By
Mayowa Adebajo
March 12th, 2024
Nxt, an advanced blockchain platform and the first currency to run solely on proof-of-stake algorithm, beats basic functional features of pioneering cryptocurrencies.
Nxt is an open-source cryptocurrency and payment network. It was developed by an anonymous person or group known as ‘BCNext’ as a platform designed for building applications and financial services provision.
Unlike Bitcoin, which uses a Proof-of-Work (PoW) algorithm to reach consensus, Nxt uses a Proof-of-Stake (PoS) one, which means that Nxt does not require mining as there is static money supply.
What Is the Difference Between Proof-of-Work (PoW) and Proof-of-Stake (PoS)?
The major differentiating factor between these two algorithms is that Proof-of-Work is a requirement to define an expensive computer calculation. This is known as ‘mining’. The first user, whose computer manages to solve the mathematical problem, is rewarded. This requires extensive amounts of computer processing power and can be a very expensive and ultimately wasteful process.
Proof-of-Stake, on the other hand, is when the creator of a new block is chosen deterministically, according to their wealth. This is far less wasteful, and therefore much more cost-effective.
For hackers looking to attack the network of a Proof-of-Work currency, they would first be required to invest heavily in mining gear. This upfront investment acts as a heavy incentive not to attack the network.
On the other hand, with Proof-of-Stake cryptocurrencies, attacking the network would require the hacker to own a significant amount of the currency. Hence, hacking the network would greatly devalue their holdings.
Proof-of-Stake has begun to receive more attention ever since it was announced in the Ethereum Roadmap that Ethereum would be moving from Proof-of-Work to Proof-of-Stake as part of the Casper Protocol.
The First Currency to Rely Solely on Proof-of-Stake for Consensus
Unlike other cryptocurrencies like Bitcoin, Nxt functions just by using the stake-size owned by the user. This means that users are not required to use their computers to ‘mine’ blocks. Instead, owning a greater amount of stake increases the likelihood of an owner adding a block to the chain. This significantly reduces waste.
Nxt was the first currency to rely solely on proof-of-stake. As a result of using this algorithm, it has a block creation rate of approximately one minute. For comparison, the block creation time for Bitcoin is approximately 6 per hour.
Aside from this, Nxt differs largely from many other cryptocurrencies in that it is written completely from scratch. The Nxt platform is coded in Java.
Its founder, BCNext, also requested that NXT cryptocurrency was not the important part of the platform and that other users should be encouraged to build on top of it.
Nxt has a very complex core infrastructure. Some of its main features include:
- Asset exchange enabling peer-to-peer trading of shares and crypto assets;
- Data storage that can be used for purposes such as building file-sharing services, decentralized apps, and various other services;
- An alias system allowing text substitutions that will enable keywords to be used to represent other things;
- A voting system that can be used to influence future development decisions, shareholder voting, public elections, and various other community-based decisions;
- Plugin support that will make it simple for external developers to add additional features and enhancements;
- Multi-signature and phased transactions that take into consideration various factors such as the approval of multiple accounts or the passage of a specific interval of time.
The Expansion of the Nxt Platform
Nxt has proven to be a very successful platform so far, and Jelurida, the company behind its success, will continue to work on it for the foreseeable future.
Jelurida has also released an additional platform, known as Ardor – essentially an ‘evolution’ of the Nxt software. To explain the major differences between these two platforms, the team have released a technical feature comparison list.
The platform utilizes the blockchain technology of Nxt through ‘child chains’ to address problematic issues such as blockchain bloat, scalability, and versatility. These chains are described as ‘light’ blockchains that are customizable to a certain extent.