The first half of 2022 has been a difficult time for crypto investors. Rising interest rates and inflation conspired to knock cryptocurrencies from the all-time highs many hit last winter. At the same time, many players within the cryptocurrency industry made matters worse by being highly leveraged, which worked while the market was soaring but forced liquidations and insolvency as the market turned.
Some major cryptocurrencies were essentially wiped out in a matter of days, erasing billions of dollars of value, while other cryptocurrencies will probably never approach their all-time highs again.
For that reason, let's separate the wheat from the chaff and take a look at a lesser-known cryptocurrency that I think has what it takes to bounce back in the second half of the year -- NEAR Protocol (NEAR 1.69%).
NEAR is practical for everyday use
NEAR, which ranks as No. 25 in crypto market cap, is down 82% from a peak of $20.42 it hit in January. While many smaller cryptocurrencies may not be able to survive the crypto winter, NEAR is different in several key ways that make it a likely candidate to not only survive but thrive over the long term.
NEAR boasts many of the advantages Ethereum (ETH -1.15%) is looking to achieve with its transition to proof of stake -- transaction fees on the NEAR network are incredibly cheap at $0.01 or less, making it a practical cryptocurrency for day-to-day transactions. Furthermore, transaction speed is near instant, with settlement times of two seconds or less. NEAR uses its own technology, called Nightshade, to achieve an incredible throughput of up to 100,000 transactions per second, which is much faster than that of most other cryptocurrencies and even bests that of traditional financial networks like Visa.
NEAR is user- and developer-friendly
Beyond this impressive performance, what I like about NEAR is its user-friendly and developer-friendly approach. For example, developers can build applications on NEAR using common programming languages like Rust and Assembly, which means they don't have to learn an entirely new language like Solidity just to work on NEAR (as is the case with many other blockchains). Furthermore, NEAR gives developers 30% of the fees that the smart contracts they create generate. This incentive should lead to more developers building more compelling applications on NEAR over time.
From a user perspective, newcomers can cut though some of the complications that can make it intimidating to get started in cryptocurrency and Web3 by signing up for a NEAR wallet on NEAR's website and creating a human-readable account ID. This means that instead of giving out a long, randomly generated string of letters and numbers as their address for transactions, which can be cumbersome, users can instead use a username with a ".near" suffix, which is easier and more intuitive.
NEAR is well funded
Lastly, NEAR has been able to raise substantial venture capital this year, with a $150 million funding round in January and a $350 million round in April led by renowned investment firm Tiger Global. In October, NEAR unveiled an $800 million ecosystem fund to spur innovation and development on the platform. This substantial infusion of cash should help NEAR Protocol ride out the crypto winter.
Is NEAR ready to bounce back in the second half of 2022?
The first half of 2022 has wiped out several prominent cryptocurrencies and has made it unlikely that many projects will ever come close to the heights they previously hit again. However, well capitalized, truly differentiated projects like NEAR Protocol seem likely to rebound as the weaker hands fold and the strongest projects rise to the top. Even so, smaller cryptocurrencies like NEAR are speculative investments that are best suited for risk-tolerant investors.