Nxt (translated name: Future Coin), considered the second-generation cryptocurrency, is built on entirely new code, improving many features of Bitcoin such as replacing Proof of Work (POW) with a novel 100% Proof of Stake (POS) design, avoiding many flaws of first-generation cryptocurrencies like resource consumption and vulnerability to attacks. It was issued through a community open subscription. With 1-minute confirmation and a total supply of 1 billion.

Project Highlights

Unlike Litecoin, Peercoin, and other altcoins, which are all based on Bitcoins source code, Nxt is entirely new and has its own algorithms.

It offers intrinsic features such as decentralized peer-to-peer exchange, colored coins, messaging/chat, decentralized DNS (host domain names), and instant transactions options.

It is 100% Proof of Stake, while most other currencies are based on Proof of Work. This effectively removes inherent security risks that could lead to the downfall of these POW currencies due to 51% attacks or other inherent vulnerabilities. Moreover, this protocol is energy-friendly since POS does not require massive hash computations.

Features of Nxt

The most distinctive feature of Nxt is its adoption of the Proof of Stake mechanism [1]. Those familiar with Bitcoin know that virtual currencies based on blockchain technology can be susceptible to 51% attacks (if an individual or organizations mining computational power exceeds that of all others combined, they can manipulate the blockchain at will). However, under the Proof of Stake mechanism, the output of newly mined blocks depends on the multiplication of the amount and duration of ownership of the cryptocurrency. To carry out a 51% attack, the attacker must already possess the majority of the cryptocurrency before the attack, which essentially turns into self-attack. Thus, the Proof of Stake mechanism effectively defends against attacks and prevents mining from evolving into an intense arms race as in Bitcoin, conserving energy.

Additionally, Nxt boasts unique features such as "transparent forging," asset trading, sending messages, account leasing, decentralized domain names, etc.

Similarities Between Nxt and Bitcoin

First, intangible form. Like Bitcoin, Nxt is also a virtual currency without physical form. Second, decentralization. Like Bitcoin, Nxt also operates on a decentralized architecture, without control by central authorities, central banks, commercial banks, or intermediaries. Third, blockchain technology. Like Bitcoin, Nxt also employs blockchain technology, but due to the adoption of the Proof of Stake mechanism, it does not have the problem of 51% attacks.

Differences Between Nxt and Bitcoin

First, different proof mechanisms. Nxt adopts the Proof of Stake mechanism rather than Bitcoins Proof of Work mechanism. The Proof of Stake mechanism effectively defends against 51% attacks and indirectly conserves energy by preventing mining from becoming an intense arms race as in Bitcoin.

Second, Nxts unique "transparent forging" function. Nxt does not require "mining" but uses the balance of old accounts to "forge" new blocks. Accounts participating in "forging" new blocks are entitled to receive transaction fees as rewards. This mechanism allows every client to automatically determine which server node will generate the next block, thus saving intermediary steps. Clients can send transaction records directly to that node, shortening the transaction confirmation time to the minimum. Moreover, the transparent forging function allows penalizing nodes attempting to create malicious forks by temporarily setting their "forging power" to zero.

Third, Nxts unique "colored coin" function. Nxt allows coloring a specific coin, which can represent bonds, stocks, assets, commodities, or any specified concept, enabling trading of anything. This is Nxts asset trading function.

Fourth, message sending function. Starting from the 40,000th block, users are allowed to send small amounts of information, which can be text messages or other data not exceeding 1000 bytes.

Fifth, Nxts unique account leasing function. Users can lease their forging power to others, which can be used to form forging pools.

Sixth, Nxts unique decentralized domain name function. Users can register names and obtain system-assigned URIs, and domain names can participate in transactions.

Seventh, different block intervals. Nxt has faster block intervals, with only 1 minute between blocks, whereas Bitcoin produces a new block every 10 minutes, resulting in a tenfold difference in speed.

Eighth, different upper limits. Nxts maximum supply is 1 billion, while Bitcoins total is 21 million.

Ninth, different minting methods. Bitcoins new coins are issued in a decentralized manner, whereas Nxt uses a centralized minting method. All 1 billion Nxt were minted in the genesis block when Nxt was born.

And it was distributed through an IPO, publicly raised by the founder of Nxt on the internet, with 73 people participating in the IPO, raising a total of 21 bitcoins. That is, the initial holders of the total 1 billion Nxt were these 73 IPO participants. This centralized minting method is clearly more elegant than Ripples centralized minting and no less inferior to Bitcoins decentralized issuance.

Tenth, Nxts unique account control function. Bitcoin accounts cannot be frozen, even if involved in illegal transactions or money laundering; however, Nxt plans to allow freezing of specific accounts.

In addition, planned features for Nxt include instant transactions, automatic trading, voting systems, multi-signature transactions, two-phase payments, multiple gateways and cross-chain transactions, digital commodity stores, distributed computing, distributed file storage, and other unique functions.

Application Scenarios

Currency Exchange
Colored Coins
To understand the concept of colored coins requires a relatively deep understanding of Bitcoin transactions, which most people do not know. For Bitcoin, each transactions hash address is based on the last address that received the currency. Therefore, Bitcoin transactions on the blockchain are traceable. Without prompting, this means that individual or series of transactions for a coin can be traced through transaction records. Since this is a fact, if we can extend the protocol to allow people to designate or "color" a specific coin, we can build a bridge for virtual cryptocurrencies to the physical real world. Indeed, this currency can represent physical entities on Earth. It can represent property, stocks/bonds, commodities, or any concept that can be specifically defined.

Stock Trading

Markets

Information

Guarantees