Unique Technologies and Attributes
NXT was the first currency to use proof of stake as its only consensus protocol. Coins are earned only through transaction fees, and there is no inflation to increase the supply of coins.
The core infrastructure of NXT supports many features which have been labeled as Crypto 2.0 technologies–the application of the blockchain to non-currency challenges, such as file-sharing, voting, and asset exchange. NXT has supported the development many industry-leading features.
Shortly after its launch, Nxt invited coin holders to vote on advanced features, including messaging, two-phase payments, voting, and colored coins. Users chose the last, and Nxt became one of the first currencyes to support ‘cryptoassets’ or colored coins. Certain coins can be associated with non-crypto assets, such as company shares or physical property. The blockchain can be used to record changes in ownership of the physical coin. Nxt began developing this feature in October 2013 and had an exchange with this capability in May 2014.
NXT relies purely on a proof-of-stake protocol. A new block is created every minute, and each can hold 255 transactions. As in proof-of-stake protocols, block creators are selected according to the amount of stake they have.
However, Nxt has a feature called “Transparent Forging,” which allows each users’ client to determine which node will forge the next block. Other nodes can then send transactions directly to that node. This allows additional fees to be realized for immediate, priority transactions. This will also allow Nxt to approach Visa/Mastercard rates of transactions. No other cryptocurrency can currently scale to accommodate this many transaction.
This also allows the network to penalize nodes that should be forging new blocks: if a block is predicted to generate a block but doesn’t, it temporarily loses all of its forging power.
On Sept 28, 2013, BCNext created a forum thread announcing Nxt and requesting donations. 21 BTC were raised. Fundraising closed on November 18, 2013, and on November 24, the genesis block was released. This block showed that all 1 billion coins were distributed to 73 addresses. The distribution allegedly mirrored the initial investment of 21 BTC. When fundraising ended, BTC was trading at over $650, making the investment roughly $13,000.
A subsequent white paper justified this initial distribution by claiming that because nature conforms to an 80-20 Pareto Principle, then NXT would eventually have followed suit with 80% of coins controlled by 20% of coin holders. The initial distribution simply conformed to this logic.
Community and Founders
NXT was launched by anonymous developer BCNext. The only information on his identity comes from educated guesses by an Nxt commenter that BCNext is a 35+ male programmer living in Europe. (post here) On Sept 28, 2013, BCNext created a forum thread announcing Nxt and requesting donations. Fundraising closed on November 18, 2013, and on November 24, the genesis block was released.
BCNext answered several questions from the community on January 08, 2014 about Nxt. BCNext encouraged users to make Nxt as mainstream and widely adopted as possible, and once sufficient downloads had been reached, Nxt would roll out new features. BCNext also encouraged community members not to be concerned with the value of Nxt in fiat money. The response ends with, “Do not trust strangers on the Internet, especially if their nickname is “BCNext.”