Is NXT (Nextcoin) A Scam?

I have received a lot of emails from traders and investors asking me if NXT (Nextcoin) is a scam? I made this video to address some common concerns about NXT for new investors.

In this video I want to talk about and answer the question if NXT is a scam or a ponzi scheme.

Since I posted the video about what is NXT a lot of people have been emailing me asking me if its a real coin or if it’s another ponzi scheme or a scam.

By the way NXT even though I refer to it as NXT coin, the community of NXT investors and people, and developers like to refer to it as NXT (pronounced “next) or N-X-T (spelled out).  So in case you hear it referred to as NXT that’s supposed to be the official name of it.

I want to address the issue of whether or not NXT is a scam.

Initial NXT Distribution & IPO

If you look at how NXT was distributed a lot of people claim it’s a scam or ponzi scheme based on the fact that there was an IPO done and the one billion coins that was originally created by the developer named BCNext.

All the NXT coins were distributed to 73 original stakeholders. These 73 original stakeholders took the risk  and put in a total of 21 Bitcoins to get the 1 billion NXT’s started.

Each of them apparently got the amount that is proportional to how many Bitcoins that they put in so each of them got a different amount. Some people don’t like this idea because they think that it’s pre-mine in the fact that only these 73 original stakeholders got the bulk of the NXT coins.

According to my understanding, the way that NXT was released is similar to an IPO for Facebook, or Google, or any other public company in the US or anywhere in the world. If you were not there when the IPO started then you missed out.

Therefore, if you were not one of the original 73 stakeholders then you’re out of luck.

There is no need to cry over a missed opportunity.

When we look at famous IPO’s such as Facebook, Twitter, or LinkedIn… they release IPOs for that and you were there on the early bird than obviously you got a huge reward for it. But if you were not there for the release then you did not take advantage of the opportunity.

For example myself, I’m not one of the original 73 stakeholders and neither are any of my friends. But I got several friends who bought several hundred thousand NXTs in the early stages back in early December 2013 after the IPO was closed by BCNext.

You can complain about this but there’s a lot of companies, and there’s a lot of offerings that go pubic and they close in a short period of time.  So if you’ve missed out on that NXT IPO then you missed out.

Just because you missed out on an IPO does not make it a scam.

In my opinion based on the research and the hundreds of pages that I’ve read on the NXT thread in the Bitcoin.org forum it’s my understanding that the NXT development is moving along as planned.  They released the original source code in Java on January 3rd 2014 as planned and so everything is moving along.

I know there’s a lot of people that complain that they did not get a chance to buy in, keep in mind that 21 bitcoins is not a lot of money.

I don’t know the reason why BCNext closed the IPO early but from my understanding and from reading the pages in the forum on Bitcointalk.org, it’s my understanding that BCNext did not expect to get the 21 bitcoins so early and so quick.

Since he only needed 21 bitcoins to get the project going and start developing the source code I don’t think it’s a scam that he closed it early.  I missed that opportunity but I don’t think it’s a scam because he said that he needed 21 bitcoins to get the source code project started for NXT so he achieved what he wanted.

I’m sure a lot of people got pissed off because they did not get in on that but just because you missed an IPO does not make it a scam.

As an investor, what I base my analysis on is the fact that he got the 21 bitcoins, he created the genesis block which contains the one billion NXT’s and it was properly distributed to all the original stakeholders who invested the 21 bitcoins.

BCNext did what he said he promised and on January 3rd the original source code was released as planned.

So everything seems to be going as planned and in my eyes as an investor I feel safe about that, and I feel confident about that.  That doesn’t mean that there can’t be something that goes wrong with NXT.  The fact that the original creator and the developers of NXT are doing what they say they were going to do is enough for me to have confidence in it.

I do own some NXT’s and I’m looking forward for it to continue growing.

The other point that I want to make also in addition to the fact that the original 73 stakeholders hold the bulk of NXT coins is…

Why Is NXT Premined?

The other complaint that I hear a lot, and I see a lot online about NXT being a scam is that the fact that it is premined.

Keep in mind that Bitcoin is based on a proof of work mechanism to secure and to process transactions in the bitcoin network.

In the NXT network, the creator BCNext did not choose to use the proof of work as the mechanism to secure the NXT network and protocol as well as process the NXT transactions.

He chose what’s called a 100% proof of stake in the processing and securing of the NXT protocol and network which is completely different from the proof of work.  When you use 100% proof of stake you do not mine coins.  You use a process called forging. Forging means you process the transactions in the NXT network and you secure the network through those transactions.

But it does not mint new coins.

It’s only used for securing it, and the people who volunteer their computers to secure and process the NXT transactions are paid a transaction fee. Right now it’s set at a minimum of one NXT.

The people who secure and process the bitcoin transactions are paid a transaction fee also but in addition the process proof work also mints new coins. So when you guys see that NXT does not mint new coins do not freak out because all the coins have already been minted.

When people own NXT turn on their computers it can be set to forge (process) NXT’s, they don’t mine NXT like people who use bitcoins.

There’s no mining involved so comparing a proof of stake coin versus a proof of work coin, is like comparing apples to oranges. It’s not a direct and equal comparison.

I just wanted to share that with you guys so that you guys understand why the 1 billion coins were already created from the very beginning in the original genesis block.

I hope this video helps answer some of you guys concerns about whether or not NXT is a scam.

It’s usually based on those two weak arguments that NXT was distributed to only 73 original stakeholders in the IPO and that it’s pre-mine which serves the basis for most people who claim that NXT is a scam.

I hope that this video helps to address those concerns that you have about NXT and I look forward to seeing you in a future video.  If you like these videos and would like to donate and support our freedom blog you’re welcome to donate bitcoins or NXT’s to our efforts under the donations page at prisonorfreedom.com.  I’ll look forward to seeing you guys,.

Please share this video with other people who have questions about NXT or are confused about it and we look forward to seeing you guys in the next video.

You can support and donate to our efforts on our donations page.

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