Receive all Cointelegraph news immediately in Telegram.
NXT and Blackcoin are rushing us into the cryptocurrency 2.0 future faster than anyone expected.
NXT and Blackcoin are rushing us into the cryptocurrency 2.0 future faster than anyone expected. But which one will get us there first?
In 1957 the Soviet Union launched the first manmade satellite named Sputnik and kicked off the space race between itself and the United States. The race ultimately culminated in the United States landing a man on the moon in 1969.
The phrase “to the moon” is one of the most popular and oldest phrases in the cryptocurrency community. It represents a nondescript and near mythical price of Bitcoin or another currency far above its current price, which it will presumably reach after mass adoption. “I'm holding my Bitcoins until they bring me to the moon” is the general use of the term, although it has evolved quickly over time, as sayings on the Internet are apt to do.
The next big wave of features in cryptocurrency is commonly referred to as “Bitcoin 2.0” or “Cryptocurrency 2.0.” The general idea is that blockchain technologies can be used to transfer things other than cryptocurrencies. The first implementation of this was Namecoin, which also acts as a domain name registry that isn't controlled by a central authority.
Since then, the idea has evolved into entire new economic systems built on blockchain technologies, as well as more secure and more anonymous ways to transfer digital currencies. There are several systems in development and already in use that are built on the Bitcoin blockchain itself. Counterparty and Bitshares the most famous among them. However, there are two altcoins in particular that are using technology built from the ground up to be more effective than Bitcoin, and are racing neck and neck to get the most interesting Cryptocurrency 2.0 features implemented in their coins first.
NXT and Blackcoin have grown considerably since their launch. I went hands-on with both of the new feature sets, as well as a few still in development. While prominent members of the community and core developers walked me through the process, showing me what their respective coins can do.
Today, NXT has an asset exchange available in its stable release wallet, while Blackcoin has multi-signature wallets and smart contracts in an open (and fairly stable) beta. NXT, also has its decentralized digital goods exchange running on a test blockchain. While it isn't quite a “Cryptocurrency 2.0” feature, Blackcoin also has a new, more secure version of the Proof-of-Stake algorithm that deserves a mention.
NXT launched in November of 2013 and has grown as both a community and a coin since. There are some who will argue that NXT was distributed unfairly at its launch and they may even have a point, but their claims of NXT being a pump-and-dump scheme seems silly when put up against the features NXT and its core of developers are consistently putting out. If you want to argue that NXT is a get rich quick scam by its developers, you have to argue it's a get rich quick scheme that beat every other altcoin to major Crypto 2.0 features (see: CoinTelegraph’s exclusive interview with NXT here).
At this point, the way NXT was distributed at launch matters very little. It has had the third largest market cap of all cryptocurrencies for a month and its asset exchange is one of the main reasons why. It matters very little if the original creators become billionaires because of it since the technology is useful for everyone else. The original coins had to go somewhere in a pure Proof-of-Stake algorithm, and it should be noted that the original Bitcoin distribution was similar.
The community issues with NXT remain a black mark for it, but it is quickly being overshadowed by the pure amount of major features in the pipeline and the ones released already for the currency.
Early drama caused the board to split into two and, more recently, a prominent member of the forum had his forum account hacked, showcasing the needs for NXT's own token, which could have prevented the scam had users waited for the token to confirm the dev's identity). The hacker then used social engineering to steal a not insignificant amount of Bitcoins from the community.
This was followed by a DAC developer leaving the community without shipping any of the promised products but keeping the NXT given to him. For what it is worth, the vast majority of the NXT community seems great and is very friendly. A few high profile bad apples have stood out in the bunch, but that doesn't reflect the coin itself.
And it may just be the flip side of having such a robust community. There are a lot of developers working on NXT actively, around fifty I'm told, and many of them are working on third party projects that are built up and around the core NXT technology, not unlike Bitcoin.
None of the issues with the community really matter. It is, after all, the math behind the product that matters. Math can't be faked and neither can the features.
NXT's asset exchange used to work directly in the wallet, and it still does, for the most part. However, they have prevented assets from being listed within the wallet. Since NXT assets are not name specific, the result was a few copycat assets trying to capitalize on the more well-known assets' names. So for now, the assets can be found at nxtblock.info which also has an integrated web wallet, but the assets users are interested in can be tracked, purchased and sold through the default NXT wallet simply by copying the asset ID number. Alternatively, users can use the third party Secureae, which can be funded directly with Bitcoin, removing the need to buy NXT on an exchange.
That wallet probably deserves a short side note. Out of all the locally stored crypto wallets I have played around with (which, admittedly, isn't all of them and only includes a few altcoin wallets) the NXT wallet is by far the prettiest and one of the most user friendly, considering its rich feature set. Everything is nice and clean and colorful. It looks like it could have been designed by a team at Microsoft rather than a crypto community (except the NXT wallet doesn't crash all the time and is by all accounts secure.)
By contrast, the user interface of the BlackHalo wallet, which is where users can access Blackcoin's new features, is nice and simple but nothing out of the ordinary in the crypto space. There is nothing wrong with that, it has great features, the NXT wallet is just extremely impressive.
There are also third party wallets including one put out by NXT exchange dgex, and the aforementioned Secureae wallet and nxtblock.info's webwallet.
As far as Cryptocurrency 2.0 goes, it should be noted that NXT got its features out before Blackcoin got theirs, but Blackcoin also approached it from a different angle, tackling smart contracts and locally stored multi-signature wallets first, before moving onto asset exchanges, cross blockchain transactions and digital goods a little later.
Blackcoin recently launched in late February, and already it is consistently in or around the top ten altcoins by market size. Since its release, it has seen a large jump in price and a resulting fall back to earth, but has since been bolstered recently by its inclusion into Coinkite and enthusiasm built on the hype for the cryptocurrency 2.0 features.
If they were one coin, then all of the much heralded Cryptocurrency 2.0 projects would be completed or almost completed in one coin. Obviously, that isn't the case, but now we have two coins that are getting close to being legitimate challengers to Bitcoin.
Blackcoin's smart contracts solve the space's fundamental issue through innovation rather than beefed up code. While smart contracts sound great in theory, there has never been anything ensuring that both sides are honest. If a scammer wanted to take advantage of a normal smart contract, he or she would simply need to put out multiple contracts without completing them and hope that one or two of them are confirmed by the other side without them checking.
Perhaps 95 % of the contracts would get sent back due to the scammer not holding up his or her end of the bargain, but since they didn't cost the scammer anything (besides the low cryptocurrency fee) it could still be potentially profitable. This would protect people who are careful about who they sign contracts with, but a market potentially flooded with such phishing attacks would not be an enjoyable one to wade through. A rating system is the most obvious solution although it causes new sellers and buyers to be at a disadvantage and still leaves established players at risk of being burned.
Rather than looking for a pure technological solution, Blackcoin simply decided to make a system that makes phishing attempts using smart contacts unprofitable using a new double deposit system. If two people enter into a contract, the one paying would put their coins into an escrow system as normal. However, both sides could also be required to put down a separate and smaller deposit.
If both parties agree that the transaction went well, then the money goes from escrow to the seller, and both deposits are returned to their users. If both parties agree to cancel the order, then the money will go back to the buyer and both parties will get their deposit back. However, if the parties can't agree on if a contract was completed or not, the buyer will get the contract's coins back, but both the buyer and seller will lose their deposit.
While that may seem risky, it should actually greatly reduce the number of people looking to scam the system. Whoever is putting up the most risk can ask for the higher deposit, but both sides should be protected. In addition, instead of using long, complicated BlackHalo addresses, users can use simple email addresses to communicate (although it is suggested that you make a new email, since the Blackhalo client will have complete access to that address). It is also important to note that smart contracts can be made with deposits of any size, including no deposit at all.
Contracts are sent through the email as well as the BlackHalo client. In the beta, initial emails are unscrambled - a bug the developers assure me will be fixed in the next update. The emails following that initial contract are secured using the same algorithm that Blackcoin runs on, making it nearly impossible to decrypt messages without the required key. The contracts themselves are fairly versatile. In addition to the aforementioned double deposit, the contracts can also be a variety of lengths, from a day to a year.
If the market takes advantage of it, this would instantly make Blackcoin the most secure coin for freelance workers. If a worker enters into a Blackcoin backed smart contract, he or she will know that the owner has a vested interest in coming to a satisfactory conclusion to the contract. If, for an example, a web designer and website owner entered into a Blackcoin contract, then after the designer made the website, the owner decided he or she didn't like it, both sides would have reason to revise it until it is satisfactory. This is a far better position to be in than normal freelance situations where only the designer, who had put in the work, has anything laying on the line.
The potential goes beyond work on the internet as well. A decentralized eBay is possible with this technology. If you send a physical good through the mail, you don't have to worry as much about the buyer claiming he or she didn't receive it and trying to get the escrow back. With a substantial deposit on both sides, those kinds of scams will no longer be profitable.
BlackHalo just went public days ago, so as you would expect, there isn't much of a marketplace at this point. If that can be curated, it could be the go to method for selling physical goods using cryptocurrencies.
Also of particular note is BlackHalo's multisignature accounts. Every BlackHalo wallet is multisignature. The program will generate two key files, both of which are needed to unlock the wallet (one key can be used to track the wallet, but both must be used to enter into smart contracts or withdraw money). Ideally, users will keep one key on their computer and the other in a safe spot like a USB thumb drive. This isn't an online generated wallet where you have to trust the provider to delete your keys, this is a locally created and locally stored, full feature multisignature wallet.
NXT meanwhile, started in on other 2.0 features, like asset exchange. While this is an article comparing NXT and Blackcoin, it is impossible to talk asset exchange without talking Counterparty, which does similar things but is built on the Bitcoin blockchain. NXT seems to have easier asset creation, or at least there are a lot more assets out on the network.
There aren't a lot of established companies on the market. Most, if not all, of them are start ups, which is what you expect at this stage. But I am really interested in seeing established businesses trying to expand through blockchain powered asset exchanges.
That doesn't mean the ones are there aren't good investments. That would be impossible for even a financial expert to say at this point. What will the value of the first few DACs be in the future? There are no precedents in this field. Invest with care and never more than you can afford to lose, but the dream of a free market investment platform is here, it is real. You can use it now.
What isn't quite ready for public consumption is NXT's Marketplace, designed to sell physical and digital goods on a decentralized network. The technology is being tested on a test blockchain right now but it isn't being used for anything but test (and joke) posts at this point. It does look as slick as the rest of NXT's wallet and my transactions did move from processing to pending really quickly.
NXT also has an aliases system that can be used for vanity addresses or domain registration similar to Namecoin. Although, there does seem to be a slight problem with name squatting.
Both coins are working on the other coin's finished features. Blackcoin is working on an asset exchange and a physical / digital goods store. NXT is working on smart contracts (although multisig seems like less of a priority). When the Soviet Union and the United States were racing to the moon, it was the United State's success (and the Soviet Union's economic issues) that ended it.
Neither coin is on the moon yet. NXT, it could be argued, is ahead in the race, simply by counting the number of features they already have running. But Blackcoin's smart contracts and user controlled multisignature wallets cannot be discounted as they are a big deal. NXT's asset exchange already has some competitors, Bitshares, Counterparty, Mastercoin and a few coming down the line.
NXT seems to be far ahead of them in implementation and only Counterparty seems to be a serious threat (I'm discounting Ethereum until they ship something) although that competition is still there. Blackcoin hit the market with things no one else has accomplished yet, but as was the case with NXT, the rest of the crowd probably isn't far behind.
These two coins are rushing us forward into Bitcoin 2.0. Even if they fail, they will be remembered in crypto history for pushing Bitcoin developers to keep up. However, there is certainly room for more than one cryptocurrency, and both coins have more to offer than Litecoin or any of the other popular altcoins out there.
I don't know which coin will have all of the cryptocurrency 2.0 features implemented first, I'm not even sure if it matters. The important thing is that they are building the crypto paradise we were all promised when we first heard about Bitcoin and it is up to us to take advantage.
Follow us on Facebook
For updates and exclusive offers, enter your e-mail below.
One fine body…
Thank you for contacting us! We will reply to you as soon as possible.
Thank you for your interest in our franchise program.
We are considering your request and will contact you in due course. If you have any further queries, please contact:
Reset letter sent.
Please checkout your mailbox for password reset details