Chainlink vs Polkadot

If you’re not investing in blue-chip cryptocurrencies like Bitcoin and Ethereum, you may be considering delving into altcoins. While there are thousands of different altcoins on the market, some have more robust ecosystems than others.

In this article we explore two popular altcoins among crypto enthusiasts: Polkadot and Chainlink. We will outline what they are, how they work, and their core differences.

What is Polkadot ($DOT)?

Polkadot is a smart-contract platform that is designed to be scalable, enabling interoperability and more environmentally friendly practices than other computationally-intensive coins like Bitcoin. Developed by Ethereum co-founder and solidity creator, Gavin Woods, it was designed as a “sharded version of Ethereum” in 2016. This is because Polkadot was designed with scalability and interoperability in mind.

How Does Polkadot Work?

Polkadot uses parallelised chains called parachains to essentially shard the network. Sharding in crypto refers to the practice of moving transactions across different layers, effectively reducing the strain on the overall blockchain. In Polkadot this means that each parachain runs its own transactions and then relays these transactions to the main Polkadot chain. In a way it can seem a little similar to Bitcoin and the Lightning Network. The difference being that these are all part of the same ecosystem and designed as such, opposed to Layer 2s on Ethereum or the Lightning Network on Bitcoin. It uses Nominate Proof-of-Stake (NPoS) as its consensus mechanism and substrate as its coding language.

What is Chainlink ($LINK)?

Chainlink is an oracle network created in 2017 and mainnet launched in 2019. An oracle is known as “middleware” in computing terms and functions to act as an intermediary that can help smart contracts and protocols get unbiased, truthful information such as token prices.

What makes Chainlink unique is that it uses on-chain data as well as other data points to solve the oracle problem in crypto. The problem in question being previous protocols would need to use external data sources off-chain that would generally be centralised and prone to attacks. This would then create a vulnerability in the contract, although the code of the contract may be sound, they have to use external data points, and the protocol could still be attacked.

How Does Chainlink Work?

Chainlink is made up of a number of decentralised oracles called the Decentralised Oracle Network (DON). Chainlink’s decentralisation means there is not a single point of failure as the DON sources data from multiple independent parties and aggregates them.

Essentially, protocols will call on Chainlink and Chainlink with provide a smart contract with the relevant information in real-time.

Key Differences

While Chainlink and Polkadot are both cryptocurrencies, they have their own distinct features and operate on different applications and have different use cases. Chainlink is even used within the Polkadot ecosystem. We have broken down the core difference in the table below.

Where to Buy?

Chainlink and Polkadot can both be bought and traded on CoinSpot.

Investors can also purchase Polkadot or Chainlink in CoinSpot bundles. You can learn more about bundles here. Polkadot is available in the the Top 10 Market Cap Bundle and Chainlink is available in the DeFi Bundle.