Introduction: What is Nxt?
Nxt is considered a second-generation cryptocurrency . With all the altcoins coming out that only change things such as hashing mechanism, time between blocks, starting difficulty, and so on, Nxt brings much much more to the table and was designed this way from the ground up.
- It is not an "alt coin" like litecoin, peercoin, and other variants whose code is based on Bitcoin's source code. It is written from scratch, in all-new source code.
- It provides built-in support for robust features such as a decentralized peer-to-peer exchange, voting system, messaging/chat, decentralized DNS, and options for instant transactions. Many Bitcoin-based currencies implement one or two of these features on top of the existing Bitcoin network. Nxt implements all of them on an improved network model that is built for speed and scale.
- It is 100% proof of stake (PoS), versus the proof of work (PoW) mechanism the vast majority of other coins are based on. Instead of using powerful computers to "mine" new coins, Nxt leverages the balances of existing accounts to "forge" blocks, rewarding forgers with transaction fees. The Proof-of-Stake algorithm is efficient enough to run on smartphones and small devices like the Raspberry Pi platform. In addition, this method effectively removes a large security risk inherent in most other coins: the issue of a 51% attack and many of the other vulnerabilities inherent to Proof-of-Work coins are gone.
- It was announced weeks in advance, unlike mere hours like most coins. Based on an injection of 21BTC by 73 original stakeholders, 1 billion Nxt coins were ejected from the Nxt genesis block and are currently being distributed to thousands of account holds through giveaways, trades, and bounties for ongoing development of the platform. Nxt is listed on http://coinmarketcap.com/ and people are trading on a 1-on-1 basis as well as on centralized exchanges such as bter.com, dgex.com, Cryptsy.com, Poloniex.com and Vircurex.com among others.
- Nxt is implementing a very slick feature called "Transparent Forging", which will allow each user's client to automatically determine which server node will generate the next block. This allows clients to send their transactions directly to that node, minimizing transaction times. Immediate and high-priority transactions can be processed for additional fees. An equally important feature of Transparent Forging is an outstanding security feature of the protocol, which can temporarily reduce to zero the forging power of nodes who should generate the next block but do not – penalizing accounts that do not actively support the network, and distributing that power to nodes that do. With transparent forging, even a 90% majority owner of all Nxt will be prevented from branching out and forcing a forked blockchain: if a node has 90% of all Nxt, and doesn't generate a block when scheduled, the system will reduce its forging power to zero temporarily to prevent a bad fork from being forced.
- Brain wallet: All Nxt account information is stored on the network. Using a secret passphrase, an account can be accessed from any instance of the Nxt software. (This is not very different from Bitcoin; the difference is that there is no automated generation of your passphrase/private key and there is no wallet.dat-like file. A Bitcoin private key still can be bruteforced without access to created wallet.dat file) Note: future clients may allow the offline storage of account keys in a wallet.dat-like file. Accounts are secured with a 256-bit key as soon as one outgoing transaction is made from an account.
- Fast transaction processing: Nxt does not use "scripts" (or predicates), which simplifies and accelerates transaction processing. Advanced features that require them are created on top of the Nxt core as third-party services. Target block generation time is one minute, and there is a currently a cap of 255 transactions per block.