Namecoin (Symbol: ℕ or NMC) is a cryptocurrency and the first fork of the bitcoin software. It is based on the code of bitcoin and uses the same proof-of-work algorithm. It is limited to 21 million coins.
Unlike bitcoin, Namecoin can store data within its own blockchain transaction database. The original proposal for Namecoin called for Namecoin to insert data into bitcoin's blockchain directly. Anticipating scaling difficulties with this approach, a shared proof-of-work (POW) system was proposed to secure new cryptocurrencies with different use cases.
Namecoin's flagship use case is the censorship-resistant top level domain
.bit, which is functionally similar to
.net domains but is independent of ICANN, the main governing body for domain names.
A peer-to-peer network similar to bitcoin's handles Namecoin's transactions, balances and issuance through SHA256, proof-of-work scheme (they are issued when a small enough hash value is found, at which point a block is created; the process of finding these hashes and creating blocks is called mining). The issuing rate forms a geometric series, and the rate halves every 210,000 blocks, roughly every four years, reaching a final total of 21 million NMC.
Namecoins are currently traded primarily for USD and other cryptocurrencies, mostly on online exchanges. To avoid the danger of chargebacks, reversible transactions, such as those with credit cards or Paypal, are not advised since Namecoin transactions are irreversible.
Payments and records in the Namecoin network are made to addresses, which are Base58-encoded hashes of users' public keys. They are strings of 33 numbers and letters which begin with the letter N or M. Initially addresses beginning with 1 existed but this was changed to avoid confusion with Bitcoin addresses.
Each Namecoin record consists of a key and a value which can be up to 520 bytes in size. Each key is actually a path, with the namespace preceding the name of the record. The key
d/example signifies a record stored in the DNS namespace
d with the name
example and corresponds to the record for the
example.bit website. The content of
d/example is expected to conform to the DNS namespace specification.
The current fee for a record is 0.01 NMC and records expire after 36000 blocks (~200 days) unless updated or renewed. Namecoins used to purchase records are marked as used and destroyed, as giving the fee to miners would enable larger miners to register names at a significant discount.
Proposed potential uses for Namecoin besides domain name registration include:
- Identity systems
- Messaging systems
- Personal namespaces
- Notary/timestamp systems
- Alias systems
- Issuance of shares/stocks
In September 2010 a discussion was started in the Bitcointalk forum about a hypothetical system called BitDNS and generalizing bitcoin, based on a talk at IRC at 14 November 2010. Gavin Andresen and Satoshi Nakamoto joined the discussion in the Bitcointalk forum and supported the idea of BitDNS. A reward for implementing BitDNS was announced at the Bitcointalk forum in December 2010. Soon a developer decided to implement this idea to earn this reward. On April 18, 2011 Namecoin was introduced by Vinced (Rumored to be Vincent Durham) as a multipurpose and distributed naming system based on bitcoin. It was inspired by the BitDNS discussion on the Bitcointalk forum. WikiLeaks mentioned the project via Twitter in June 2011.
On block 19200 Namecoin activated the merged mining upgrade to allow mining of bitcoin and namecoin simultaneously, instead of having to choose between one or the other, this fixed the issue of miners jumping from one blockchain to another when the profitability becomes favorable in the former.
Two years later, in June 2013, NameID was launched. It is a service to associate profile information with identities on the Namecoin blockchain and an OpenID provider to allow logging into existing websites with Namecoin identities. The main site itself is accompanied by an open protocol for password-less authentication with Namecoin identities, a corresponding free-software implementation and a supporting extension for Firefox.
In October 2013, Michael Gronager, main developer of libcoin, found a security issue in the Namecoin protocol, which allowed modifying foreign names. It was successfully fixed in a short timeframe and was never exploited, except for bitcoin.bit as a proof-of-concept.
In February 2014, a plug-in for Firefox compatible with Windows and Linux, FreeSpeechMe, was released, providing automatic resolution of .bit addresses. This is available by downloading the Namecoin blockchain and running it in the background.
One month later, in March 2014, Onename was released. It is another identity system built on top of the Namecoin protocol that stores usernames and personal profile data in the Namecoin blockchain. In contrast to NameID, Onename is built purely for profile information and does not support password-less authentication or log-in. Onename later (in September 2015) switched user profiles from Namecoin to the Bitcoin blockchain, citing the higher hashrate of Bitcoin as the reason.
In May 2014, Kevin McCoy and Anil Dash introduced Monegraph, a system that links Twitter accounts and digital assets (such as artwork) in the blockchain, allowing proof of ownership of such assets.
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