NXT Platform Overview
The intended purpose of this article is to provide a fairly broad overview of the NXT platform. Many details have been omitted, but will be covered in future articles. The official NXT website describes NXT as a blockchain platform. It was created in late 2013 by a programmer in Europe with the alias BCNext. Not much is known about BCNext except that he’s an old member of the Bitcoin talk forum. At first, BCNext chose to work on the project by himself. In order to develop the Nxt client and a few decentralized exchanges, BCNext did hire some programmers. BCNext then handed over the responsibilities of the NXT project to a community. A few members of this community are affiliated with the Nxt foundation
So, what does NXT offer? The NXT platform enhances the capabilities of the very first digital currencies like bitcoin. By emphasizing and focusing on the vast potential of decentralization, the NXT platform taps into numerous applications of blockchain technology. These applications include leveraging blockchain to build a flexible payment system and an open-source cryptocurrency.
Transactions are processed on the NXT network by using the proof-of-stake algorithm. Bitcoin transactions are based on the proof-of-work algorithm. With NXT, there’s no concept of mining. There is, however, something somewhat related called forging, which will be covered in another article. Before understanding NXT’s proof-of-stake, let’s briefly look at bitcoin’s proof-of-work. Bas Wisselink, a speaker and educator focusing on blockchain technology, explains that, “in bitcoin, you generate blocks and then you are rewarded with coins. These coins didn’t, at first, exist on the network. So, bitcoin creates new coins every time”. Basically, this is how a proof-of-work system functions.
NXT’s Proof-of Stake Algorithm
In a proof-of-stake system, all coins that will ever exist are created in the very beginning. Also, no more coins are created afterwards. A total of 1 billion NXT coins were created with the very first block. Generating blocks with the bitcoin network uses up too much computing power. If you use the NXT platform, the number of active coins determine how many blocks will be generated. This means that all active wallets get an opportunity to create blocks. Furthermore, the more NXT a user has, the greater their chances are for being able to generate more blocks. Once an entity generates a block on the NXT network, they’re compensated with the transaction fees associated with that particular block.
According to Wisselink, this method makes it possible for NXT to function on a “much lighter system”. This is supposed to be more efficient than proof-of-work systems, which require much more computational power to operate. The Nxt client can run on desktop computers, laptops, and even smartphones.
Different Programming Language used with NXT
Although the overall concept behind the NXT platform is somewhat similar to Bitcoin, it was programmed using a different programming language (Java). Because of this, standard APIs can be used by third-parties to communicate with the platform. Block times are a lot faster as well. Anyone can easily download and install the Nxt client on Android, Linux, Mac, Windows 32-bit/64-bit operating systems.
The the NXT plug-in feature is used by third-parties, usually programmers, to add more features to a Nxt client. Data from December 2014 indicates that block times with NXT were only 90 seconds. However, as the network scales, this time should decrease. Therefore, these block times will be around 60 seconds. In comparison, block times with Bitcoin are around 10 minutes.
Nxt Account Ledger
NXT should not be thought of as a cryptocurrency. This would be inaccurate because NXT is actually a crypto-platform. You can think of it as an economic ecosystem. This is made possible by utilizing Nxt tokens as opposed to coins. One thing to note here is that when we say coins, we can also refer to them as tokens. These subtle differences in terminology might seem confusing, at first. However, a closer look and examination makes the differences easier to understand.
One of things that is very easy to understand is the Nxt account ledger. The ledger comes with the Nxt client and can be used to check on account balances and transaction history. The way this is set up is conceptually similar to a typical bank statement, so it’s intuitive. Other relatively easy to grasp concepts include the option Nxt client users have to “tag” another Nxt account using a small piece of data. This data can be used by traders on the network to identify Nxt accounts with which they’ve transacted with before.
Nxt accounts can also be quickly verified. So, if a user on the NXT blockchain wants to prove that they’re the real owner of a Nxt account, then they can do so easily. This is done by using sophisticated cryptographic techniques and principles. The user need not have knowledge or understanding of how these cryptographic algorithms work, but they can benefit from the high level of security they offer.
NXT Asset Exchange
The NXT Asset Exchange offers the ability to conduct peer-to-peer exchanges. Trading can be done quickly, efficiently, and securely without the need of a third-party.With NXT, there are a multitude of transaction types. Depending on the type of transaction, tokens can be labeled accordingly. If you use the NXT asset exchange, you should know that it’s based around the concept of colored coins. Colored coins are traceable to the point where they originated from. You will be able to create tokens and give them a certain value. With this type of functionality, users are able to trade just about anything. So, you can sell, buy, or issue orders using the Asset Exchange.
NXT assets can represent anything. Coins that haven’t even been introduced into the market are also tradeable on Asset Exchange. Loyalty coins can be issued and traded as well. Even crowdfunding can be done. Furthermore, encrypted membership cards on websites can be pegged to tokens. Typical use cases for NXT Assets include: copyrights, software licenses, patents, bonds, and private and public equities,
Data Transfer & Data Storage with NXT
Data storage on NXT happens mainly on the NXT Data Cloud. Storage is completely decentralized. There’s an option to securely store user-defined (customized) data by simply uploading it to the NXT blockchain. The Data Cloud can be thought of as an added feature or functionality on top of NXT’s intrinsic messaging system. Every time data is uploaded to the NXT blockchain, a unique tamper-proof time stamp is generated. This ensures that the data remains immutable and permanent.
One of the great things about this is that legal contracts can, therefore, be reliably stored on the NXT blockchain. And, nobody can alter the contracts created by the original author. Common use cases for this include: business licenses, passports, forensic information, and government regulatory records. Educational data can also be securely stored such as degrees, student transcripts; medical records or even genome information can be stored.
The system behind NXT’s data transfer and data storage is referred to as arbitrary messaging. This feature can be used to deliver everyday messages that we send to each other. Around 1 MB of data can be transmitted between accounts. Software applications running on the network can use this functionality to communicate. In addition to this messaging system, there’s an alias system.
The NXT Alias System
The NXT Alias System makes it possible to assign a purely random value to another random value. Moreover, a piece of text can serve as a replacement for another piece of text. This allows for key-phrases to be defined, which represent whatever a user wants them to represent. For example, accounts can simply be identified with an alias instead of having to always specify a hard to remember account number. For advanced users, you can also create a decentralized DNS system. Even full-fledged shopping cart applications can make use of the alias system.
Furthermore, all transactions occur on the same blockchain, which means they can work cooperatively. Let’s say you wanted to create a game on the blockchain. Then, your game can use the intrinsic messaging system for sharing data. And, you can use the Asset Exchange to keep track of assets within the game. All data can be kept on the blockchain so it can be accessed by anyone on the blockchain.
Multi-Signature Accounts & Voting System
NXT Account Control beefs up the security of accounts. With NXT’s multi-signatures feature, fully decentralized and autonomous accounts can be created. These accounts remain locked until all the required signatures from the specified users have been obtained. The signatories might be holders of certain currencies or assets. The voting system can be used to require that transactions be executed after certain number of votes have been accumulated based on spending.
With the NXT Voting system, you can vote based on the number of coins, voting by account, or voting by asset exchange (tokens). For example, balloting can be done by sending people asset exchange tokens. Only these people would be allowed to participate in the vote. Typical use cases include: private insurance or investment funds, decentralized autonomous organizations (DAO), and charity accounting.
Furthermore, the NXT voting system can be used by decentralized entities on the blockchain to arrive at a consensus. An entity can be defined as an organization, person, place, thing, or concept about which information can be recorded. Consensus can be achieved by conducting polls. Polls that we normally encounter in real life, such as those used to determine the winning candidate or even to assess public opinion, can be implemented using the NXT platform. A few other practical use cases include: government accounting and transparency, package delivery process, and arbitration.
NXT Monetary System
With the NXT Monetary system, it is possible to create your own cryptocurrency. If you’d like to trade crypto, then you can do this as well, as long as they’re supported by the NXT platform. Users are able to generate their own custom tokens (aka currencies). These tokens can be backed by NXT’s cryptocurrency to give them more stability.
Currencies within NXT’s monetary system can easily be traded inside of the NXT system or even on outside exchanges as long as that exchange offers support for NXT’s Monetary system. A few use cases include: escrow, micro-finance, and crowdfunding.
NXT Market Capitalization
Currently, the NXT market capitalization stands at $101+ million and trading at around $0.10 (CoinMarketCap). It’s the 84th largest crypto-platform in terms of market capitalization. The purpose of this article, as stated previously, is to offer a broad overview of the NXT platform. Not all features and concepts have been covered in their entirety. Other articles on NXT and related platforms and technologies will be covered in future articles.