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What is the Near Protocol and how does it work?

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Launched in 2020 as a decentralized cloud infrastructure to host decentralized applications (DApps), NEAR Protocol’s growth has been continuous ever since, evident from the huge success that it has accumulated over the past 2 years. This success can be largely attributed to NEAR’s use of a new blockchain technology known as Sharding, which helps increase the number of transactions per second in a blockchain while reducing the cost per transaction.


NEAR is also aiming at creating a decentralized, permission-less “open web.” This means that no government, cooperation, or individual is in control or has any type of power to say what can and cannot be done on this type of web. It will solely rely on code and users instead. With its advanced technology and amazing coordination and organization of data, NEAR is the only chain that can come close to making this a reality.

Meta platforms, formally known as Facebook, is a good comparative example of what NEAR is trying to avoid, a closed, biased ecosystem where the majority of the power goes to one individual. Instead, NEAR is looking forward to creating what it calls a “community cloud’’ where users can store important information and items such as digital assets, identity, and money and freely conduct transactions with them with anyone without requiring anybody’s permission or platform to do so.

What is NEAR Protocol?

NEAR Protocol can be defined as a decentralized application (DApp) platform that focuses on usability among developers and users. NEAR’s design makes it easy for its end-users to interact with the platform while offering them access to millions of devices across its network and giving developers new and sustainable monetization models for their apps.

NEAR technology also makes it easy for engineers and innovators to create their products on the blockchain while also assuring security for their decentralized applications that safeguard high-value assets like money and identity. Similar to its competitor Ethereum, NEAR Protocol is also smart-contract capable and a proof-of-stake (PoS) blockchain.

NEAR operates in a manner that is similar to other centralized data storage systems such as amazon web services which serves as the base layer on which applications are built on, the only difference is that NEAR is not run by a single organization, but is operated and maintained by a distributed network of computers which are called nodes. This helps increase the platform’s security and eliminate other inefficiencies associated with a cloud platform controlled by a single organization.

How does NEAR Protocol work?

In order to compete and rank on top of other smart contract-enabled blockchains such as Ethereum, Polkadot, and Eos, NEAR administers a variety of features in its ecosystem to enhance its performance. In this video, we will go through some of these features to help us gain a better understanding of how the Near protocol works.

Nightshade Sharding

Scalability has become a major issue among blockchains, especially to the older ones such as bitcoin and Ethereum. As blockchains become more popular and gain more users, the number of transactions being held at a time increases and so does the cost per transaction. When this happens blockchains usually have a hard time handling the large number of transactions at fast speeds and at manageable costs.

This is where NEAR’s new technology comes in play and solves this issue. NEAR’s solution to this problem is by implementing nightshade sharding. Through sharding, NEAR is able to break up the blockchain into smaller more manageable segments. This then reduces computational load and increases the throughput of transactions. Also, distributing segments of the blockchain instead of it as a whole across its network of participants makes it easier to retrieve lost network data.

When it comes to choosing its validators, unlike the other proof of stake(POS) networks, Near protocol uses a different election mechanism known as thresholded proof of stake. Instead of validators competing for the next block based on the size of their stake, the threshold proof of stake method operates just like an auction where a large number of anticipating validators are expected to indicate how many tokens they’re willing to stake via a signed transaction. A minimum threshold for becoming a validator will then be determined and those that have staked above the threshold will have a chance to be selected as validators, in proportion to the amount they staked.

Rainbow Bridge

NEAR Protocol also includes an application called the Rainbow Bridge that allows participants to easily transfer Ethereum tokens back and forth between Ethereum and NEAR. This compatibility makes near very attractive to developers and users because they are able to take advantage of the higher throughput and lower fees on the near protocol. The rainbow bridge is also fully permissionless and decentralized.

For one to be able to move Ethereum to NEAR protocol, you will first need to deposit tokens in an Ethereum smart contract. These tokens are then locked and new tokens representing the original ones are created on NEAR’s platform. This process can also be reversed if the user wishes to retrieve their original tokens since the original funds are held in storage through a smart contract.

Normally, transactions on NEAR take as little as 1 to 2 seconds to confirm and cost under 1$ but if the user wishes to move the token back to Ethereum, the process can cost more and take longer to process. The final value will depend on the current Ethereum traffic and gas prices.

Aurora

Another major feature of the NEAR protocol is a layer-2 solution on its blockchain known as Aurora. Aurora is compatible with Ethereum and through this developers are able to expand their apps on the NEAR protocol platform from Ethereum and get to enjoy the low transaction costs available on NEAR for their users.

Aurora is made up of the Aurora engine and the Aurora Bridge. Aurora engine is an Ethereum virtual machine (EMV) on the NEAR protocol that is compatible with Ethereum and supports all tools available in the Ethereum ecosystem. This makes it easier for developers to get started on the NEAR platform since they don’t have to rewrite decentralized applications or learn how to work with new development tools. Aurora bridge is a similar technology to the rainbow bridge in that it is used to bridge users’ contracts between Ethereum and near protocol blockchains. Users can also pay transaction fees with ETH on Aurora.

What is the NEAR token?

NEAR token is the blockchain’s native currency. It is mainly used for paying transaction and storage fees on the network. NEAR token holders aspiring to become transaction validators and help achieve network consensus also use the near tokens for staking. It is also mandatory that you hold this tokenif you want to participate in governance. Because of the need for decentralization, many projects embrace governance so that every holder can take part in contributing to society.
Additionally, developers who create smart contracts receive a portion of the transaction fees that their contracts generate. The remainder of each transaction fee is burned, increasing the scarcity of the NEAR token. NEAR has also established a protocol treasury, which receives 0.5% of the total NEAR supply annually, for the purpose of reinvesting in the development of the ecosystem.

How to buy NEAR on Binance?

  1. Register on Binance
    Binance is one of the most widely used cryptocurrency exchanges in the world. One of the main reasons why Binance is so popular is because of its vast selection of altcoin, which continuously grows as more and more altcoins are made. It also compatible with both android and iOS devices and for withdrawals below 2 BTC per day no verification is required. If you don’t own any cryptocurrency, you can get started by purchasing some BTC on Binance with a credit or debit card.
  2. Deposit cryptocurrencies
    The most convenient cryptocurrencies to deposit are Bitcoin, and Ethereum. They both have trading pairs with the vast majority of cryptocurrencies listed on Binance and therefore give you the greatest amount of flexibility. Both BTC and ETH can be traded for NEAR on Binance. In order to make your deposit, go to the navigation bar at the top of the website and click Funds > Deposits.
    A search bar should appear on your screen. Enter the ticker (BTC for Bitcoin, ETH for Ethereum) for the cryptocurrency you wish to deposit and select it from the drop-down menu. The website will provide you with a deposit address for the cryptocurrency you selected. The address will be a string of numbers and letters(both lowercase and uppercase). Copy the address in its entirety and go to your wallet of choice. Send the amount you wish to deposit to the address you copied. It is quite common for the transaction to take up to half an hour to complete, so don’t expect the funds to be available on your Binance account instantly.
  3. Check your balance
    In order to check your balance, go to Funds > Balances in the navigation bar at the top of the website. If you would only like to see the coins which have a balance of over 0.001 BTC, click on Hide small assets. If your deposit has already been processed, the coin and amount will appear on the list. If you have multiple coins, you can use the search bar.
  4. Place a buy order for Near Protocol.
    To place an order, go to Exchange > Basic.
    For this step, we will assume you deposited BTC. If you deposited ETH, don’t worry – the process itself is exactly the same.
    On the top right corner, select BTC and search for NEAR, which is the ticker for Near Protocol. The NEAR/BTC trading pair should appear.
    After clicking on the trading pair, a price chart will appear in the center. You can place your buy order under the chart. If you want to buy NEAR when it reaches a specific price, use the Limit order. Enter the desired price (in BTC) and the amount of NEAR you want to buy, then click the Buy NEAR button. Ifyou want to buy NEAR at its current price, click on the Market tab and enter the amount of NEAR you wish to buy. The order should be executed almost instantly and the NEAR will be added to your balance soon.

Congratulations, you’ve just completed your first order on Binance!
I hope that this video has been helpful and you have finally understood what NEAR protocol is. Thank you for watching and stay tuned for more.

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