NEAR VISION #1: What is NEAR protocol? The Evolution of Blockchain Technology.
What Is NEAR Protocol?
NEAR is a decentralized application platform which runs atop the NEAR Protocol blockchain. This blockchain, which runs across hundreds of machines around the world, is organized to be permissionless, performant and secure enough to create a strong and decentralized data layer for the new web,
NEAR’s main mission is to present a platform that’s ideal for running applications that have access to a shared — and secure — pool of money, identity and data which is owned by their users. It combines the features of partition-resistant networking, serverless compute and distributed storage into a new kind of platform.
So, before we go any further, let’s learn some of the backstory and see how blockchain platforms have evolved over time.
The Evolution of Blockchain Technology
Ever since Satoshi Nakamoto released the Bitcoin whitepaper in October 2008, the world has gotten acquainted with the game-changing blockchain technology. Over the last decade, the blockchain has gone through three stages of evolutions.
Generation 1: Bitcoin
Bitcoin is the perfect example of the first-gen blockchain. The purpose of this blockchain is to be a simple and straightforward payment system. Starting out as the “internet’s currency,” Bitcoin has since become one of the most in-demand asset classes. However, there is a major problem when it comes to BTC. It is infeasible to conduct complicated transactions with them which may have several layers of metadata and logic attached to it.
Generation 2: Ethereum and Smart Contract Platforms
Ethereum ushered in the second-gen blockchain platforms with smart contracts. Finally, developers were able to program sophisticated transactions through these smart contracts, and were able to create decentralized applications (dApps). Through these dApps, the blockchain’s use cases went through the roof.
However, this space has been struggling with its growing pains. The main thing is that these blockchains are suffering from severe scalability issues. For example, Bitcoin has a throughput of 7 transactions per second, while Ethereum can only manage 25. When you compare that with PayPal (115 tps) and Visa (1,700 tps), it’s pretty abysmal.
To be fair, Ethereum and Bitcoin have recently been trying to fix these scalability issues with several layer-two solutions like lightning network, raiden, plasma protocol etc. The idea here is to create an additional layer over the underlying blockchain which the main protocol can delegate repetitive and cumbersome tasks too.
However, there are two issues with this approach. Firstly, these layer-2 solutions haven’t yet achieved acceptance from the masses. Secondly, these layer-2 solutions ruin the original architecture of the protocol, which may have long-lasting implications.
This is where the third generation comes in.
Generation 3: NEAR
NEAR is an example of gen-3 blockchains, which aim to solve the scalability issues and allow both the end-users and developers to enjoy the full potential of smart contracts and blockchain technology. Instead of relying on layer-2 tech, NEAR breaks free from the idea that every single node which participates in the network has to run all of the code because that essentially creates one big wasteful bottleneck and slows down all of the other approaches.
To fix this issue, NEAR uses a technique that is already extremely prevalent in the database world — sharding. If properly executed, it allows the network’s capacity to scale up as the number of nodes in the network increases so there isn’t a theoretical limit on the network’s capacity. The best part? Sharding is a layer-1 scalability technique.
So what is sharding, let’s find out in the next episode.
NEAR VISION #2 will be on @insght_near tomorrow.
