Ever since the value of Bitcoin and the blockchain technology was discovered, there has always been innovations to make cryptocurrencies and blockchain technology better. The next milestone after Bitcoin is Ethereum. Ethereum let developers create various kinds of digital assets to be circulated and traded. Bitcoin and Ethereum are therefore leaders in their respective categories. Their dominance in their respective categories is very hard to be challenged. This is especially the case for Bitcoin. In the case of Ethereum, however, all new blockchains are trying to be next Ethereum. In my opinion, the market of Ethereum’s category is going to be fragmented. It is very hard for any blockchain to achieve the market dominant position Ethereum once enjoyed. However, some blockchain will become the leader in this category. Right now, there is a good chance for Polkadot to become such a market leader. There are at least six reasons Polkadot may become very successful.
Number one reason is its founder, Dr. Garvin Wood. It is a well known fact that the founder of one blockchain technology determines the future of the technology. Dr. Garvin Wood was a core developer of Ethereum. In 2016, he decided to build Polkadot, a system that is better than Ethereum. After five years development, Polkadot mainnet went on line in 2020. Without his persistent and excellent work, Polkadot would never have achieved its current status.
The second reason is Polkadot’s technical merits. Its relay chain and parallel chain design makes it very scalable. It is also very strong in integration. It can bridge Bitcoin and Ethereum. Therefore it can import crypto currencies and assets to the Polkadot ecosystem. Its performance is much better than that of Ethereum. This solves one of the most serious problems Ethereum is having now. Also, the much improved performance makes Polkadot system more suitable to support more application scenarios. Polkadot’s substrate technology substantially lowers the blockchain development entry barrier. More blockchain applications can be built this way. This is not only important for the Polkadot ecosystem, but also very important for the overall blockchain ecosystem.
The third reason is Web3 Foundation’s support for the developer community. Developers’ support is critical for any technology to be widely adopted. While this is true for all other technologies such as internet and mobile technologies, this is especially true for blockchain developers because it is much harder for blockchain applications to generate profit in a reasonable amount of time. It is only through Web3 Foundation’s consistent financial support for developers, there are now applications in many production categories in the Polkadot ecosystem.
The number four reason is Polkadot’s incentive mechanism. It uses auction method to select parachains. If one parachain is well receive in the market, it will attract leveraged market resources in its bid to become a parachain. Thus the Matthew Effect will take place. This can accelerate market adoption of well liked parachains, which is also in turn very beneficial to the development of the Polkadot ecosystem.
The number five reason is its software development project management. It did not adopt the usual MVP and frequent upgrades development method. Because of the nature of blockchain technology, it is more like a business software instead of a retail application. The Polkdot’s development team spent five years in making this product and then brought it to market. In release management, it is also carried out like an enterprise software release. It has multiple environments so that the software can be thoroughly tested before release and fixed quickly if a bug is found in the production environment.
The number six reason is its support for stablecoins. Nowadays, it is virtually impossible for any blockchain to be adopted without support for stablecoin. Any blockchain application that can be widely used will for sure uses stablecoins. This is also why I believe that the Diem ecosystem will develop very fast. The Diem blockchain will be in turn more adopted because of the use of Diem stablecoins. Also in view of the US regulator’s recent stance on stablecoin, more stablecoins and their supporting underlying blockchains will appear. Therefore, support for stablecoin nowadays has already become an essential requirement for any blockchain. The Polkadot ecosystem further supports minting stablecoins based on crypto assets in addition to stablecoins based on fiats. Amply supply of stablecoins will therefore attract more application to be developed in the Polkadot ecosystem.