What Is Polygon - A Virtual Currency, or Is There More To It?
When most people think of cryptocurrencies, they think of them as means of exchange. However, the industry has evolved over the past few years, and we have coins designed to solve certain problems within the crypto community. One of such coins is Polygon, formerly known as Matic. The cryptocurrency is a protocol and framework for developing and connecting blockchains that are compatible with Ethereum. Basically, the project makes it easy for the Ethereum blockchain to connect with other blockchains. Polygon intends to create a world where distinct blockchains can easily interact and exchange value and information.
Why Was Polygon Invented?
The Ethereum blockchain is one of the most useful in the cryptocurrency space. However, it has certain limitations such as low throughput, high gas fees and more. Polygon was created to mitigate some of these problems on the Ethereum blockchain. The cryptocurrency project intends to develop an internet of blockchains for the Ethereum network and create an ecosystem of networks compatible with the Ethereum blockchain.
To achieve this, the Polygon development team will provide a simple framework that would empower people to launch Ethereum-compatible blockchain with ease. Developers can create their own unique networks compatible with Ethereum with just a few clicks.
With Polygon, the Ethereum network will achieve interoperability, making it easy to exchange messages within the Ethereum blockchain and with other blockchains. In the beginning, the project was known as Matic because it was an L2 scaling solution for Ethereum at the time. However, it had to be rebranded because the developers expanded the scope of the project to become a framework for the internet of blockchains.
How Does Polygon Work and What Technology is Behind It?
What makes Polygon a unique project is that it offers blockchain developers various modules to enable them to launch and configure their custom blockchains with ease. The governance and consensus modules provided by Polygon make the process easier for developers to launch and execute projects on their custom blockchains.
The blockchains developed with the Polygon network get to enjoy the benefits the Proof of Stake (PoS) sidechain has to offer. Since everything is finalised on the Ethereum blockchain, the Matic PoS sidechain leverages a global network of validators to ensure fast transactions and reduce the high-cost transactions.
At the moment, Polygon supports two major types of chains; the secured chains and the independent chains. It implies that they are self-sovereign blockchains compatible with the Ethereum network. On the other hand, the secured sidechains increase their security by taking advantage of a network of available validators.
Since the Polygon platform wants to make it easy for blockchains to communicate with each other, it intends to support numerous blockchain scaling techniques. Some of the supported scaling solutions include Optimistic Rollups, Validum Chains, Matic Plasma and zk Rollups. However, at the moment, Polygon only integrates the Matic Plasma scaling solution but intends to roll out the others over the next few updates. This is to provide the blockchain developers with the option to choose the scaling solutions that suit their needs.
Is Polygon Real Money?
Polygon cannot be considered as real money in its true sense. Even within the cryptocurrency space, MATIC is not one of the cryptocurrencies that are considered payment coins. MATIC's major purpose is to be used for paying gas fees and other network activities. Furthermore, it can also be used in other areas of the decentralised finance (DeFi) ecosystem.
Fees & Expenses of Polygon
The primary aim of the Polygon network is to solve some of the problems affecting the Ethereum blockchain. One such problem is the high gas fee, which makes it virtually tough for some developers to launch projects on the blockchain.
There is no set fee on the Polygon network. However, the transaction cost on the Polygon network is a fraction of the one seen on the Ethereum blockchain. Polygon posted a statistic on its website that compares the transaction fees on the two networks, and that of Polygon is by far the cheapest. This means that developers can avoid some of the high transaction fees on the Ethereum blockchain. For instance, ETH transfer on the Ethereum network costs above $2.5 while it costs $0.000170 on Polygon.
For cryptocurrency exchanges and brokerage platforms, the transaction fee for MATIC depends on the platform. Each platform sets the transaction fee model they use. Users should check the transaction fee on a cryptocurrency exchange before transacting.
What Are the Benefits of Polygon?
The Polygon blockchain and its native cryptocurrency offer a wide range of benefits to the users. Some of them include;
One of the major benefits of Polygon is its interoperability. The blockchain, with the help of the MATIC tokens, allows blockchains to interact with each other with ease. The token powers the Polygon platform that serves as Ethereum's blockchain of the internet.
Low gas fees
Thanks to the MATIC token, developers can enjoy the benefits of using the Ethereum blockchain but also avoid the high gas fees associated with the network. Developers will get to pay only a fraction of gas fees on the Polygon network compared to the Ethereum blockchain.
The Ethereum blockchain has always struggled with scalability, and that has hindered some decentralised applications on the network. However, when developers use the Polygon network, they can easily enjoy the benefits of the Ethereum blockchain and avoid the scalability issues. The MATIC tokens power the blockchain and ensure that transactions are approved as soon as possible.
Can Polygon Be Used Anonymously?
Some cryptocurrencies claim that users can receive and transfer them anonymously. However, MATIC is not one of them. MATIC is not a privacy-focused token as it is used to pay gas fees on the Polygon network.
Still, transactions are hardly anonymous in the cryptocurrency space at the moment. The crypto market has grown to become a $2 trillion industry, and this has attracted the attention of regulatory agencies globally. Regulators are ensuring that crypto trading platforms and entities implement KYC (Know Your Customer) and AML (Anti Money Laundering) policies. This is to ensure that transactions can be traced and vices such as money laundering, theft and scams can be drastically reduced in the cryptocurrency sector. Since MATIC is mostly used to pay for gas fees on the Polygon network, anonymity isn’t something you should worry about.
How Safe is Polygon?
Polygon is a very safe token. It has a PoS sidechain, which means that decisions are made by a pool of professional validators. As such, it is unaffected by 51% attacks, which can threaten the Proof of Work coins.
Despite that, you have to consider the threats of hackers and scammers. This is why you should take sole responsibility for the safety of your MATIC tokens. After buying them from cryptocurrency exchanges or peer-to-peer (P2P) platforms, you should ensure to save them on cold storage wallets like Ledger or Trezor. The cold storage wallets provide better security for your MATIC coins compared to cryptocurrency exchanges and hot wallets. You can also add extra security layers such as two-factor authentication for extra safety.
What Teams Are Working On Polygon Development
Polygon's team of developers are from various parts of the world. According to the team, they don't believe in traditional companies, hierarchy and management. Polygon is always open to anyone to contribute code, ideas or anything else that can make the project even better.
However, the core team behind Polygon includes four co-founders; Jaynti Kanani, Sandeep Nailwal, Anurag Arjun and Mihailo Bjelic. In addition to these, Polygon has a strong team of advisors, including Hudson Jameson from the Ethereum Foundation, Pete Kim from Coinbase, John Lilic from ConsenSys, Anthony Sassano from EthHUB and Ryan Sean Adams from Bankless.
As an open-source cryptocurrency, the codes are stored on GitHub and developers from all parts of the world can contribute to the project.
Which Financial Institutions Are Invested in Polygon?
Financial institutions have started to show interest in cryptocurrencies. However, most of the traditional financial institutions are either providing their clients with exposure to cryptocurrencies or investing in the coins via futures and other investment vehicles. Despite that, MATIC is a cryptocurrency designed to settle gas fees on the Polygon Network. It has gained wide usage within the cryptocurrency space, especially amongst developers. At the moment, there are no traditional financial institutions that have invested in Polygon. However, some popular companies like Coinbase Ventures and famous investors like Mark Cuban have invested in the project.
Mining is a very important part of the cryptocurrency space. It is a process that ensures transactions are executed, and the blockchains are kept secure. However, mining is reserved for cryptocurrencies that use the Proof of Work protocol. Since MATIC uses the Proof of Stake consensum mechanism, it cannot be mined.
MATIC, similar to other leading cryptocurrencies, needs to be stored properly, especially if you intend to hold the token for the long term. Leaving your MATIC tokens on cryptocurrency exchanges is not advisable, considering the fact that many platforms have suffered numerous attacks in the past and have lost billions of dollars of investor funds. Some of the leading MATIC wallets you should consider include;
Ledger Nano X (cold storage wallet)
Trezor (cold storage wallet)
Trust Wallet (hot wallet)
Atomic Wallet (hot wallet for phone and desktop)
Whichever wallet you choose, ensure that you implement adequate security protocols to boost the security of your MATIC tokens. Use the two-factor authentication and other available security measures.
Is Polygon Worth The Investment?
The answer to this question varies from investor to investor. Each investor has to analyse the MATIC token and consider if it is a worthy investment or not. However, what you have to keep in mind is that the cryptocurrency market is just over a decade old. As a new market, regulations are just starting to come up, and the technology behind most cryptocurrencies continues to evolve. Hence, to consider MATIC and whether it is a great investment or not, you need to conduct in-depth research into the project and the solutions they are providing within the sector.
Despite your confidence in MATIC or other cryptocurrencies, the general advice is to approach crypto investment with caution. The market is very volatile, and this could result in massive gains or losses. Hence, only invest amounts you can afford to lose. Furthermore, we recommend implementing a wide range of security measures to properly ensure the safety of your MATIC tokens if you end up buying them.
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Frequently Asked Questions
Polygon uses the Proof of Stake (PoS) protocol. This protocol doesn’t have miners but instead uses network validators and consumes less energy compared to the Proof of work (PoW) protocol.
Buying Polygon (MATIC) is easy since it is a popular cryptocurrency. You can purchase MATIC on cryptocurrency exchanges, brokerage platforms or P2P platforms. However, we recommend using regulated exchanges or brokers to buy MATIC or any other cryptocurrency.
The MATIC token is designed for users to pay gas fees on the Polygon network. The Polygon network's purpose is to make it easy for developers to launch their own blockchains and interact easily with the Ethereum blockchain without the negatives like high gas fees, scalability issues and more.
The legality of Polygon depends on the general rule around cryptocurrencies in your country.
You can buy Polygon on cryptocurrency exchanges, brokerage platforms or peer-to-peer exchanges. Whichever one you settle for, we recommend using regulated platforms to buy Polygon to ensure the safety of your investment.
As a Layer 2 solution, Polygon's job is to solve scalability and other issues on the Ethereum blockchain. However, with ETH 2.0, the Ethereum network will solve its scalability problems. Polygon doesn't feel that ETH 2.0 going live will affect its function as it will only make transactions on the Ethereum blockchain faster.
Like other cryptocurrencies, storing MATIC works best with cold storage wallets. This is because they offer better security compared to the other wallet types.
Polygon allows developers to enjoy the full benefits of the Ethereum blockchain. However, they will pay lower gas fees and get to enjoy faster transactions.