NXT For Investors #1 – What Is Nextcoin (NXT)?

Tai Zen: What’s up, guys? This is Tai Zen again from PrisonOrFreedom.com. It’s a blog where we talk about the different technique, tools, strategies and technologies that can help people find freedom in health, wealth and relationship.

I have my good friend Leon Fu here. We’re going to talk about the wealth aspect. The things can allow you to find freedom in wealth. In this particular episode, I want to talk to Leon here about Nextcoin – one of the new alt currency that’s coming out. Can you talk a little bit about Nextcoin?

Leon Fu: Nextcoin just exploded onto the scene in the last couple weeks. The first time I heard about it, it was on the coin market.cap. It just appeared.

Tai Zen: We got the coin market.cap here in front of us. Let me see. Go ahead.

Leon Fu: So anyway the Nextcoin is just… Every time one of these coins go up hundreds of per cent, it’s natural that you go down the list there’s 50 or 60 of these coins down there and anytime you see a coin go up 500% 1000%, you take a look at it, we all take a look at it and we see… what’s so special about this, why are people buying this.

Tai Zen: So for a non-technical person like myself and a lot of our audience here, you’re one of the world’s top iOS developers, when you look at something like this, what’s going through your head?

Leon Fu: I want to see…I look at these coins as software, alright, because that’s what this is…

Tai Zen: Your entire life has been based around software.

Leon Fu: So basically what Bitcoin has done is it has turned money into software.

Tai Zen: Could you elaborate on that?

Leon Fu: Because Bitcoin is software, it’s computer code but what it has done is that instead of using gold as money, instead of using government created money, cows, pigs and chickens, we’re using entries on a computer.

I look at these coin as software just like you would use Facebook over Myspace or you would use Microsoft Office over WordPerfect or whatever or Windows versus Mac. I mean that’s all software so there are two ways to look at these… there are many ways to look at it but one way I look at it is that I look at these coins as “Does this coin actually have features that these other coins don’t have?”, “What makes it special?”

Tai Zen: And then what was it about Nextcoin that caught your attention?

Leon Fu: Actually all of these coins are basically copycats.

Tai Zen: That’s why I always refer to them as copycat coins.

Leon Fu: Because they literally are, they took Bitcoins source code and copied it and then just changed a few parameters and gave it a new name, put some new pictures on it and boom we have a coin.

Tai Zen: And what’s to prevent other people from doing the same thing like myself if I knew anything about programming?

Leon Fu: You can do the same thing, you can make a Thai coin, Freedom coin, whatever. Really, what gives the currency value is that people are willing to accept it, that you are able to take this currency and trade it for something of value so I probably wouldn’t take Taicoin because no one else would take it.

Tai Zen: So what was it about Nextcoin that got your attention?

Leon Fu: Nextcoin is actually a brand-new coin.

Tai Zen: It’s not a copycat?

Leon Fu: It’s not a copycat at all, it’s written in a brand new language. Bitcoin was written in C++, Nextcoin was written in Java so it’s an entirely new code base.

Tai Zen: But it’s still based on the public ledger invented by Satoshi Nakamoto?

Leon Fu: He took the blockchain and he has his own… he’s also anonymous, this guy was called BCNext and we don’t know who this guy is either.

Tai Zen: It’s really not that important.

Leon Fu: It’s really not that important, actually what’s different about Nextcoin now is the source code has not been released, the app has been released, the client, the wallet has been released and the network has been launched, so people are running just like you can download…

Tai Zen: But you cannot mine it as you do with Bitcoin or Litecoin or any of others?

Leon Fu: No because it doesn’t mine. So the way Nextcoin… let me jump back about the source code… He has promised to release the source code on January 3rd 2014, he said he was going to release the code then, as of today there’s no source code available but there is software we can download and use.

Tai Zen: As a programmer does that bother you at all?

Leon Fu: If he doesn’t really it then it might because so why aren’t you releasing the source code. It’s important to release the source code so that other programmers can audit the code and to review it and to make sure that it is actually doing what he claims it to be doing and the only way to do that is to release the source code and that’s why people trust Bitcoin even though not everybody’s a programmer, not everybody can read C++ but….

Tai Zen: For example, like myself, I read the Whitepaper, I see the source code but I don’t understand what it says, you do and I trust you so if you…

Leon Fu: But without the source code, you can’t; therefore, nobody can verify that what he said, he was doing in the Whitepaper is actually what the code is doing, so the source code allows other programmers to audit like peer review to say all he wrote, this is how he’s going to do it, this is the Whitepaper and then there’s the actual code that he wrote to other programmers.

Tai Zen: And you’re saying that this source code is supposedly different from anybody else’s…

Leon Fu: Yes, all the coins. It’s a total break, there’s no relationship between Nextcoin and Bitcoin, it was written completely

Tai Zen: Except for the blockchain.

Leon Fu: It uses the blockchain concept but the code, the implementation is totally new.

Tai Zen: What else is a difference about it?

Leon Fu: Back to mining, there is no mining, the way the coins were issued was that he…back in September or October, he went on the message boards and said, “I want to start a new coin” and he wanted to raise 21 and 21 Bitcoins at the time.

Tai Zen: That’s not a lot for…that was about $21,000 at the time.

Leon Fu: But it wasn’t… he needed a fair way to distribute the coins so Bitcoin distributed the coins through the process of mining.

Tai Zen: Processing the transactions.

Leon Fu: When you are issuing currency, how do you distribute who gets the currency? I mean you don’t start off with who mints the coin, how do you even create the coins, who gets the coins? Do you give it away for free, do you sell them, what do you do? The way Satoshi did was he invented this process called mining and then you would mind them and that’s how the coins…

Tai Zen: Just for the people that are watching this that’s not technically inclined, when we say mining, we’re talking about the process of processing Bitcoin transactions and getting paid for it.

Leon Fu: But that’s not only how you’re compensated, it’s also how new Bitcoins are created

Tai Zen: So it’s killing two birds with one stone.

Leon Fu: Yes, exactly, number one, the miners are being compensated, number two it’s how the currency is issued –  is being minted to begin with. Nextcoin doesn’t do that because there is no mining so he needed to issue the currency and the way he issued the currency was people would buy into it with Bitcoin.

Tai Zen: And he opened it up so you said it was a billion…?

Leon Fu: He said that on day one there was already a billion Nextcoins, for about a month or so, he had a fundraising campaign, he would say that “I’m going to raise 21 Bitcoins and whoever wants these Nextcoins you send me Bitcoins and I’ll send you back Nextcoins”, so you bought into it – the people that wanted to and I think there were a total of 71 people.

Tai Zen: So 71 people somewhere around the world.

Leon Fu: Seventy-one Bitcoin accounts.

Tai Zen: Pitched in 21 Bitcoins and took a chance with this anonymous founder of Nextcoins and so in return, he took that 1 billion Nextcoins and distributed evenly?

Leon Fu: Not evenly, proportionally.

Tai Zen: Proportionately.

Leon Fu: If you put 1 Bitcoin or 2 Bitcoins or whatever, you get your share of that 1 billion.

Tai Zen: Would you say that this is kind of like an IPO. It’s kind of taking an IPO approach or a Kickstarter approach.

Leon Fu: It’s kind of like a Kickstarter approach where there is no minting, it’s just that there are 1 billion Nextcoins, there always be 1 billion Nextcoins. So then the question is how do you get people to process the transactions. Right?

Tai Zen: Several questions come to mind, the first one obviously is how would you incentivize people?

Leon Fu: Transaction fees.

Tai Zen: Transaction fees?

Leon Fu: Bitcoin also has transaction fees but in addition to transaction fees, the miners get 25 Bitcoins per block but they also get a transaction fee. NXT would only use transaction fees.

Tai Zen: So it eliminates the whole mining…

Leon Fu: There’s no hashing, there’s no minting new Nextcoin, just only gonna be a billion.

Tai Zen: Now would that seem unfair for the people… like you’ve already… you’re not one of…

Leon Fu: I’m not one of the seventy-one.

Tai Zen:

But you have invested in it. I just wanna make a disclaimer for our audience here I don’t own Nextcoin, he owns some but neither one of us work for Nextcoin or have any affiliation with it, we are just investors and traders

And we like to speculate on these things and there’s no attachment between us and Nextcoin, we’re not promoting them, we’re discussing it and then try to present the facts and our opinions and then you guys make an informed decision what you want to do with it.

So my first question besides the… so you explained, you answered the transaction fees so that’s the incentive for people to help process the Nextcoin transactions.

Now it would seem to me that it’s unfair because these 71 accounts that originally pitched in the original 21 Bitcoins to get this project funded, they hold the majority share or the majority of Nextcoins. So what is your thoughts on that?

Leon Fu: They should make money because they took the risk, they took a huge risk, they sent some Bitcoins to this guy who could have just run off with it so they do need to make money because they took that risk.

Tai Zen: We both affirmed believed if you take the risk, you deserve to be compensated because you could have lost everything.

Leon Fu: You could have lost it, this guy could have just been a scammer and he just ran off.

Tai Zen: Made off, a crook.

Leon Fu: You took a chance on this guy, basically those 71 people send Bitcoins to some guy, somebody on the message board, based on what he said he was going to do.

Tai Zen: What else did he say he was going to do that got you interested in it besides the fact that it was a completely different type of…

Leon Fu: Because there’s no hashing, it’s a totally 100% proof of stake.

Tai Zen: And what is the difference between the proof of stake that’s in Nextcoin versus the proof of work that’s in Bitcoin.

Leon Fu: It’s the way the blocks are awarded, the way Bitcoin works is you have to do hashing you come up with a hash and if you hash the correct value, you win the block.

There’s none of that with proof of stake, who gets to mint the next block is based on the number of coins that you’ve owned. So it’s based on your stake in the coin, there’s no GPUs and ASIC chips and none of that’s gonna matter, everybody is a node, if you run the Nextcoin client, you have a chance to… they don’t call mine they call it forging, that’s the term that they use.

Tai Zen: Like you’re forging metal.

Leon Fu: All that means is…it seems to me like the chance for you to get it is based on the number of Nextcoins you owe and so the more Nextcoins you own the higher the likelihood that you are the one that is going to get the next block and therefore the transaction fees in that block.

Tai Zen: Now since I don’t have any Nextcoins and you do, then you have more proof of stake than I do.

Leon Fu: And it’s based on the concept that it’s impossible to prove…this has several advantages; number one you’re not burning off all this…

Tai Zen: Hardware dependence?

Leon Fu: You’re not burning off all this electricity to do hashing like Bitcoin or these proof of work. You also don’t have a 51% attack because it’s not based on hashing, it’s based on who owns the coins and so like who generates the next block is just simply…the more coins you own them… it’s a lottery just like Bitcoin but the lottery is based on…

Tai Zen: So more Nextcoins you own, the more opportunities, the more lottery tickets you have.

Leon Fu: Just like in proof of work, it’s the more hashing power you have, the more lottery tickets you have so it’s based on that rather than proof of work.

So it has several, you know, it has the advantage of not requiring massively powerful computers.

Tai Zen: Out of all the coins that we see here on the Coinmarketcap, in your opinion, your experience in investing in all these cryptocurrencies and your programming background, you feel that this one has a good shot?

Leon Fu: It does just because it’s different.

Tai Zen: Just because…

Leon Fu: That alone gives it merit because it’s not a copycat coin, everything on that list except for that coin is, maybe Mastercoin is very unique too but all of those coins except for Nextcoin, the Mastercoins are just copycat coins even Litecoin is a copycat coin.

Tai Zen: That’s why I invested in all these alt coins and it took me so long was –  because I don’t know you’ve been investing a lot of them at different stages that have got rewarded tremendously, for me personally, I just don’t see the difference between them and Bitcoin and that’s why I find it so difficult to get money on it, you know.

Leon Fu: The other thing that attracted me to this is Nextcoin actually has several features that the developer says that they’re working on, they recently released a feature called Alias. Just like domain names; you can actually create names that map to an account number

Tai Zen: So it’s not just a random string.

Leon Fu: So I think Bitcoin, they’re also working on this feature but Nextcoin just released this feature I don’t know if…

Tai Zen: So basically when I ask people for donation of some payment or donations they can send to prisonorfree.com?

Leon Fu: Prisonorfreedom instead of this wrong number.

Tai Zen: Right I know that they’re trying to do that in the new Bitcoin.

Leon Fu:

A lot of coins are working on that, that’s a feature a lot of coins… Remember this is software so it a race to include features that people want or can get.I think one of the determining factors of which coin is eventually going to win is also how fast can the developers behind each coin develop their…

Number one is their product roadmap because they’re offering a product, the product is cryptocurrency and number one is they’re going to have a list of features that they’re gonna put in their currency and what are those features and how fast can they deliver them and so that’s one thing I’m looking at, is I’m looking at this as like software which is what it is.

Tai Zen: Is there any last comments you want to make on the Nextcoin?

Leon Fu: It’s been hot, we’re talking about it because it’s number 5 on the list now and I started buying it when it first appeared around number 18 and it’s gone up, I don’t know like…

Tai Zen: You’ve definitely made your money.

Leon Fu: It’s one of the tops and it keeps climbing, I think at this rate, it will be number three pretty soon if it keeps going up like this.

Tai Zen: But just for our viewers, where did you get your Nextcoins from?

Leon Fu: There’s only one exchange that trades it, it’s called DGEX.COM I think.

Tai Zen: So that would be D as in Delta, G as in Google, E as in Echo and X as in X-ray.

Leon Fu: DGEX.COM and so far that exchange only trades Nextcoin, that’s the only exchange you can get Nextcoin on.

Tai Zen: When you were trying to show me how to get by some Nextcoins, it was under a DDoS, and that was just like maybe an hour ago?

Leon Fu: It’s still a bit under DDoS attack for the last week and actually I mean this also happened to Bitcoin. It seems to happen to every currency is going to get attacked and Nextcoin is no different. It’s back up now.

Tai Zen: Should people be concerned whenever…

Leon Fu: Oh yeah, I’m concerned, that’s why you shouldn’t invest all your money because people are going to attack it and it may not survive.

Tai Zen: Now whenever you say that the exchange won’t survive, is it possible that the person, the founder or the core team behind it wants to do something about it but they’re under such heavy attacks that they can’t fix it in time.

Leon Fu: What’s happening is somebody is attacking the network by flooding it with traffic.

Tai Zen: What is the purpose of that? If somebody out there is trying to do that, what are they trying to get out of that?

Leon Fu: Who knows what their motives are, I mean…

Tai Zen: What are some of the most…

Leon Fu: Earlier in the year when Mt. Gox was the only Bitcoin exchange, it was being DDoS all the time and every time that happened, people panicked and then the price would go down and then the attack would disappear the site, the site would come back up and then the price went back up.

But that it was dropping 30% every time one of these DDoS attacks happened, it’s a little bit different because they were actually attacking Mt. Gox, because that was the only exchange.

Tai Zen: This exchange doesn’t have that kind of money yet, so what’s the purpose of attacking? Just computer hackers claiming they can do it?

Leon Fu: So far I have not figured out the motive why people are doing it.

Tai Zen: So it’s extremely risky, this is like money you should only invest when you can throw that money away.

Leon Fu: This is gambling money, if you want to win big you got a gamble.

Tai Zen: I mean back in my neighbourhood, back in the projects where I grew up and we always have a saying that, “A scaredy cats never gonna become a fat cat”, you’re not gonna get…

Leon Fu: You can lose all your money, you can but at the same time if it works you’re gonna make ten, a hundred, a thousand times your money if it does work just likes the people who sent their Bitcoins to get Nextcoin are up 2000%, 2000 times their money.

Tai Zen: So that would be if I put in one Bitcoin during that 21 Bitcoin round…

Leon Fu: You would have $200,000 or 2000 Bitcoins.

Tai Zen: That’s a huge jump.

Leon Fu: That’s a lot, but the market is so thin that you wouldn’t be able to unleash it, you’d crash the market.

Tai Zen: You said that when you got 20,000 Nextcoins…

Leon Fu: The markets are very thin so you don’t want to buy 10 Bitcoins’ worth of Nextcoins at market price, you yourself would move the market like against you so be very careful.

Tai Zen: What would be a safe number?

Leon Fu: You should look at the…they have a chart with – their order books, they have a chart that shows you…once you log into the site they have a chart that shows you the market depth and so if you want to buy a hundred thousand Nextcoins, you know, you got to look like “If I do that how much am I going to move the price” and you don’t want to move the price against you.

Trade in a smart way, so look at the order book and … Remember this coin is only like a month old, it only started a month ago so the market is still very thinly traded, you know, it doesn’t take a lot of money to move it 10 – 20%.

Tai Zen:  Now conclude this video, I hope you guys got a lot out of this. If you guys would like to hear more about videos, like this, please leave it in the comments below and we try to do some more if you like to donate to our PrisonOrFreedom.com site you’re welcome to do that at the address listed below and we’ll look forward to seeing you in the next video.


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