Generally the second generation coins go beyond being merely money. Features include voting, asset exchanges, text messaging, digital shops, escrow and other automated transactions. The idea is for these things to be implemented in a distributed, de-centralised, trust-free yet secure way, using block-chain technology.

Calling them "second generation" is, I think, relatively uncontroversial. Calling them "Bitcoin 2.0" is controversial, because they typically don't have much to do with Bitcoin other than using a block-chain as a means of distributed consensus. Many of them also use "Proof of Stake", which is very different to the Proof of Work that Bitcoin is founded upon. However, that doesn't mean they are scams. Most of them are proud of being their own thing, and don't want to appropriate the "Bitcoin" name, although it can be a convenient short-hand when talking to people who have only heard of Bitcoin.

Some say that to warrant the name "Bitcoin 2.0" they must be a fork of the original Bitcoin block-chain (but not necessarily a fork of the source code). I don't care.

The real question here, in my view, is not over what a new sub-forum should be called, but whether it is worth having separate sub-forums to separate the coins with wholly new source, from ones which are essentially based on the Bitcoin source.

It sounds like Bter have now borrowed enough from various Nxt whales to cover the deficit, so they aren't running on fractional reserve any more. Also, their withdrawal fees are reduced to 1%. That's not as good as the old 0.5%, but is much better than 3%.

I think the 3% wasn't so much to punish the Nxt community, or to make back the loss quicker, as to discourage a run on the exchange as soon as withdrawals were reopened. Basically, Bter seem solid, and are trying to do the right thing; they just need time to sort themselves out.

Maybe. Maybe not. I don't know who would commit serious money to bailing it out, should it become necessary.

You won't get very far forging with the 2 NXT you got from a faucet. The rate of return is very low - fractions of a percent per year. Forging in Nxt is a way to secure the network, not a way to get rich.

The original "Arbitrary Messages" are just bytes. You can store encrypted bytes if you want, and some clients do, as a service on top of the Nxt core. Encrypted messages have also recently been added directly in the core; this is a different feature which will be enabled soon. I'm sorry if you got confused; I'm not sure what it is you read that confused you.

I'm not sure what proposal you mean. If you suggested other people spend their money to bail out an exchange, I'm not surprised the whales didn't go for it. Also, the Bter-thief deal did not reflect the market value of the coins stolen. Bter bought them back below market value. In effect, they paid a ransom. The thief accepted a low value because he would have found it hard to sell the coins for market value, and because he feared bounties placed on his head.

It's not easy to start a new coin and have it be a success. There's too much competition, and people are suspicious of scams. I'd rather you use your talents helping Nxt, or some more worthy coin if you prefer, with their marketing.

The cost of a transaction doesn't have to be 1 coin. Currently the Nxt fees are too high. Everyone knows this. They will be reduced; almost certainly by the end of the year. If they get reduced to 0.01 NXT per transaction, then with 2 NXT from a faucet you can make 200 transactions. It'll be better.

Agreed. I'm not sure faucets are the answer. Giving coin away for free just makes the currency seem worthless. And whatever a faucet gives for free has to be low value, because nothing stops people milking them endlessly (if necessary, creating thousands of different accounts) other it being more effort than its worth.

Similarly, a lot of coins try to launch by having free give-aways. People don't value what they get for free. Most dump it, if they can. Some hold it and hope that others will put the work in to make it worth something.

Some exchanges are better than others. Bter took minutes. A bigger problem was having to buy BTC to trade for NXT. Trading NXT for fiat directly would be better, but when you try to set that up you run into legal and regulatory issues. It takes effort and time, and few exchanges will bother until a currency has proved itself.

Nothing has happened that is likely to shatter their long-term confidence in Nxt. They are true believers in it for the long haul.

I disagree. It just takes time to develop value. Weathering this recent Bter storm will help in the long run. It hasn't tanked.

There are Nxt clones. You are seriously underestimating how difficult it is to launch a successful coin. Technology isn't enough. It needs a hard-working community. And, with respect, I wonder if you are as good at dealing with people as you think. It sounds like you alienated those you talked to.

Why? Because it is old? I don't think that follows at all. Nowadays it really has no USP, nothing to recommend it. It's not a 2.0 coin, and it's not immune to ASICs, it's just another alt-coin.

I don't think the world works like that. There are things that are "too big to fail", but Litecoin isn't one of them.

I think the opposite. Nxt has weathered this storm, and in doing so has shown its strength. The option to fork was available, the choice was made in a decentralised way, and the community chose to let the theft stand. If they don't fork for this, they probably won't fork for anything, so now everyone can have confidence in the currency and its transactions. No-one is "too big to fail" in Nxt-land. No bail-outs.

This left Bter to sort out their problems, which they did. They paid off the thief, and most of the stolen money was returned to them. Bter are hurt, but not enough to destroy them. They are able to make their customers whole, which is the important thing. We don't have to worry about 50m NXT getting dumped onto the market.

It's been interesting to watch. One of the most fascinating proposals, when it seemed Bter had lost the coins forever and would not be able to repay their customers deposits, was for them to create 50m units of an asset on the Nxt Asset Exchange and distribute them to all the customers they owed, to represent the debt. Bter could then buy this asset back at whatever rate they could afford. For example, since the thief returned 5M NXT quickly, Bter could offer to buy their asset at 0.1 NXT per unit immediately. Over time, by putting money aside from their exchange profits, they could offer higher prices until they could afford to pay the full 1 NXT per unit (estimated to take about 3 years). Users could either accept 1 NXT in 10 if they were greedy and sell, or hold onto the asset for the full three years. As an asset, the debt could be traded on the exchange, so people who trusted Bter would repay the debt could buy from those who didn't. As it turned out, this wasn't necessary, but I think it would have enabled Bter to survive and maintain a degree of public trust.

It's worth re-iterating that the hack was due to Bter's poor security, and they have accepted full responsibility for it. Nxt itself is and was secure, and its performance has been exemplary through out. You should have more confidence in Nxt now than in currencies which have not been tested.

50m, not 500m. The difference matters; 500m would have been 50% of NXT, which would have been an existential threat. 50m is only 5%, and not a problem. And now most of that has been returned.

The Bter hack was not a Nxt security issue. As far as I can tell, they were using a cloud server account for which they hadn't enabled 2-Factor Authorisation, and they re-used the same password. They were stupid. They've accepted it was their mistake.

Nxt is a proof-of stake coin. That means it doesn't need to pay miners to do the work involved in "proof of work". There's no high block-reward, only transaction fees. The fees are set low to encourage people to use the currency. Actually, most people think the fees are currently too high, and they will be lowered considerably soonish. Lower fees will make micro-transactions more viable. Low fees is a basic long-term advantage Nxt has over Bitcoin. (The short term advantage is no inflation; Bitcoin inflation is currently around 10%/year, to pay miners. As the block-reward halves and inflation drops, Bitcoin fees will increase.)

To secure the network. The more honest people forging, the more resilient the network is to dishonest people. If you feel your 10,000 NXT isn't worth securing, you don't need to forge. A whale with 1,000,000 NXT will have more to lose, so probably will want to forge.

Basically, Nxt is not a currency for greedy fat cats to make money by doing virtually nothing.

Thanks. That's well-hidden.

How do I unlock my wallet? I get prompted to unlock if I try and create a transaction, but I'd rather not pay to unlock. The only menu I see is called File, and has 2 options, neither being "unlock". Clicking on "Wallet is locked" does nothing. The only other button seems to be for creating new accounts. There's no Help button or menu. Am I missing something?

Keep the wallets on a computer that is never connected to the internet.

Use N of M passwords. For example, 2 of 5, with the 5 stored in different places.

Armory. It will do both hot and cold wallets, and let you monitor and send money to the cold ones from the hot one, and do N of M.

N of M passwords. Some copies on paper, some in the cloud, etc. If you care. Personally I am fairly happy with backups (a) on my PC; (b) on my person; (c) on Dropbox. All encrypted. It's unlikely all 3 will get wiped simultaneously.

The energy used needn't increase as the network is used more, so the current situation needn't get worse. As the block reward halves, it will become easier to manage the total cost of mining by controlling transaction fees.

(I think the opposite will happen. The energy cost of Bitcoin will likely reduce over time, for the reason given below.)

The hope is that the total transaction fees per block will rise to compensate. Partly by the number of transactions increasing, but if necessary the fee per transaction can be increased. In the short term, the real-world value of Bitcoin may increase, too. If Bitcoin doubles in value every 4 years, that will nicely counter-act the block reward halving every 4 years, even if transaction fees and number of transactions stays the same. (I say this is a short-term effect because I don't believe any economy can sustain that growth indefinitely.)

Alternatively, the number of miners will reduce until it balances.

Another way of putting it is that no-one really knows. It may end up in a downward spiral of higher fees, hence fewer transactions, hence lower mining income, hence fewer miners, hence network less secure, hence less trust in the currency, hence less demand for Bitcoins, hence lower real-world value. One reason I think Nxt is important is that I think Bitcoin may (slowly) die in this way. Not "will", but it's a high enough risk to be worth hedging against.

It won't be a problem for the miners because they can drop out in good time. However, that doesn't answer the question. As the miners stop investing, the network becomes less secure.

The security of the network against an outside attack is roughly what it would cost to mount such an attack, which is roughly what it would cost to acquire 51% of the hashing power, which for reasons of economics is directly proportional to the real-world value that miners get paid for mining one block. So if the block reward halves, and Bitcoin value, transaction volume and fee-per-transaction stay the same, then the security of the network halves. So it's really a question of how low can it get before it matters.

That's a matter of opinion, and your threat model. Some say the network is already vulnerable. Some say Bitcoin it is actually over-secured now.

Personally I am in the former group. An attack might cost someone like a bank $100m. HSBC got fined $1.9bn for money laundering. UBS got fined $1.5bn for rigging Libor. If those guys felt seriously threatened by Bitcoin, $100m is easily affordable to them. Since a lot of ASICs are made in China, the Chinese government could probably do it with a phone call. A terrorist might manage it by kidnapping the ASIC manufacturer's daughter. Not to mention we've already seen hash pools hovering around 51%, that we're basically just trusting not to mount an attack. Many people in the Bitcoin community are complacent, in my view.

There are many kinds of 51% attacks, but I gather that is the kind you want to talk about.

As an aside, I think the most likely kind of Bitcoin 51% attack is one that rejects transactions with low fees. Since that would benefit miners in the long run, they might see no need to avoid mining pools. I'll be mildly surprised if this doesn't become a real concern in 2 or 6 years, when the block-reward halves.

As far as I can tell, what you have in mind is like 50% of Americans deciding to boycott Walmart. It's not likely. I'm not sure where you get "only 51%" from. 51% is a lot.

You seem to be saying anonymity is a two-edged sword.

In Nxt, the blocks are signed by the accounts that forged them, so we'd know which accounts to blame. There's not much anonymity in Nxt. If a single entity gains 51% of NXT, then its true Nxt has a huge problem. I think an attack like you describe would destroy all confidence in the currency, so the entity would lose the value of their coins. It'd be very expensive for them.

Trying to buy 51% of NXT will be very expensive and will push the price up. Dumping 51% of NXT will crash the price, so they won't be sold at the price they were bought for. The attacker will lose a lot of money. The price crash would be a problem, even without the attack.

I think you are underestimating how difficult it is to get 51% of NXT. It's not like in Bitcoin, where entities have got that much hashpower almost by accident. In Bitcoin, you can get it almost unilaterally, by buying from ASIC manufacturers who have no stake in the currency. To get 51% of NXT, you have to persuade people who own NXT to sell to you. Likewise, to sell afterwards you'd have to persuade someone else to buy. Nxt has been running for 8 or 9 months now, and has had the third highest market cap for much of that time, but no-one has done the attack you describe.

Is it normal to get scores of exceptions when starting the server? I've just updated to v13 after a month or so of inactivity, and it seems to be taking a long time to get going.

Examples include:

java.net.SocketException on nonsocket: recv failed
java.io.EOFException
java.lang.Exception: Dishonest peer
java.lang.InterruptedException
INFO: Failed to connect to : /103.21.143..147

Lots of "Failed to connect" with different addresses, but some connections are successful. The wallet says, "No connections", and I hope the balance is out of date.

Nxt was at its peak in June, far more than 2 months after release, and long after its distribution was known. You say it collapsed in Jan/Feb. Back then 1 NXT cost 5,0000 satoshi. Today it costs around 7,000. Looking at the charts, it's actually been quite steady, with a few peaks (one in Feb, one in Jun). By your own analysis, the figures say Nxt is to be.

Nxt will have a 12 month head start on Ethereum (roughly, depending on when it comes out). That's worth a lot - see how hard it is for alt-coins to displace Bitcoin despite often being technically better. And it's not clear that Ethereum will be technically better. The Nxt approach of implementing features using Java in the core, is more efficient than a scripting language. I hope Nxt gets its Turing Complete scripting language before Ethereum launches, because it's a good way to play with ideas, but the best ideas should go into the core.

Interesting. Nxt has a trading exchange built into the block-chain, which is decentralised, so even if you can't convert NXT to fiat with an external exchange you will be able to buy assets on the internal exchange. Even for Bitcoin, I'd expect external exchanges to become less important over time as the currency becomes more self-sufficient.

How would an attack destroy an NXT business if they are anonymous? How would you even know they are attacking?
[/quote]Any attack that reduces the value of NXT reduces the value of the attacker's NXT holdings. If you own 51% of NXT, you are primarily attacking yourself. Even if you only own 1%, you are still devaluing your own holdings.

Aside from that, I don't really understand your question. What does anonymity have to do with it? Is an attack that no-one is aware of even an attack? Did something get garbled when you applied GHash.io's mining business to Nxt forging?

At the moment, for Nxt, yes. Because we don't have Nxt forgers forging on multiple chains, but we do have mining pools hovering close to 51%.

Not to my knowledge, no.

I don't think you understand what inflation is. It's not a "problem" for the miners (they benefit from it, at the expense of everyone else), and it is not affected by the difficulty algorithm.