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Nxt

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For other uses, see NXT.
Nxt
Nxt Logo
Unit
PluralThe language(s) of this currency do(es) not have a morphological plural distinction.
SymbolNXT‎
NicknameNxtcoin (also incorrectly referred to as Nextcoin)
Denominations
Subunit
 1NXT[1]
 10−8nxtQuant
(smallest unit)
Demographics
Date of introduction24 November 2013[2]
User(s)Global
Issuance
AdministrationDecentralized
peer-to-peer consensus.[1]
 Websitenxt.org
Valuation
InflationDisinflationary. All coins were distributed after IPO (28 September 2013 - 26 November 2013).

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.[4] 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.[5]

NXT has been covered extensively in the "Call for Evidence" report by ESMA,[6] which NXT has answered in July 2015.[7]

History

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.[8] 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.[2] The source code was partially released on 3 January. The full source code was released on 1 March 2014 under the MIT License.[3]

Concept

Just as with bitcoin, the blockchain stands at the core of this currency. But Nxt is completely written from scratch[9] 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[10] - possibly devaluing the core currency.

  • Nxt is coded in Java.
  • Nxt was the first currency to rely purely on proof-of-stake for consensus. Allowing a block creation rate of roughly one minute.[11]
  • 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.
    The standard client is running in web browsers (Russian version pictured).
    [citation needed]

Developer Accessibility

The core structure and the client features are aimed at facilitating external development.

  • 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.[12]

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.[1] 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.[13]

Forging

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),[14] the Nxt software will begin to contribute to the block generation process and can earn coins for as long as an account is "unlocked".

At the moment Nxt is open to attacks if any account has 51% of the total coin supply that is forging.[15] As outlined in the founding statements[10] 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%.[15] The Proof-of-Stake algorithm requires little computation and energy, and can run on smartphones and small devices like the Raspberry Pi platform.

Features

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.[4]

Asset Exchange

Screenshot of the SecureAE Asset Exchange window

A peer-peer exchange allowing decentralized trading of shares, crypto assets. Since the blockchain is an unalterable public ledger of transactions, the Asset Exchange provides 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.[16][17]

Data Storage

Arbitrary Messages enable the sending of encrypted or 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.[6]

Alias System

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.[18]

Voting System

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.[5]

Plugin Support

A plugin running on NXT test-net, that will allow easier crowdfunding.

The standard client of NXT supports the installation of plug-ins. Which make it possible for external developers to add features or usability enhancements. The Plugins are not be contained in a sandbox.[19]

Monetary System

Implemented in version 1.4.8,[20] the Monetary System allows the creation of currencies on the Nxt blockchain.[21][22] 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.[23]

Multi-signature and Phased transactions

The latest client (1.5) supports a method (named Phasing for Nxt) for requiring specific conditions for executing a transaction. [5] Such as approval of multiple accounts or the passage of an interval of time.

Criticism

Nothing at Stake Attacks

It is proposed that one could attack any Proof-of-Stake currency with zero costs.[24] 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.

Distribution

Since Nxt had no mining phase, all initial units were released to 73 people through a one-time fund raiser via bitcoins, after the announcement of the NXT project in the bitcointalk-forums by its inventor BCnext.[25]

User-generated passwords

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.[citation needed]

3rd Party use

Local Economies

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.[26]

See also

References

  1. ^ a b c "Nxt Whitepaper". Retrieved 2014-03-09.
  2. ^ a b "Genesis-Account". mynxt.info Blockexplorer. Retrieved 21 December 2014.
  3. ^ a b "nxt - source code MIT license". Bitbucket.org. Retrieved 21 December 2014.
  4. ^ a b "Nxt Wants to Be a Digital Infrastructure of Everything". cointelegraph.com. Retrieved 22 December 2014.
  5. ^ a b c "NXT Phasing News". Cointelegraph. Retrieved 14 June 2015.
  6. ^ a b "Call for evidence Investment using virtual currency or distributed ledger technology" (PDF).
  7. ^ LOPEZ PORTO, Marcos José (2015-07-21). "European Securities and Markets Authority Report" (PDF).
  8. ^ "NXT Fundraising Over". bitcointalk.org. Retrieved 22 December 2014.
  9. ^ "Cryptocurrency News Round-Up: Mt Gox Fire Sale as Jamaica Bobsled Rides Again". IBTimes. 2014-02-17.
  10. ^ a b "BCNext Founding Statements". nxter.org. Retrieved 22 December 2014.
  11. ^ Chepurnoy, Alexander. "Nxt forging algorithm: simulating approach". scribd.com. Retrieved 22 December 2014.
  12. ^ "Nxtpeers API". nxtpeers.com. Retrieved 15 January 2015.
  13. ^ Eyal, Ittay; Gun Sirer, Emin. "Majority is not Enough: Bitcoin Mining is Vulnerable". Cornell University Library. Cornell University. Retrieved 22 December 2014.
  14. ^ "Nxt-Whitepaper (Blocks)". wiki.nxtcrypto.org. Retrieved 22 December 2014.
  15. ^ a b mthcl (pseudonymous). "The math of Nxt forging" (PDF). pdf on docdroid.net. Retrieved 22 December 2014.
  16. ^ "Crypto 2.0 Roundup: Bitcoin's Revolution Moves Beyond Currency". Coindesk. Retrieved 25 September 2015.
  17. ^ "Crypto 2.0 Roundup: Bitcoin's Revolution Moves Beyond Currency". Retrieved 25 September 2015.
  18. ^ "NXT is Powering a Decentralized Voting System and Twitter". Cryptocoinsnews. Retrieved 25 September 2015.
  19. ^ "Nxt Wants Developers to Unleash Apps Via New Plug-in Store". cointelegraph.com. Retrieved 25 September 2015.
  20. ^ "Nxt Monetary System NRS client 1.4.8". nxter.org. Retrieved 15 January 2015.
  21. ^ "Nxt Monetary-System on public testnet". nxter.org. Retrieved 22 December 2014.
  22. ^ "description of the Monetary System". bitbucket.org. Retrieved 22 December 2014.
  23. ^ "NXT Monetary System Infrastructure Allows Creation of New Cryptocurrencies On NXT Blockchain". Yahoo Finance. Retrieved 25 September 2015.
  24. ^ Houy, Nicolas. "It Will Cost You Nothing to 'Kill' a Proof-of-Stake Crypto-Currency". papers.ssrn.com. University of Lyon 2. Retrieved 22 December 2014.
  25. ^ "[ANN] Nxt :: descendant of Bitcoin". Retrieved 20 May 2014.
  26. ^ Aitken, Roger. "Brian Kelly Capital Investing In First 'Fully Deployable' Digi Currency Ecosystem". Retrieved 2015-09-19.
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