- This article was considered for deletion at Wikipedia on September 15 2015. This is a backup of Wikipedia:Nxt. All of its AfDs can be found at Wikipedia:Special:PrefixIndex/Wikipedia:Articles_for_deletion/Nxt, the first at Wikipedia:Wikipedia:Articles_for_deletion/Nxt.
Nxt is an open source cryptocurrency and payment network launched in November 2013 by anonymous software developer BCNext. It uses proof-of-stake to reach consensus for transactions - as such there is a static money supply and no mining as with Bitcoin. Nxt is specifically conceived as flexible platform to build applications and financial services around. It has an integrated asset-exchange (comparable to shares), messaging system and marketplace. Users can also create new currencies within the system. The last major release enabled Multisignature capabilities and a plugin-system for the client.
- 1 History
- 2 Concept
- 3 Features
- 4 Features Under Testing
- 5 External Services
- 6 Criticism
- 7 3rd Party use
- 8 See also
- 9 References
- 10 External links
On 28 September 2013 Bitcointalk.org member BCNext created a forum thread announcing Nxt as second generation cryptocurrency, asking for small Bitcoin donations to determine how to distribute the initial stake. On 18 November 2013 fundraising for Nxt was closed, with 21 BTC raised. The genesis block was published on 24 November 2013. It revealed that 1,000,000,000 coins had been distributed to 73 stakeholders in proportion to their level of contribution. The source code was partially released on 3 January. The full source code was released on 1 March 2014 under the MIT License.
Just as with Bitcoin, the blockchain stands at the core of this currency. But Nxt is completely written from scratch and departed in several ways from existing cryptocurrencies. Most notably, in one of the founding statements BCNext asks the community not to consider the NXT coin as the important part, but rather create currencies on top of it - possibly devaluing the core currency.
- Nxt is coded in Java.
- The standard client works as brain-wallet: Instead of storing keys in a wallet file, security works via a secret passphrase. This means it can be accessed from any instance of the Nxt software.
- Nxt was the first currency to rely purely on proof-of-stake for consensus. Allowing a block creation rate of roughly one minute.
- Focused on being a developer-friendly platform and fostering third party services
The core structure and the client features are aimed at facilitating external development.
- The protocol supports more out-of-the-box than Bitcoin (i.e. colored coin exchanges), saving development time (see features).
- There is an extensive API.
- No centralized service is needed for accessing the API, not even a node run by the developer, since named peers of the network can be directly accessed via API calls.
- The upcoming client supports plugins
Proof-of-Stake Consensus Mechanism
While Bitcoin uses hashing power as proof for verifying transactions, Nxt works with the stake-size the user owns. Block authors are selected in a practically random manner, with greater amounts of stake increasing the likelihood of adding a block to the chain. While in the former the investment in mining gear serves as incentive not to attack the network, an attacker in the latter would directly hurt the personal coin holdings.
This method effectively removes the security issue of any miner gaining 51% of the hashing power and attacking the network.
Since Nxt has an unchanging coin supply, no new units are created for block rewards. Instead the transaction fees are passed on. After owning Nxt for about one day (1440 confirmations), the Nxt software will begin to contribute to the block generation process and can earn coins for as long as an account is "unlocked". This process is called forging (referring to the smith that takes existing iron and reshapes it).
At the moment Nxt is open to attacks if any account has 51% of the total coin supply that is forging. As outlined in the founding statements Nxt is aimed at implementing a process of "transparent forging", which allows the software to predict which accounts will forge upcoming blocks. This is basically done by iterating through all active accounts and seeing which one has the highest "hit". Transparent forging rapidly increases transaction processing, since the account that will forge the next block is known. Another benefit of this feature is that accounts that are due to forge, but do not, will be penalized by having their forging power temporarily reduced to zero. This raises the threshold for an attack to 90%.
The Proof-of-Stake algorithm is efficient enough to run on smartphones and small devices like the Raspberry Pi platform. As such there are no additional costs, no expensive mining hardware is needed and no additional energy burned. This makes Nxt use ca. 7000 times less energy than Bitcoin at the same network size.
The core infrastructure of Nxt is complex. This adds risks as compared to the more lean Bitcoin, but makes it easier for external services build on top of the blockchain.
A peer-peer exchange allowing decentralized trading of shares, crypto assets. Since the blockchain is an unalterable public ledger of transactions, the Asset Excchange can provide a record of trade for items other than Nxt. To do this, Nxt allows the designation or "coloring" of a particular coin, which builds a bridge from the virtual crypto-currency world to the physical world. The "colored coin" can represent property, stocks/bonds, commodities, or even concepts. These can be transferred between users, which allowed Nxt assets to become the first to be traded on external exchanges.
As of December 2014, the Nxt Asset Exchange is the most widely used among the decentralized exchanges.
NXT has one of the first completely decentralized marketplaces, since the offers are stored directly in the blockchain. Users are able to buy and sell directly to any other user - the ledger serves as unchangeable proof of the transaction.
Multi-signature and Phased transactions
- Multiple accounts authorizing the transaction
- This is comparable to having a "joint bank account" and could also be used to provide escrow and two factor authorization.
- Specified time has passed
- This way transactions are delayed until the specified time is reached.
- Existence of other transactions in the blockchain
- This allows advanced features such as atomic transactions
- Revealed secret
- The transaction is only approved on revealing a message that fits a given hash. This can be used as a building block for cross-chain transactions.
This feature enables the sending of simple text messages - encrypted or as plain text - which can also function to send and store up to 1000 bytes of data permanently, or 42 kilobytes of data for a limited amount of time. As a result, it can be used to build file-sharing services, decentralized applications, and higher-level Nxt services.
The Alias System feature of Nxt essentially allows one piece of text to be substituted for another, so that keywords can be used to represent other things – names, telephone numbers, physical addresses, web sites, account numbers or emails. This would for example allow for a decentralized DNS system similar to Namecoin.
Allowing holders of the currency or Nxt-Assets to vote in a cryptographically proven and externally verifiable way. This can be used for future development decisions, or for shareholder voting. It can also be applied to public elections and community based decision-making.
The standard client of NXT will support the installation of plug-in. Which make it possible for external developers to add features or usability enhancements. The Plugins will not be contained in a sandbox, so users should take extra caution.
Implemented in version 1.4.8, the Monetary System allows the creation of currencies on the Nxt blockchain. These coins are backed by a specified amount of NXT, which can be retrieved if necessary. The possible properties range widely - including different models of inflation, exchange and the use of Proof-of-Work as distribution system.
Features Under Testing
More features are planned, several are already implemented in test environments.
Smart Contracts allow the creation of scripts that reside in the blockchain - to allow trustless execution of code. There are several completely different implementations in development for Nxt. The Automated Transactions attempt for turing-complete scripting is fully integrated into the Nxt-clone Burst.
There are several websites offering web-wallets. These allow easier access without downloading the full blockchain and running a node. As downside they add various degrees of need for trusting the provider.
Using the Nxt's data storage capabilities, SmartContracts.com is a website adding smart contract functionality - with the benefit of external data sources (like market prices or GPS signals). These are executed centrally, but the agreements are unalterably stored in the blockchain.
SuperNet and MultiGateWay
SuperNet is an ecosystem build around various cryptocurrencies, to allow the usage of all their features in one application. The interface is build on the Nxt client and uses its features like the Asset Exchange.
The MultiGateWay feature for example, allows the peer-to-peer exchange of various cryptocurrencies, without having to trust any funds to an external exchange site.
Freemarket is using Nxt's arbitrary messages feature to provide a more comprehensive marketplace. Since the offers are stored in the blockchain and not on servers like other cryptocurrency good-markets, it is resistant to any attempt of shutting it down.
Nothing at Stake Attacks
It is proposed that one could attack any Proof-of-Stake currency with zero costs. There are several proposed attack avenues. Amongst them to attempt to build blocks in every fork in the network, because doing so costs them almost nothing and ignoring any fork may mean losing out on the block rewards that would be earned if that fork were to become the chain with the largest cumulative difficulty.
It is disputed whether attack scenarios are prevented through the various measures that Proof-of-Stake currencies apply.
Since Nxt had no mining phase, all initial units were released via a one-time fund raiser. After the announcement of the NXT project in the bitcointalk-forums by its inventor BCnext, it was open to interested parties to buy shares in this new system via Bitcoins. Due to the unconventional offer, only a total of 73 people took advantage of it. Because of this relatively small group of initial stake owners, the distribution has been repeatedly criticized.
Counter arguments point to the fact that company shares are typically spread in a similar manner - with little complaints about big holders. Considering the young age of NXT it has yet to be seen how the distribution will change over time.
To access an account, the user types a password or a pass phrase from which a private key is calculated, unlike Bitcoin, where private keys are typically stored in a wallet file and not directly visible to the user.
On the user-side the NXT account solely consists of a pass phrase with no wallet file in the standard client. That means anyone in the world can access the wallet if they know the phrase. This might lead to user errors, where the user creates accounts with short or predictable passwords. Brute-force attacks on the whole blockchain are possible. To alert users, the NXT client warns when a password has fewer than 30 characters. It also provides an auto-generator for pass phrases.
If the phrase is 20+ characters - consisting of random symbols. Or it's 8+ random words, not a phrase/quote published somewhere, the password can be considered unbreakable by any existing computing powers (currently and far in the foreseeable future).
3rd Party use
On the 18th of September, Wall Street investor Brian Kelly announced he would be investing into the Nxt based platform Drachmae, which has as its aim the revitalisation of the local economy of the Greek Island Agistri.
Bitcoin ATM service CoinOutlet uses the NXT Messaging service for managing it's transactions.
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- nxt.org - Main Website
- nxter.org - Detailed updates news and resources
- nxtforum - Most active Nxt user community
- thenxtwiki - Detailed Wiki in multiple languages
- Nxt Whitepaper and Nxt source code
- reddit/r/nxt - Nxt Subreddit
- Bitcointalk.org - Official Discussion Thread
- PS Coin - incentivized trading - An incentive based Nxt exchange. Nxt orders accumulate royalties.
- bitcoinwisdom-nxt-btc - NXT/BTC Chart with BTER-Data
- Various block explorers and online wallets: mynxt.info, nxtblocks, secureae, nxtreporting, nxtexplorer.
- Peer explorer: nxtpeers
- Reason Magazine - Bitcoin and the Cypherpunks
- PayExpo 2015 - Cryptocurrency sponsor
- Euro Banking Association - Cryptotechnologies
- European Securities and Markets Authority - Call for evidence / Investment using virtual currency or distributed ledger technology
- European Central Bank - Virtual currency schemes – a further analysis
- Yay. This is how Deletionpedia v2 got started. Guaka (talk) wanted to rescue some Wikipedia articles for Coinwiki.