Why do we need Polkadot? What is Polkadot's cross-chain network effect?

" Polkadot Knowledge Graph " is our entry-level article on Polkadot from zero to one. We try to start from the most basic part of Polkadot and provide everyone with a comprehensive understanding of Polkadot. Of course, this is a huge project and is full of challenges. However, we hope that through such efforts, everyone will be able to correctly understand Polkadot, and people who don’t understand Polkadot will be able to quickly master Polkadot-related knowledge. Today is the 4th issue of this column, let ’s talk about why we need Polkadot .

Since the birth of Bitcoin, many high-quality blockchain projects have emerged in the blockchain industry, and each blockchain project has its own ecosystem. However, these blockchains also face an information island problem , that is, different blockchains cannot communicate with each other, and there is no way to transfer and interact data, assets, and information.

This also makes it impossible to implement certain usage scenarios that require cross-chain collaboration or interaction. Cross-chain is like Amap integrating taxi-hailing apps from different platforms into its own app. It is the best way to solve the problem of blockchain information islands.

From the situation of wBTC, we can see that the entire crypto industry has a strong need for cross-chain assets. wBTC stands for Wrapped Bitcoin, which means "wrapped Bitcoin". It is a token issued on Ethereum based on the ERC20 standard jointly launched by BitGo and Kyber Network and other teams. It is 1:1 anchored to Bitcoin. The emergence of wBTC has realized the circulation of BTC assets on the Ethereum network.

In this way, Bitcoin assets can be integrated into the world of Ethereum wallets, DApps, and smart contracts. In less than a year, the market value of wBTC has grown from the initial 4 million to 1.5 billion US dollars, and has even become one of the important solutions for DeFi.

Coincidentally, Tether has issued USDT based on the Bitcoin network, Ethereum network, and TRON network, namely Omni, ERC20, and TRC20. Data shows that the volume of USDT has increased from about US$3 billion at the beginning of last year to nearly US$70 billion today. The purpose of these tokens is to transfer assets in different blockchain networks and enable their businesses to migrate to other blockchains .

Similarly, another major stablecoin USDC is also preparing to further expand it to 10 public chains including Polkadot, Tezos, Flow, etc., aiming to promote the adoption of open blockchain technology by individuals and enterprises.

In addition, Tether also stated that it will launch USDT on Polkadot’s universal asset parachain Statemint. More and more examples are proving that cross-chain is not a false demand, and the development of cross-chain is very necessary .

We have always emphasized that Polkadot is not competing with a certain chain, and what it wants to do is not to become the most powerful chain, but to be the underlying infrastructure of all blockchains. It can not only enable blockchains with Polkadot consensus (architecture) to easily enter the Polkadot network, but also connect those blockchains that are incompatible with Polkadot through cross-chain .

Just like when we register for many apps and websites, there is an option to log in with QQ or WeChat. This is because QQ and WeChat already have a strong user base, and other products are willing to use their network effects to expand their users.

Although the current situation is that Ethereum already accommodates more than 60% of applications and Dapp users, from the perspective of public chains, there are or will be competitors outside of Ethereum, and Polkadot is not that competitor. It will connect all public chains to form a blockchain network .

In this network, any blockchain that joins will inevitably enjoy the security, information, and resources of the entire network. When those independently developed blockchains are connected to each other and jointly develop the functions of blockchains, a network effect will be formed, and the resources, talents, and users contained in this network effect can attract new blockchains to join the Polkadot ecosystem .

So, back to the original question: Do we need Polkadot?

Of course! Whether it is from the level of breaking the deadlock of information islands or from the level of building a blockchain network, we need Polkadot. Although it takes time to achieve Polkadot's goals, it is of practical significance for the new conception of blockchain.