NXT Staking – Everything You Need to Know
Staking NXT can be a very profitable and secure way to manage your investment. NXT uses the Proof of Stake protocol where users stake their coin holdings in order to create and confirm blocks on the network and earn more currency. This is not called mining, but rather referred to as forging or minting.
NXT is a fully pre-mined coin that relies on transaction fees as a means of reward for its users. It is an open source application platform that expands on the already broad spectrum of functions of the blockchain. Being the first proof of stake protocol using blockchain since 2013, it has never stopped gaining popularity among the community. NXT staking makes the network more secure as you play the part of a validator when being chosen.
The main advantage of NXT is the ability to create your own tokens and currencies, which is a great benefit for businesses trying to tokenize their assets. In this article, I will show you how to stake NXT, and thus earning some passive income.
Pros & Cons
- NXT offers the freedom to create your own tokens and coins with ease, creating opportunities for businesses to manage their assets in a whole new way
- Decentralized Marketplace – users can trade with their assets for NXT only on the platform while receiving the full profit of their trades. The network keeps only the transaction fees, which go to validators as payment for their use of resources
- Asset Exchange Platform – Same as the marketplace, but in the AE, users can exchange assets for other assets. Again, the only charge is the transaction fee which goes to the validators
- Voting – The platform has a built-in voting system that can add up to 100 options to choose from. This is perfect for government voting, shareholder voting for businesses and also community voting for the future of a project/blockchain
- One of the main disadvantages of the platform is that the developers behind it are moving on to new projects. They have created a 2.0 version of NXT called Ardor
- Since Ardor is the main target for development, the active updates on NXT will sooner or later come to a halt
- With the NXT platform losing priority over Ardor, the credibility of the network will fade away as well
How To Stake NXT
Staking NXT is just like any other coin, you get a sum of coins in an open wallet, host that wallet on a PC, Laptop or another device 24/7 and watch your investment start working for you. But why should you stake NXT? Well, one of the advantages except getting more NXT is supporting that network. The more users on it, the more secure it becomes. Additionally, NXT uses the forging method of staking, meaning that when the network chooses a user, he creates and validates the blocks, also known as the process of forging. Unlike Bitcoin or ETH, where you get new coins that have not been in circulation until now, in the NXT network you get the transaction fees in the block. Let’s see how you can start staking and what the requirements would be.
Minimum Requirements
- Operating system – Windows, Linux, MacOS
- The latest version of Java
- NXT Client software installed and up to date
- Have at least 1002NXT
- 62GB of space on your hard drive
- 1024MB (1GB) of RAM
NXT is a fully pre-mined cryptocurrency, meaning no new coins are put in circulation. Because of that, the only way to obtain this currency is by purchasing it from exchanges. The ones I’d recommend for beginners in the crypto sphere are HitBTC, Poloniex and Bittrex.
NXT Wallet Setup Guide
Before you begin make sure you have the latest version of Java on your computer in order to run Nxt. The latest version can be obtained from: http://www.java.com/en
Step 1: Download & Install the Official Wallet
In order to keep it simple and with as little confusion as possible, I recommend visiting the NXT official website. Choose your desired Operating System and download the latest version of NXT software.
After downloading the installation files, open them and begin the installation process. Remember – do not tick the testnet box during installation.
Once the installation is complete, you can go ahead and run the wallet program. Once it loads you will be transferred to a new screen. There you can create a new account.
It will automatically create a 12-symbol seed (passphrase) that is used for securing and backing up your wallet. It is important to know that it will be a good idea to write down the passphrase somewhere for safe keeping.
You will be asked to re-enter your passphrase to ensure that you have written it somewhere.
Step 2: Transfer Coins to the Wallet
Fund your account with at least 1002 NXT. You can find your NXT public address in the top left corner in the software window. You use that address for receiving funds.
In order for you to be ready to “forge” or stake the coins, you need to wait 1440 confirmations which could take around one day. Also, you must have a public key which can be done by sending 1 NXT to a random address or the address you used to fund your account. Just click on the button “Send NXT” and fill the required fields.
You should wait for another 1440 confirmations to be able to start forging.
Step 3: Unlock the Wallet for Forging
If the outgoing transaction is confirmed, you need to click “Not Forging” to begin the forging process.
You will be asked for your passphrase to successfully confirm that action.
Once you see the green light and “Forging” text you are done. You can monitor the “Account Ledger” section where you can see your rewards.
NXT Staking Reward
All right, you have started staking (forging) and the wallet is operational. The question at hand is what staking returns you can expect and on what does the reward depend? In the NXT network, the main factor that can affect the returns is the amount of coins staked. The more NXT coins you stake the higher the chance is you to be chosen as the next forger. Unlike other currencies, all the coins are already pre-mined, and no new coins can be added in circulation. This means that the reward you get depends on how much transactions there are in the block you got. The sum of all the transaction fees in it is what you will get as staking returns.
So how much % reward could you expect from staking NXT? Exactly 0%. It sounds discouraging, but there is no way to predict it as there are no set block rewards as in other blockchains like Bitcoin and Ethereum. The rewards completely rely on how populated the block is with transactions and the sum of those transactions. The model resembles the plans for what the Bitcoin network would look like around the year 2040 when the block rewards go down to 0 and all coins have been mined. Only transaction fees would be the payment for miners.
How To Maximize Rewards
With the PoS consensus method, you can’t do much to maximize the rewards. Of course, you can invest more coins and add them in your staking wallet. The only other alternative that you can consider is forging in a staking pool with other users. This increases the chances of the whole pool being picked as the next forger as it takes the combined staking amounts by all users. While your chances are much higher to hit blocks, the reward is split among all users depending on their stake in the group thus it could actually be worse and hinder your returns.
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Pool Staking
- Pool staking can be a good idea because the NXT network allows a lease or lend of your coins. This means that you can give your forging power that is dictated by the amount of coins to someone else without them having access to the coins. They can’t spend the coins but can use their strength, which means that a good and secure forging (staking) pool can be made. This is very appealing to users as when it comes to other coins, you would actually have to give your coins to a 3rd party.
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Split Address
- In general, it is not a good idea to have split your coins over multiple addresses for staking because there is no cooldown after you hit a block. Also, the chances of you forging a block get higher with the increasing staking amount.
Figure Out Your Profit With The NXT Staking Calculator
It is only logical that you would like to see a prediction on your earnings beforehand. That’s why I have created a calculator with which you can check your staking rewards depending on how much coins you stake and the time period of staking. Please be advised that the calculator can only give you a rough estimate. As mentioned, the reward you get depends on how much transaction fees and how large they are in the block. Additionally, you should have in mind the expenses of keeping a device online for 24/7 like electricity and maintenance, although the process is not resource taxing on the components.
FAQ
It is not possible to mine it, because the consensus protocol is not Proof of Work, it is Proof of Stake.
Yes, you can. There is no official guide for forging with the Raspberry Pi computer, but the community has created one that is quite detailed.
To be eligible for forging, you need to wait 1440 blocks. When you are approved for forging, you still need to wait until you are chosen for a new block to start forging.
For some people it would be worth it, while for others it would not. That’s why I recommend using the calculator that I added earlier and decide if it would be worth it for you.
Yes, the total amount of NXT in the network is 1 000 000 000NXT.
Because after you set up your staking wallet and a device that runs all the time, you needn’t do anything else. The investment starts working for you and roughly it will return annually about 0.5%.
Please make sure that you have 1000 NXT in your wallet. Also, if 1440 blocks have not passed, you will not be eligible for forging. Alternatively, if the wallet states that it is fully operational, but you don’t receive any rewards, you just have not been chosen as the forger for a new block.
About NXT
As I mentioned in the beginning of this article, NXT is a platform that just improves and adds more features to the already quite functional blockchain technology. The main advantage of the NXT platform is the ability for the users to create their own assets like coins and tokens. This gives the possibility for companies to tokenize their assets and trade them either for cryptocurrency or other assets on the decentralized marketplace or exchange platform.
Unique Selling Points
The most unique feature of the NXT network is that you can lease your coins to a shared node if you don’t have enough funds for your own. The way leasing works is that the node can use the coins for staking but does not have the authority to move or spend them resembling something like a cold staking method.
Team
The developer behind the NXT network is Jelurida. There are 3 founders – Kristina Kalcheva, Lior Yaffe and Petko Petkov. The original creator of the NXT project, Lior Yaffe, saw the flaws that the Bitcoin blockchain had with the highly inefficient Proof of Work consensus method and decided to create NXT. It is the first Proof of Stake cryptocurrency, launched in 2013. As the company and network began to expand, the team grew as well, adding Ms Kalcheva and Mr Pеtkov to their ranks later on.
Network
NXT is a fully decentralized and transparent network providing amazing security for its users. Sometimes users would like to be fully anonymous and keep their funds completely private and use the Coin Shuffling feature. What it does is shuffle your coins with other users’ funds and change the mapping between the accounts. This system was first developed to be implemented into Bitcoin, but later on, it was adopted by the NXT network.
Future
Based on the roadmap, by the end of 2018, we can expect translations for the wallet in 14 languages, transaction vouchers implemented from Ardor platform and Java 9 support. Next up in the development stages, the plans are to add a permission layer to the NXT network for private transactions.
Useful Weblinks
- Website: https://nxtplatform.org
- Announcement Page: https://nxtplatform.org/news
- Block Explorer: https://nxtportal.org/monitor
- Whitepaper: http://nxtwiki.org/wiki/Whitepaper:Nxt
- Socials:
- Twitter Discord Telegram Reddit/Subreddit