How to Buy Polkadot
If you want to invest in Polkadot by buying DOT tokens, you are in the right place. We will discuss how to buy Polkadot and where to store your DOT tokens in detail.
What Is Polkadot?
Polkadot is an interoperability chain that allows interaction between different crypto chains. But what does that really mean?
As you know, cryptocurrencies are mainly built on blockchains, distinct networks that operate separately from each other. While this feature introduced an element of healthy competition at the beginning of the cryptocurrency era, it became pretty problematic as the crypto economy grew because you could not share or transfer data between these networks.
Furthermore, while each blockchain project focused on increasing its functionality and scalability features, most of these projects were limited in what they could accomplish due to the blockchain infrastructure.
Take Bitcoin and Ethereum, for example, both projects use layer two solutions to increase their performance to be able to process multiple transactions at once. However, even with the development of more sophisticated layer two solutions, crypto scaleability remains unable to compete with older processing technologies.
There are many approaches to solving the scalability problem in crypto. For example, Polygon (MATIC) is a layer two network that aims to increase scalability across multiple blockchains, especially Ethereum. Solana is a layer 1 blockchain (like Ethereum and Bitcoin) that focuses on scalability. Optimism and Arbitrum are other layer 2 solutions that are widely used in the crypto economy.
So, how is Polkadot different from these approaches? Polkadot is sometimes referred to as a layer 0 solution or a metaprotocol. That’s because, unlike other layer 1 protocols, Polkadot doesn’t build dApps or smart contracts for end-users. Instead, it offers basic tools to develop and operate layer 1 solutions that help developers. That means multiple different blockchains can take advantage of Polkadot infrastructure to establish interoperability within the crypto ecosystem.
Polkadot is seen as a useful tool for the development of Web3 applications. It was founded by Robert Habermeier, Peter Czaban, and Ethereum co-founder Gavin Wood, who is said to have coined the term Web3.
However, the future of Polkadot, as with most cryptocurrency projects, remains in limbo, partially due to the SEC’s complaints that these projects are selling unregistered securities.
What Is the DOT token?
The DOT token is the native cryptocurrency of Polkadot and serves three different functions: It allows DOT holders to participate in Polkadot governance and have a voice in future upgrades, it is used to run the Polkadot consensus protocol, and finally, to create new parachains necessary for interoperability of different blockchains.
Polkadot’s native cryptocurrency DOT is the 11th largest digital asset in the market, with around 5 billion DOTs in circulation.
Where Can I Buy Polkadot (DOT)?
You can buy native DOT tokens on centralized crypto exchanges like Binance, Coinbase, and Kraken. DOT is one of the most popular digital assets in the crypto ecosystem and thus is widely accessible via many crypto exchanges.
If you are looking for a good centralized exchange to buy Polkadot (and other digital assets), check out our “21 Best Cryptocurrency Exchanges” article to see what the biggest and most popular exchanges offer to users.
You can also read our individual reviews for each platform to better understand their benefits and drawbacks. It’s important to do your own research at this stage to minimize the risks that come with using centralized solutions.
Unfortunately, centralized exchanges are your best bet to buy DOT, as there are some difficulties when it comes to DOT on decentralized exchanges.
As we discussed above, Polkadot is a layer 0 solution. So, Polkadot’s main system “Polkadot Relay Chain” isn’t actually used for deploying smart contracts and dApps. Such apps, including decentralized exchanges, can only be built on independent Polkadot “parachains” that use the Polkadot Relay Chain for security and interoperability.
That means you need a DEX built on a Polkadot parachain to buy and trade DOT. You can find these DEXes by perusing Parachains.info and Dotinsights.
However, these DEXes can be vulnerable to hacks. For example, in 2022, Polkadot-based DeFi app Acala suffered an attack that let attackers mint 1.3 million worth of tokens.
On the other hand, if you try to use an unrelated DEX to purchase DOT tokens, you will end up buying wrapped DOT tokens. Wrapped DOT tokens are not native DOT tokens. These are synthetic tokens pegged to DOT that can’t be sent to Polkadot addresses or its parachains.
How to Buy Polkadot?
There are three important steps to buying Polkadot: Deciding on a centralized exchange, deciding on a Polkadot wallet for storage, and deciding on a payment method depending on your choice of exchanges.
Where to Buy Polkadot?
As we said above, you are mostly limited to centralized exchanges when it comes to buying Polkadot. This is actually fine for most beginners, as using decentralized exchanges can be more complicated and require you to own other digital assets for trading.
But centralized exchanges have many downsides as well: They are, as the name suggests “Centralized” i.e. owned by major companies that control the flow of crypto. They often have higher fees compared to DEXes, and many of them have come under fire for trading against their customers and promoting wash-trading in order to increase their profiles.
All to say that, picking a good exchange among thousands of platforms is no easy task. If you are based in North America, or anywhere in the world with developed crypto regulations, your choices are also limited by what is accessible. Popular global platforms with minimal KYC requirements, like Binance, Kucoin, OKX, HTX, and Poloniex, are not available to US-based users. So where to start?
Coinbase is known as a good beginner’s exchange that offers multiple tokens (including Polkadot), several storing methods (both custodial and non-custodial), and other benefits. The company went public in 2021 and is careful to maintain a good image, minimizing the occurrence of more predatory actions crypto exchanges often take.
Another US-based exchange you can use is Kraken. It is known for its hyper-vigilant security measures to protect customer assets and has a larger market for both USD and EUR pairings. Although the company and its founder drew a lot of criticism due to their work environment, it nonetheless remains one of the most credible platforms in the world.
If you are not based in the US, you can also use Binance to buy DOT. Although Binance’s US platform isn’t doing well, the global platform remains the biggest exchange in the world, offering many cryptocurrencies, including Polkadot.
If you want to try your hand at decentralized trading, you can also check out Polkadex, a non-custodial, decentralized exchange. It’s not currently available as an app, but you can access the order book via a browser.
How to Buy Polkadot
Have you already decided on a platform? Then, the next step is to open an account and proceed to the easy buy feature.
Please note that most exchanges require a simple KYC check before you are allowed to purchase crypto through their easy buy function. Then, you can add a payment method to the platform or use one of the supported third-party services to complete your purchase.
Easy Buy
Once you log in to the exchange, look for a “Buy Crypto” button on the main dashboard. For example, it’s right at the top left corner of the page on Binance. Once you click “Buy Crypto”, you will see an order form.
Fill out the order form by entering the amount you would like to invest and choosing Polkadot as your preferred crypto. When you click “Buy,” you will see all the available payment options.
Most exchanges allow you to buy crypto with debit or credit cards, but that can be a little costly, as there is an almost standard 5% processing fee. You may also be able to deposit cash into the exchange, which is the cheaper option. Domestic bank deposits are usually free of charge.
Other options include payment services like Moonpay, Banxa, Simplex, Advcash, and so on. With these services, you can buy crypto with your preferred payment methods including Apple Pay, Google Pay, and Paypal.
Spot Market
There are two reasons to use the spot market to buy Polkadot and other digital assets. First, the spot market is usually cheaper, as it offers better prices and lower fees.
Second, not all exchanges offer Polkadot through the easy buy function. Some exchanges only offer Bitcoin, Ethereum, and stablecoins like USDT or USDC through easy buy, so you may have to buy one of those assets and later convert it to DOT.
If your chosen exchange doesn’t offer DOT through its easy buy feature, go ahead and purchase a stablecoin like USDC or USDT. Most spot trading is accomplished via stablecoins anyway, and you can trade these assets for any cryptocurrency in the market. If you aren’t sure which one, open up the spot market interface and look for the available DOT pairings.
Spot market can be accessed by clicking “Trade” and selecting “Spot.” You will see a complicated interface but don’t focus on the details. Look for a pairing ticker or a “Markets” panel. It’s usually located on the left or right side of the page. In the markets tab search for DOT to see all the pairings.
Once you get your pairing, go ahead and convert your assets to DOT.
We have detailed guides on how to buy Polkadot on many exchanges, including Coinbase, Binance, Kraken, Gemini, OKX, HTX, and MEXC.
How to Store Polkadot (DOT)?
So now that you bought yourself some DOT tokens, there is one final issue to address: Where to store DOT tokens?
Once you DOT on a centralized exchange, your assets will be deposited to your exchange wallet. Problem solved, right? Well, maybe.
Exchange wallets are actually tremendously helpful to traders. You can trade and stake your assets easily through the exchange, and you don’t really have to do anything else to secure your funds, other than remembering your exchange password.
However, centralized exchanges usually offer custodial wallets. As the name implies, the assets in a custodial wallet are trusted to the exchange for protection and storage. Basically, you trust the exchange to protect the assets from hackers and not steal, misuse, or lose your funds.
The key word here is trust: When you use a custodial exchange wallet, you trust the exchange for the security of your funds.
Ironically, cryptocurrencies were, at least theoretically, developed in order to end these sorts of trust-based patronage systems. Early crypto developers tried to devise ways to ensure each trader could hold their funds in their custody to eliminate the need for third-party institutions.
However, the practical applications of custodial wallets outweighed the ideological concerns of the movement, and exchange wallets became the primary solution to crypto storage.
Does that mean you should leave your assets in an exchange wallet? Not necessarily. There are a lot of ways to store your DOT tokens, and some of them are way more secure than most exchanges. Let’s see your options.
Custodial Exchange Wallets
If you choose an exchange with reputable security and minimal hack history, custodial exchange wallets can be a good solution. However, no exchange is 100% secure, especially in this volatile crypto economy. If an exchange goes bankrupt, you can lose access to your funds in a second.
The benefits of a good exchange wallet include seamless trading and staking operations. You can execute trades very fast to stay ahead of market fluctuations and earn interest on your staked assets.
Keep only small amounts of crypto in exchange wallets and try to store the majority of your assets in non-custodial wallets.
Official Polkadot Wallets
There are several official software wallets developed by Polkadot-affiliated teams to secure dot tokens.
However, most of these wallets are developed for more advanced users who want to take part in Polkadot development and governance. If you are buying DOT for investment purposes, they might not be the right choice for you.
If you are interested in participating in the Polkadot ecosystem, you will find these wallets very useful.
You can use the Polkadot extension to access the Polkadot network via Firefox, Chrome, Edge, and Brave browsers and interact with official Polkadot wallets available.
Developers and advanced users can use the web-based Polkadot-JS UI for full-chain access. If you have serious technical knowledge about Polkadot systems (or if you want to learn), you can use the Subkey wallet.
There is also the Polkadot Vault. This is a storage solution that is a low-key alternative to hardware wallets. You can set up Polkadot Vault in an old mobile device you no longer use. Since you won’t use the phone, it will not be connected to the internet and can’t be accessed by hackers.
Third-Party Polkadot Wallets Developed by the DOT Community
There are many third-party Polkadot wallets, some developed and funded by the Polkadot community.
Please keep in mind that, although these wallets were funded by the Web3 foundation and developed by the Polkadot community, they are not actually official wallets. You’ll be using them at your own risk.
And what is the risk? Well, while these wallets are all non-custodial, it means the burden of keeping your funds secure rests on you.
In other words, these software or extension-based wallets are vulnerable to hackers because you access them through internet-connected devices like computers and mobile phones.
Internet connection is a huge boon and a risk when it comes to asset storage — on one hand, you can execute fast trades; on the other hand, all internet-connected devices and wallets are vulnerable to digital attacks.
If your device is exposed to malware, hackers could easily obtain your wallet key and drain your funds without your knowledge. Therefore, internet-connected wallets (or Hot wallets) are seen as a liability in the crypto environment.
Talisman and Polkagate are web-based online wallets that allow users to stake DOT and participate in nomination pools. Enkrypt, another web-based wallet, allows NFT trades.
Fearless Wallet, Polkawallet, and Nova Wallet are mobile wallets available for iOS and Android devices. They can be used for Polkadot governance in addition to staking purposes.
SubWallet can be accessed via browsers and mobile apps and supports crowd loans, staking, and NFTs.
Other Software Wallets for Polkadot
You can use multi-currency wallets like Exodus and Atomic Wallet to store DOT tokens.
These wallets can store hundreds of digital assets but have all the weaknesses of the software wallets we mentioned above.
You can use Exodus with a hardware wallet device to increase its security.
What’s a hardware wallet? It is the most secure way to store crypto. Let’s see.
DOT Hard Wallets
As we discussed, web-based and software wallets are convenient storage options but have security vulnerabilities due to internet connection. One way to bypass these issues is to store digital assets in hardware devices that are not connected to the internet.
Wallets that are not connected to the internet are generally referred to as cold wallets. The earliest cold wallets were paper wallets that had your wallet’s public key written on them but they were not practical to use. With a paper wallet, you can send a fraction of your assets to another wallet, but you have to send the whole balance to make a transaction, which, as you may guess, isn’t very practical or useful.
That said, paper wallets are still a great way to store an asset you plan to hold for a very long time. If you are a HODLer, someone who collects an asset with no intention of selling, you can get a paper wallet and keep it in a secure location like a bank deposit box or a safe.
But if you want to be able to trade your assets from time to time, a paper wallet is not going to cut it. Then, you need a hardware wallet. These are hardware storage devices that come with wallet software and additional security measures like PIN protection to provide maximum safety.
Hardware wallets are multi-currency wallets. An average hardware wallet supports hundreds of cryptocurrencies. You can connect a hardware wallet to a computer connected to the internet to make secure transactions.
You can also use hardware wallets with software wallets to better manage your assets and trade them.
Ledger hardware wallets like Ledger Nano X and Ledger Nano S support Polkadot in addition to thousands of other digital assets. They come with a mobile app and a desktop program to manage your assets.
Coolwalet and Ellipal Titan are other hardware wallet providers that support DOT.
Trezor hardware wallets don’t offer support for Polkadot yet.