Getting Nxt: Forging Instead of Mining
Mining cryptocurrencies like Bitcoin and Ethereum requires you to provide computational power to maintain the network, validate transactions, and earn coins. You must invest in expensive equipment and dedicate more time to get incentives, not to mention that you will be competing against a large community of miners who also want their share of crypto coins.
Nxt mining, on the other hand, is a different case. Nxt’s developers had already pre-mined 1 billion NXT that were distributed to shareholders upon the coin’s launch. As a result, there are no more new Nxt coins to mine, at least as of this writing.
But how do users earn rewards if they are not mining Nxt? Read on to learn how Nxt rewards users who validate transactions on the blockchain.
How Proof of Stake Works
Unlike Bitcoin mining which uses a proof-of-work (PoW) mechanism, Nxt uses a proof-of-stake (PoS) system. Under the PoW model, miners compete with each other to make sure there is a distributed consensus on the blockchain. Miners then contribute their computing power to the blockchain in order to verify transactions sent through the network. And as the difficulty to find a new block increases, the computing power increases as well.
Under the PoS mechanism, on the other hand, miners do not exist. Instead, they are replaced by forgers who validate transactions on the blockchain. Forgers do not need to use much energy, nor do they need intensive equipment. All they have to do is activate the forging feature on their Nxt client, which they can access from their desktop computers or mobile gadgets. They will then get NXT based on the amount they currently own. This means forgers can earn more NXT if they have more crypto coins on hand.
The PoS system is also known for its feature called transparent forging. This allows each user’s client to determine which node will generate the next block. Other nodes can then send their transactions directly to that node. If a Nxt account does not participate in the forging process, the system penalizes the account by temporarily preventing it from earning transaction fees.
How to Forge Nxt
Instead of generating new coins, the Nxt blockchain relies on forgers in order to verify transactions. It is easy to forge Nxt as you do not need to have knowledge of coding or web development in order to participate. Here is how you can forge the altcoin:
Create a NXT Wallet
It is important to get a wallet first before you can start validating transactions. To get started, download and install the Nxt client. After running the software, you must use the given passphrase to activate your NXT wallet.
Fund Your Account
Now that you have a wallet, the next thing you need to do is fund your account. Do this by purchasing Ethereum from popular crypto exchanges like Coinbase and Cex.io. Then, convert your Ethereum to Nxt. Keep in mind that you must have 1,000 NXT in order to stake coins.
Create a Public Key
After your deposit, you must generate a public key by sending NXT. You can do this by transferring crypto coins to another user. Another way is by making a transaction using any of the features on the platform, such as buying digital products.
Activate the Forging Feature in Your Nxt Client
Once the transaction is confirmed, go back to your wallet and click Not Forging. After keying in your public key, click Start Forging to begin the forging process.
With these four simple steps, you can forge NXT. Just remember that you will earn more coins if you have more NXT in your wallet. In addition, you do not need to keep your Nxt client running. As long as Start Forging is activated, you can keep forging even when you close your web browser on your computer or mobile gadget.
3 Advantages of Forging Nxt
Through Nxt forging, one can earn coins from fees gathered from all the transactions made in the Nxt platform. Here are the advantages of forging the altcoin:
Low-Cost Transaction Validation
With Nxt’s PoS system, you need only little energy to power Nxt blockchain’s core software. You do not need expensive equipment in order to validate transactions either. As long as you have a Java-supported web browser or a mobile device, plus NXT coins, you can start forging Nxt.
Little to No Competition Among Forgers
Instead of offering block rewards, the PoS system pays forgers transaction fees gathered from transactions in the Nxt platform. While you might receive greater earnings the more NXT you own, you will not need to compete against fellow crypto holders just to earn more coins.
Heightened Security Mechanism
Nxt eliminates the possibility of double spending because each user knows who is forging the next block of transactions. Furthermore, the Transparent Forging feature has a security mechanism that prevents users from forging high-stake nodes, thus forging a fork.
Based on these advantages, Nxt provides low-cost, eco-friendly, and easy transaction validations. This process is ideal for crypto holders who do not want to spend on equipment, as well as on energy and maintenance expenses that come with mining.
Nxt may not produce new coins, but it provides users with an earning alternative that is easier than mining—that is, forging pre-mined coins. Users will not have to worry about buying processing power to earn rewards. They can get incentives by owning NXT and forging using the cryptocurrency’s client. Since the process of forging does not focus on solving blocks and increasing transaction efficiency, users can save time and money when validating transactions.