Since the advent of Bitcoin in 2009, digital currencies have been on the rise with many other options such as Namecoin, Litecoin, and PPCoin emerging. This is these currencies facilitate easier yet secure funds transfer between two parties. What’s more, the transfers involve negligible charges compared to the huge chunk charged for wire transfers by banks and other financial institutions. To secure the transactions, the currencies use public and private security keys. Let’s save cryptocurrency lecture for another day, for in this piece we’re going to limit our discussion to Namecoin.
Today might be the first time you are coming across the name “Namecoin”, but it won’t be your last. As aforementioned, it is a type of cyptocurrency that came into existence after the success of Bitcoin. To be precise, the idea that brought it to light first came in 2010 but it was first implemented in April 2011.
Namecoin avoids domain censorship by using a new top level domain, .bit, which is outside ICANN, as alternative to decentralised DNS. .bit websites are able to avoid internet censorship and this makes such websites the best avenue for people to access or share vital information without being gagged by the authorities. But also due to this freedom, such websites are prone to abuse and may be used by devious folks to achieve their own agendas, yet elude the long arm of the law.
According to Investopedia, a digital or virtual currency that employs encryption (cryptography) for security purposes is called cryptocurrency. Unlike the conventional currencies, cryptocurrencies are immune to manipulation by the government, because they are not issued by any central authority. However, just like the conventional currency, they are affected by demand and supply and this means that the rate at which cryptocurrency exchange may fluctuate widely.
Domain Name System (DNS) in the internet is like an address book that’s designed to make navigation easier. While we are used to typing url addresses in the browsers address bar, the internet operate with numerical addresses known as IP address. Once you input the name of the website, the browser runs a search in the DNS server asking for the IP address of the named url address.
The extension on the domain name such as .com or .org is what is referred to as the top-level domain (TLD) and they are often controlled by a central authority. The authorities allow registrars (third party companies) to offer domain names and deal with customer queries. The authorities can also shut down the website with such extension should complaints arise about its content.
On the other hand, a decentralised DNS system decimates the power of the authorities. This is what cryptocurrencies such as NMC and Bitcoins employs. Even though TLDs can exist in these systems, they are not owned by anyone, and its lookup tables are shared on a peer-to-peer system. Because the authorities do not seize the physical servers, it is impossible for them to impose rules to dictate the decentralised top level domain.
Namecoin model apply the modified peer-to-peer system of the Bitcoin protocol. To avoid conflict between it and Bitcoin, Namecoin led to the development of a new genesis block and there can be only 21 million NMC created, and for each solved block of crypto issue, 50 coins are generated.
Other than being an alternate DNS system, NMC is not very different from Bitcoin. Though they do not interact, the two digital currencies count on the same set of mathematical problems and the same hardware can be used to mine them. Here are the basic distinguishable features of NMC cryptocurrency:
Namecoins are produced and transferred by a peer-to-peer network, just the same way as Bitcoin. Whenever you discuss NMC, Bitcoin just comes in, this because the two digital currencies shares the same heritage. While they do not interact, they do rely on exactly the same set of mathematical problems. In fact, the same hardware can be used to mine both bitcoins and Namecoins. Corresponding to this is a process called merged mining, where a mining machine simultaneously mines the two currencies.
Namecoin may be used as a currency, but its main purpose is to serve as a decentralised DNS. Its Domain is acquired at a small fee to prevent spammers. The domain needs to be updated every 250 days, failure to which it expires.
NMC is used to create uncensored websites, since it disallow government control. However, this is also its dark side, as unscrupulous individuals may exploit it to commit heinous crimes through the internet. Such crimes may include child abuse, terrorism, money laundering and many more. You may be eager to know websites with .bit TLD, but you cannot just type these addresses and get the web page like the cases of .com. Nevertheless, browsers such as Chrome and Firefox have extensions that connect them to .bit web proxy servers, which allow them to correctly handle such addresses.
Namecoin is also used in voting, messaging and login systems. This is because of the digital currency’s ability to ensure integrity of files that hinders file tampering.
Namecoins are traded in the online major currencies exchange markets, but not very many people are aware of this; in fact, there are minimal chances that even you reading this article will need to trade NMC or create a .bit website or service. Nevertheless, it is everyone’s right to access information and everyone has a freedom of expression.
Using the NMC technology, websites such as Wikileaks have laid bare information that otherwise would have remained highly protected. But because governments’ surveillance and their abilities silence whistleblowers are weakened, you get the freedom of expressing yourself or accessing classified dirty secrets. However, this comes at a cost and might even threaten the national security or throw countries into diplomatic rows. This is exactly why you need to know both the good sides and the dark sides of NMC technology so that you can exploit it objectively.