What is a Chain? A chain of blocks, each one connected to the next by cryptographic hashes. Blocks in a blockchain are chained together and contain data that’s currently associated with transactions such as paying someone or sending money to another account. No one person can tamper with any block without breaking the entire system because tampering would break all other blocks after it.

The “parachain crypto” is a blockchain that utilizes a new type of consensus algorithm. The idea behind the “parachain crypto” is to create smaller, more manageable chains that are easier to use and maintain.

What are Parachains and Why are they Important for Crypto?



The cryptocurrency industry has invested a lot of time and effort over the years trying to make blockchain technology relevant to the general public. Of course, the phrase here is “masses,” since the blockchain was much superior than most, if not all, conventional systems when it was founded. The inability to scale, on the other hand, has been seen as Bitcoin’s most serious flaw from its inception.

With that in mind, the industry explored a variety of approaches to address the problem, and one of the answers that developers devised was parachains, a groundbreaking concept specific to the Polkadot ecosystem. We wanted to take a closer look at this technology today to discover what it is, how it works, and what makes it unique.

What are parachains, exactly?

Let’s start at the beginning and figure out what parachains are in the first place.

Parachains are independent layer-1 blockchains that operate in parallel with the rest of the Polkadot ecosystem on both the Polkadot and Kusama Networks, according to Polkadot.

The center chain, also known as the Relay Chain, secures the parachains. They also share the security, scalability, governance, and interoperability of the whole Polkadot ecosystem, allowing them to take use of all of the Polkadot ecosystem’s advantages. Furthermore, because of the project’s universal cross-chain composability, almost any sort of asset or data may be transported from one parachain to the next. Because parachains may be linked to other networks through cross-network bridges, this opens up a variety of new applications and use cases.

Polkadot’s core Relay Chain provides layer-0 security and interoperability, as well as the potential to link up to 100 layer-1 blockchains as parachains.

Parachains’ Characteristics

Parachains have a lot of advantages and benefits as a result of their advanced properties, which include:

1) The capacity to scale

When it comes to parachains, one of the first and most important aspects to discuss is scalability, since the whole parachain paradigm enables Polkadot to achieve considerable scalability at layer-1 instead of relying on layer-2 solutions. This is also a more efficient and decentralized method of achieving scalability, allowing the blockchain to better serve its community.

Parachains also enable the system to spread out transactions over the whole ecosystem and process them in parallel, increasing the number of transactions that may be handled at the same time.

2) Flexibility and specialization

The whole parachain paradigm was designed with a particular vision in mind of how the internet of the future would appear. The creators envisioned the future internet as one that uses a variety of blockchains, each of which is devoted to a distinct purpose but eventually works together.

All of these chains would provide a range of services, similar to how the internet already provides a number of services. As a result, certain chains may be used for online gaming, while others may be used for money, identity management, or something else entirely.

This is why Polkadot opted to set no requirements for the parachain design other than the ability to certify that each block on the parachain meets the agreed-upon protocol.

To put it another way, there is a lot of flexibility in the sense that each parachain may have its own, distinct architecture, as well as its own token, governance procedure, and even be devoted to its own, specialized use cases. They may also be used as public or private networks, to service communities or businesses, and as development platforms, among other things.

Everything is permissible as long as each parachain can demonstrate to the Polkadot validators that the blocks of the parachains respect the protocol.

3) Administration

Polkadot enables parachains to use whatever governance model they wish, and there are currently a variety of pre-built modules for implementing various governance systems. Another way the project gives flexibility is that the community has access to some of the most advanced on-chain governance systems, allowing teams to limit the likelihood of hard forks on their chain. This would be preferable since hard forks are always risky because they have the potential to separate whole communities, like Bitcoin Cash and Bitcoin SV did in November 2018.

On-chain governance may also provide communities with accountable transparency, which is a need for many institutions that want to ensure that decision-making procedures are transparent and accessible before they contemplate becoming engaged with the blockchain.

Interoperability (n.d.)

Then there’s interoperability, which enables parachain groups to have complete control over their own layer-1 chain. They also profit from the ability to participate in free commerce, not only with other parachains, but also with external networks. As a result, a community built around one of Polkadot’s parachains may interact just as readily with Ethereum’s blockchain as it can with another.

Of course, this is only possible due of Polkadot’s inherent cross-chain composability. It allows for the transmission of coins, data of any kind, including verified credentials, smart contract calls, and even off-chain data from oracles.

The possibilities inside the blockchain ecosystem are practically unlimited thanks to interoperability, and interoperability is also seen as a major characteristic that could eventually lead to Web 3.0.

5) Leasing of Slots

It’s also worth noting that projects that want to operate as a parachain must rent a spot on the Relay Chain. This is accomplished by winning a parachain slot auction, in which auction bids are made in the network’s native coin. Of course, in Polkadot’s case, the native token is DOT, and in Kusama’s ecosystem, it’s KSM.

Polkadot slots are available for lease at a minimum of six months and a maximum of two years. When teams choose to participate in the parachain slot auction, they are effectively agreeing to lock up the DOT tokens they are bidding on for the remainder of the leasing term. After that, they will be reimbursed in full. However, the DOT is reserved in the original account throughout the leasing duration. It cannot, however, be used for transferring, staking, or almost any other purpose.

6) Less expensive

Another benefit of employing parachains is that they are linked to Polkadot’s main chain, giving them access to as much computational power as they need. The benefit is that they don’t have to pay any extra fees or petrol prices.

The real cost of operating a parachain may be characterized as the opportunity cost of not having access to the locked DOT/KSM (during the leasing term) vs unlocking the entire amount of DOT/KSM pledged by a team for a parachain slot once the lease period expires.

If a team wants to use crowd loans to finance its slot, they may do so, and then reward donors in whatever manner they see right. However, there is a cost associated with this. Other expenses, such as the cost of operating collator nodes on the parachain, are usually minimal. However, for applications with a lot of traffic and users, a Polkadot-based parachain is almost always a more cost-effective alternative than hosting a standalone blockchain.

7) Parathreads and Parachains

Finally, there’s a distinction to be made between parathreads and parachains. Parathreads are parachains that use a pay-as-you-go methodology to link to Polkadot’s main chain rather than leasing a slot. This paradigm may be more appropriate for certain projects, since it is especially well-suited to those that do not need continual network connection.

Polkadot’s blockchains can, of course, swap between parachains and parathreads as needed. Because there are no available parachain slots on the Relay Chain, some people may choose to use parathreads instead. Rather of delaying their project’s development until a slot becomes available, they may utilize a parathread and then switch to a parachain when one becomes available.


Parachains on platforms like Polkadot and Kusama offer a more sophisticated way to addressing scalability and a variety of other challenges that have plagued the blockchain industry for years. They provide a variety of advantages, and it is necessary to be acquainted with their qualities in order to fully comprehend them. Parachains, which are particularly compatible with a variety of different blockchain solutions and technologies, including oracles, may lead to the next stage in the growth of the blockchain industry. Polkadot has gotten a lot of attention because of this, and it’s one of the initiatives with the greatest promise for the future.

Watch This Video-

The “parachain vs blockchain” is a question that has been asked many times. It can be difficult to understand what the difference between these two terms are, so I have decided to provide a definition for both of them.

Frequently Asked Questions

What are crypto Parachains?

A: Crypto Parachains are chains of transactions that make it possible to send cryptocurrencies without the need for a third party like a bank.

What is Parachains Polkadot?

A: Parachains are a style of jewelry that is layered and has multiple pieces. The first layer being the chain, then there are either more chains or separate rings to go around your neck and wrists

What is Polkadot used for?

A: Polkadots, also known as wormholes, are a method of transport that allows for faster-than-light travel in the Game of Thrones universe.

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