A hard fork has been announced for the NXT crypto-currency, which will enable the long anticipated ‘Monetary System’ feature that allows for the creation of user-issued currencies by ‘locking’ NXT.
NXT users can update now to the NRS v1.4.5 client, which will enable the Monetary System. This is a ‘hard fork’, which means that the upgrade is compulsory if you want to keep using NXT without ending up on your own separate block chain. Users of NXT must upgrade to the latest release by block 330000, at which point the Monetary System will go live.
The new Monetary System feature will allow users to create their own crypto-currency secured by the NXT block chain. To do this they must ‘lock’ a certain amount of NXT – meaning that each new coin will be ‘backed’ by a certain value in an established coin. This is similar to the ‘proof of burn’ used to create Counterparty’s XCP tokens by burning Bitcoin, except that the process works in reverse – you can also ‘unlock’ a coin later for its face value in NXT coins. Once a token or coin is created using the Monetary System its supply is also locked – meaning that inflating the supply by creating new units later on is impossible.
In addition to having its own uses in areas such as crowd-funding, retail rewards points, and creating coins pegged to stable value indicators such as fiat currencies or gold for investment purposes, the Monetary System is also a key plank in the implementation of other features such as the planned Coin Shuffling feature for anonymous transactions and the NXT Credit System for peer to peer financial services such as loans.
The Monetary System was first proposed in March 2014 and has been hotly anticipated by the NXT community.