Nxt — Update I

26.01.2019

TL;DR. Ecology:2 (2). Technology:2 (2). Decentralization:2 (2). Valuation:3 (2). Rating:2/10 (2/10)

Six months have passed since the first BD Ratings article on Nxt. Here is how that prediction has turned out so far.

2018-07-26 USD 0.101958, Satoshis 1 243.

2019-01-26: USD 0.026947, Satoshis 738.

The prior rating of 2, equivalent to 'sell', is clearly a hit so far. Let's explore what the project has been up to the last 6 months.

Throughout the end of July, August and September, not much happened in the Nxt ecosystem. In October however, a new version of Nxt was released, correcting for an old bug related to the processing of unconfirmed transactions. This upgrade was mandatory, meaning it resulted in a planned hardfork.

In November, the network turned 5 years old. Not much else of interest can be reported from year-end 2018, and nothing Nxt-related happened in January 2019 either. The recently reported PoS Fake Stake vulnurability seems to not affect Nxt as the code base is not copied from Bitcoin.

Ecology

The official BCT thread is still largely inactive. It is evident in that thread that the Jelurida developers focus almost exclusively on Nxt 2.0, in other words Ardor and not Nxt. When inspecting the Nxt subreddit, it is inactive as well.

When looking at the number of on-chain transactions, it is clear that there are just a few dozens per day, at most. This observation is repeated in the Nxt sub-reddit.

Grade: 2

Reasons: Still low on-chain and community activity.

Technology

As mentioned above, there was one new Nxt client release in October 2018, but nothing else as can be verified here. It is unclear if development is happening on some hidden Bitbucket branch, but in the main repository no changes have been made after the October release. BD Ratings concludes that Nxt is not developed and will at most get some secondary updates mainly resulting from Ardor development.

Grade: 2

Reasons: Few, if any, developers. Few code updates. Not resilient to attacks.

Decentralization

Somewhat concerning is the decision by Ardor/Nxt company Jelurida to send a Cease and Desist to Apollo, a Nxt fork. Granted, Apollo clearly broke the Jelurida Public License, but the problem is still that the Nxt developers are engaging in this kind of licensing in the first place. Sound cryptocurrencies can very easily thrive despite multiple forks they did not approve. Permissionlessness is an important property in cryptocurrencies; no permission ought to be needed for developers to innovate. Otherwise you create a power structure that inherently adds to centralization and the perils that stem from it. The Apollo project complied with the demands later on.

Worth mentioning is also possible token concentration from the fact that all one billion of them were issued from the very start, to just a few contributors. I is very probable that they have been spread out over a much broader user base through trading, but to what extent is hard to estimate.

Grade: 2

Reasons: Few developers. Unnecessarily strict copyright licensing rules.

Valuation

Nxt has decreased in market capitalization when compared to the time of the initial rating article. From over USD 100M to around USD 27M, or a #114 place on coinmarketcap.com list of highest valued cryptocurrencies. This is still a too high valuation considering the huge problems the chain has with low economic activity, few or no developers, and certain centralization aspects like intellectual property licensing. To word it another way, Bitcoin is undervalued when compared to Nxt.

Grade: 3

Reasons: No ecology. No developers. Fall in market capitalization.