Why Near Protocol Could Be A Buy During This Time Of Crypto Instability

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The cryptocurrency market is crashing right now, but this could present buying opportunities for investors looking for high-growth crypto picks at more reasonable prices. In this January 19 episode of “The Crypto Show” on Backstage Pass, Fool.com contributors Chris MacDonald and Jon Quast discuss why Near Protocol (CRYPTO:NEAR) might be one of those choices to consider right now.

Jon Quast: Let’s do Near and we’ll save Cosmos for next week. The close protocol, $17.50, market cap of $10.8 billion. What’s the bull business? Real quick, what is Near?

Chris MacDonald: Yes. Near is a layer one protocol. It was basically one of the projects that raised funds.

What’s interesting about Near is that it’s a delegated proof-of-stake blockchain. Many others, possibly competitors of Ethereum, have smart contract capabilities as well as a proof-of-stake blockchain that allows for more efficient transactions, cheaper transactions, and faster transactions than what we see. on Ethereum. Basically, with Near, there is a cost and speed argument being made with this blockchain.

But one of the other interesting factors that investors are looking at is the element of interoperability with it. Essentially with Near, they started a cross-chain bridge protocol. What this allows is that Near works with other blockchains like Ethereum, there’s the Rainbow Bridge there, and there are other bridges with other networks. For developers looking to create projects on different blockchains, Near is a blockchain project that is getting a lot of attention.

It recently completed a $150 million funding round, and I know the token rose at this news. Many of these projects raise funds to grow their ecosystems and encourage developers to build on their platform. For the reason that the bigger an ecosystem on a given blockchain network is, the more valuable the underlying token is, so in the case of the Near protocol, it would be better if the token got bigger. The projects they invest in are Web3 projects, and essentially Near may have marketed itself as a blockchain network focused on the mass adoption of Web3.

Quast: The way I’ve seen it talked about is that they’re trying to replace the current internet structure.

McDonald: Yeah. I think Web3 is a nebulous term. I know we talked about this last week. The projects themselves that are built on that, I’m not going to dwell on that a bit more, but there’s definitely that angle as well.

As for the bearish case for this token, it is inflationary, so the Near Protocol team is working on a token burn to try and manage some of that. I was reading an article that there is an argument that as transactions increase on the Near network due to the fundamentals of token burning and tokenomics, this could lead to a deflationary environment for this token.

Whether or not this is long-term inflationary remains to be seen. But another thing that investors may be a little worried about is the fact that the NEAR Foundation currently holds the keys to the community treasury. There are decentralization issues for a lot of tokens, and this one might fit that profile as well.

Quest: Very well. One of the things I saw with this, Ethereum has human readable addresses. You can get your name with an .ETH domain, but it costs money. We see with this that with Near you can get a .NEAR address with your name but it’s free. I thought that was interesting in terms of what could possibly be a driver of adoption here.

MacDonald: It’s very interesting. I haven’t really read that. I know with Near the transaction fees are very low, close to zero, so maybe that’s why they can do it for free. But when you think about all the potential whether it’s NFT or other purchases that are smaller dollar amounts, having a near-zero cost structure rather than Ethereum is a huge advantage.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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