What Is NEAR Protocol?

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Contributor, Benzinga
July 5, 2022

In the crypto world, decentralized apps (DApps) are ubiquitous, with DApps ranging from entertainment to financial products. Nevertheless, it has become clear that scalability is still an issue throughout the majority of blockchains.

Scalability is a prevalent problem with blockchains, especially with the eldest like Bitcoin and Ethereum. The difficulties stem mostly from a blockchain’s inability to handle huge amounts of transactions at rapid speeds and at reasonable rates –– known as the scalability trilemma. 

NEAR Protocol is an open proof-of-stake (PoS) network with sharding features and smart contract capabilities that was designed as a community-driven DApp ecosystem. 

The NEAR Collective created NEAR, and it aims to rival Ethereum as well as other Layer 1 protocols such as Solana and Avalanche. NEAR is the native token used to settle transaction costs and maintenance. Coin owners that contribute to attaining the network's consensus mechanism as validators can stake NEAR tokens for rewards.

Disclosure: ²Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts

Overview of NEAR Protocol

The NEAR Protocol is a Layer 1 network that facilitates scaling via the use of sharding architecture. To protect its infrastructure, NEAR leverages smart contracts and the PoS consensus method. The technology has been built as a community-run cloud infrastructure for DApps.

To assist programmers in creating DApps, the NEAR ecosystem includes a variety of developer tools and interfaces and also cryptographic functions with interoperability that can interact with other networks. The platform has a simple registration procedure, and account names are instead human-readable rather than encrypted wallet identifiers.

NEAR aims to be the Layer 1 blockchain to rule them all and was launched in 2020, much later than most rival networks. Hopefully, that gives them enough runway for innovation.

Why Do People Use NEAR Protocol?

NEAR is a project that aims to solve the blockchain trilemma by creating a new blockchain with a different perspective. Implementing sharding was NEAR's answer to the problem.

NEAR divides up the blockchain into smaller, more manageable portions by employing the sharding approach. This practice eases the pressure on the network by lowering algorithmic demand, resulting in higher transaction throughput.

To be eligible for involvement, nodes desiring to become transactional verifiers must stake their NEAR tokens. If a holder does not want to run a node, they can outsource their stake to a validator of their choice.

Like most other Layer 1s, the utility of the network is mostly theoretical and not presently harnessed. The value of the coin is speculative, but if you believe in the infrastructure as the most sound, innovative and efficient network relative to the rest, it could be a potentially profitable investment. 

The prophesied utility’s progress can be viewed by looking at DApps built on the network and if they have usefulness. ZomLand and NEAR Crowd are among the top DApps thus far deployed on the network in terms of interactions. 

NEAR Protocol History

In 2017 and early 2018, while investigating software composition, the team looked at the advent of smart contract networks and crypto transactions. They found the present iteration of the technology didn't satisfy their demands as they researched the optimal solution and tested out a number of blockchain protocols, on a quest to design a blockchain that would. 

In August 2018, co-founders Alex Skidanov and Illia Polosukhin recruited a team of developers and formally began developing NEAR Protocol. The NEAR platform was created with the goal of making it simple for developers to create DApps that can grow to broad use. NEAR used a PoS method to assist payment validation and block generation to fulfill these objectives.

NEAR integrates a lateral scaling strategy with a novel consensus algorithm that divides the system into concurrent fragments and automatically allocates processing power to maximize computational power. The system went live in April 2020, was community-run in September 2020 and in October 2020, a vote to allow token transactions was approved, making the protocol fully operational.

Where to Buy NEAR

You can buy NEAR on many global crypto exchanges. Presently, U.S. exchanges have more barriers to provide to consumers and ergo fewer markets available. Binance US and Gemini has NEAR for U.S. users, and Binance has NEAR listed for most other countries globally. 

NEAR Protocol Blockchain vs. Other Blockchains

The network's distributed structure or sharding feature is NEAR's main advantage. The limited scalability and processing limitations caused by the core blockchain pillars are the challenge for older networks like Bitcoin and Ethereum. Every node in such blockchains performs millions of superfluous, repetitive processes, restricting the usefulness of the network and lowering transaction volume.

Even if Bitcoin opened the blockchain realm, it was only intended to be used for configurable currency. Because of its restricted capability, sluggish and expensive transactions and other issues, the creators' attempts to use it as a general-purpose computer platform were clunky and mostly unsuccessful.

How to Store NEAR Safely

Purchasing crypto on an exchange means it’s held in a custodial wallet where the exchange has access to the wallet’s keys rather than the individual. A noncustodial wallet is advised after purchasing crypto on an exchange. 

If you had purchased on lending platforms like Celsius that have a custodial wallet you would, at the time of writing this article, not be able to withdraw funds. 

Hot wallets are excellent storage places. A hot wallet is a digital and interconnected crypto client that is always accessible. You can see how many coins have been allocated for use and transfer as well as acquire cryptocurrencies using hot wallets.

Cold wallets are regarded as the safest form of storage. They are physical devices that are not connected to the blockchain network and are offline. The most common and well-known cold wallet company on the marketplace is Ledger. Ledger has the Ledger Nano S, which is quite cheap relative to other cold wallets. The gadget is an offline- and online-compatible hardware wallet. Whether you're using a PC or a phone, Ledger communicates through Bluetooth and USB. You may safely manage and administrate your assets with the Ledger app.

Does NEAR Have a Future?

NEAR Protocol is a promising protocol, and its native coin NEAR is an well-integrated coin. The sharding infrastructure and safety feature complexitiesmake NEAR Protocol stick out compared to other Layer 1 networks like Solana. The platform also is oriented toward builders and creators, which is distinct from Ethereum.

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