What Is Namecoin?
Namecoin is a cryptocurrency originally forked from Bitcoin software. A fork is simply a change in a blockchain’s protocol. Namecoin is based on the code of Bitcoin with additional functionality built on top of it. Namecoin uses the same proof-of-work (PoW) consensus algorithm as Bitcoin. The two currencies are nearly identical.
However, Namecoin was developed as the basis for a decentralized domain name system (DNS). DNS translates human-readable domain names (for example, www.investopedia.com) to machine-readable IP addresses (for example, 000.0.0.00). DNS is the mechanism by which domain identities are linked with numerical IP addresses around the world. The decentralization of this system was intended to put an end to Internet censorship and enhance Internet-related security and privacy. The makers of Namecoin describe it as "an experimental open-source technology which improves decentralization, security, censorship resistance, privacy, and speed of certain components of the Internet infrastructure such as DNS and identities."
- Namecoin is a cryptocurrency originally forked from Bitcoin software.
- It was developed to decentralize the infrastructure of the Internet and increase privacy and security.
- Namecoin has lagged behind other cryptocurrencies in terms of value and market capitalization.
- As of late 2020, Namecoin trades around $0.40, and its all-time high price was $9.88.
Namecoin retains many ardent supporters who believe that a decentralized DNS system could be crucial to long-term Internet privacy and censorship reduction. While it's likely that most individuals will not have the need for a .bit website or related service, Namecoin could provide some with the tools to connect to an Internet free from censorship and central control.
While we type text-based website addresses into Internet browsers, the Internet is actually based on numerical addresses, called IP addresses. Because a long string of numbers is not that easy to remember, the DNS was created to make Internet navigation easier. The DNS can be thought of as the Internet's address book. Every time you type a website address into, a DNS server is contacted. The DNS server locates the IP address of the Internet destination server and then retrieves that web page's data.
The final part of a webpage's domain (i.e., .com) is called a top-level domain (TLD). All TLDs are controlled by a central authority. For example, the TLD .com is controlled by the Internet Corporation for Assigned Names and Numbers (ICANN). When a specific complaint arises regarding a webpage, the central authority for its TLD has the ultimate control over the outcome of that grievance. In the majority of real-world cases, lawyers or copyright holders will correspond with the central authority. However, those who are concerned about censorship may find the existence of any central authority that has the power to give commands problematic.
By introducing a decentralized DNS system, there can now be TLDs that exist that are not owned by anyone. In addition, the querying system for a decentralized DNS is shared on a peer-to-peer system. With a peer-to-peer system, volunteers run the customized DNS server software and no central authority can intervene in the operations of the TLD.
The TLD .bit is the first and only TLD of Namecoin's domain. The steps for registering a new domain or updating an existing one are built into the Namecoin protocol.
How Is Namecoin Different From Bitcoin?
Namecoin features a number of similarities with Bitcoin, currently the top digital currency by market capitalization. (As of March 1, 2021, the market capitalization of Bitcoin is approaching $1 trillion, at $926.79 billion. The market capitalization of Namecoin is $22.02 billion.) Namecoin was developed as a fork of Bitcoin. A fork is a radical change to a network's protocol that may be initiated for several different reasons. In the case of Namecoin, the fork was initiated to create a new technology and cryptocurrency offering. While the mining system for Bitcoin and Namecoin is identical, they have a separate blockchain.
The main difference between Bitcoin and Namecoin is the purpose of the technology. The creators of Bitcoin wanted to create a viable alternative currency; the creators of Namecoin were trying to create a naming system. Because of this, there are different consensus and protocol rules that exist within each project. Certain features are necessary when conducting financial transactions that are not necessary when completing name registrations for new Internet domains.
Because Namecoin utilizes the same proof-of-work (PoW) algorithm as Bitcoin, if you are already mining Bitcoins, you can merge-mine Namecoins without any additional hardware (and without any extraneous electricity). Both Bitcoin and Namecoin are limited to a total of 21 million coins.
Goals of Namecoin
Namecoin's developers indicate a number of potential uses and applications for this experimental cryptocurrency. First and foremost, the developers hope to protect free speech rights online by making the web more resistant to censorship.
There are myriad ways that Namecoin attempts to do this. It can be used to attach identifying information—such as email addresses, Bitcoin addresses, or specified keys—to various identities as determined by the user. It can also be used as a means of providing decentralized TLS (HTTPS) certificate validation.
Namecoin can be used in Tor and dark web capacities to generate human-meaningful Tor .onion domains. In the future, the cryptocurrency and its underlying technology could also be used for file signatures, securing voting procedures, for notary services, and for establishing proof of existence for individuals and entities.
Namecoin is a key/value pair registration and transfer system based on Bitcoin technology. This means Namecoin can be used to record and transfer arbitrary names or keys in a secure fashion. It can also attach data to these names.
Because of their links with the Namecoin network, these names are difficult to censor or seize, meaning that they are resistant to outside influence. Additionally, the makers of Namecoin specify that lookups do not generate network traffic. The result of this is that Namecoin offers improved privacy capabilities.