the Blockchain, they cannot be changed and are ready for use by anyone and everyone on the Blockchain.
Let’s say Facebook was a Dapp. It would work pretty much in the same way, except users would have ownership of their data. All users could create smart contracts (high-quality programming is crucial) and contribute to the Dapp. And since these smart contracts are self-executing, all users could be rest assured that the app works smoothly. No single user could tamper with any data since this is all on a Blockchain. With the tech giants out of the picture, your data would be yours, and would not be used against you in the name of “personalisation”. Long story short, Zuckerberg would be out of business :P
Acha. But, what is Ether, then? Aren’t Ether and Ethereum the same thing?
Ether is Ethereum’s cryptocurrency. If Ethereum is a vehicle, then Ether is its fuel. It is similar to other cryptos and is traded on exchanges, but it also serves an additional purpose: Ether is used to run applications on the Ethereum Blockchain. Every transaction on Ethereum needs a fee (also called GAS fee), which is paid using Ether. Just like Bitcoin miners, Ethereum miners are paid this fee to process and verify transactions.
Now, In attempts to solve one set of problems, Ethereum left a new trail of problems. And, our very own homegrown Polygon took upon itself to clean this mess.
In 2017, the world was hit by a new frenzy. A Blockchain game called CryptoKitties was introduced that allowed users to purchase, collect, breed, and sell virtual cats. This game was built on the Ethereum network, with each “cat” being unique. As with any new trend, humans jumped into this one too. So much so that Ethereum reported a sixfold increase in the number of pending transactions! And, this congested the network, which in turn slowed down the speed and increased the transaction fee from 0.001 ETH to 0.002 ETH.
This incident brought to light the scalability issues of Ethereum. To keep up with the speed, the transaction fee of each transaction went up. The Ethereum network couldn’t balance the two ends and toppled over, bringing down the overall user experience.
In came Polygon, claiming to have balanced both sides of this equation.
How? What makes Polygon stand strong on this beam balance, and how does it not fall apart?
Well...
Till then...Read on!
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Finally an article which makes understanding the roles of blockchain like Ethereum chewable & digestible. Thank you so much.