Namecoin: The Token for Internet Anonymity and How it Fares in 2017
Namecoin tries to solve the problem of online identity and anonymity. But how is this token doing in 2017?
Namecoin is a cryptocurrency project for geeks and techies. This recent ICO belongs to the anonymity and web services companies that use the blockchain to transfer information. The Namecoin network, built over the Bitcoin protocol, also carries the Namecoin token (NMC).
Currently, Namecoin has been buried by an avalanche of new tokens and coins. But in 2013, it was one of the few new cryptocurrencies built over the Bitcoin protocol. It is one of the earliest tokens to fork the Bitcoin network, though without preserving the history, thus becoming a blank blockchain.
The idea behind Namecoin was first discussed on the BitcoinTalk forums back in 2010, and supported by Satoshi Nakamoto. The first product appeared in 2013.
Namecoin offered the .bit domain, independent of the international domain categorization system, along with other services to transfer encrypted information. Emercoin (EMC, $1.11) and Peercoin (PPC, $1.70) offer similar uses of the blockchain technology.
Namecoin Market Price
Currently, NMC trading has been subdued as other tokens get all the attention. For Namecoin, there was a brief price surge at the beginning of 2014, followed by years of depressed prices as the whole cryptocurrency market was slow and unknown.
But in 2017, Namecoin went through a revival as buyers recognized the old, forgotten coin among the new shiny tokens.
[caption id="attachment_343" align="alignnone" width="829"] source: coinmarketcap.com[/caption]
Unfortunately, this chart shows the signs of a temporary pump, as now prices have receded to below $2.
The biggest share of trading for Namecoin happens on Poloniex, as more than 44% of volume is in the pair NMC/BTC. But more than 37% of orders come from BTER, where Namecoin is exchanged directly for Chinese Yuan (CNY). This gives some support and diversification to Namecoin, as price pressures come from very different markets.
The Namecoin Controversy
In 2013, just as cryptocurrencies had an early bull run, Namecoin was hit by an insecurity controversy. A flaw was discovered, allowing anyone to take over a .bit domain. The flaw was discovered during a Kraken exchange due diligence and added to the downward price pressure for Namecoin.
The flaw was later repaired, and the .bit domain continued existing, but Namecoin spent long years with a market price below $0.50.
Kraken went on to trade Namecoin for a while, but it is not among the available markets right now, as exchanges sometimes shed trading pairs to streamline operations.
The Namecoin Service in 2017
For a year now, Mozilla Firefox has supported a .bit address search engine, the bitSE .bit add-on.
The network of .bit domains is functioning as a niche space. But it would certainly be a place of free speech, as Namecoin is the DNS provider and domains cannot be taken down, unlike the regular .com, .net and other domains. All information on the network sits on the blockchain, and users of the .bit network synchronize with the blockchain upon installing the plugin.
The Namecoin service is still considered experimental. The blockchain also cannot handle large amounts of data, and the time to create a new block is 10 minutes.
Similar Blockchain Services
Currently, the Ethereum network services its proprietary series of domain names. Ethereum Name Service (ENS) even auctioned off the most desirable names. And if you open a domain ending in .eth, it will be serviced by the Ethereum network and smart contracts.
But compared to the Namecoin option in Firefox, the ENS service is still in an early stage. And there are up and coming ideas and ICOs to keep building online identities through blockchain technologies.
If you still like Namecoin and would like to buy and hold it, one option is to trust the Poloniex wallet. Users stored Namecoin on BTC-e, but the site has been offline since July 25 and US law enforcement seized the domain and confiscated some machines. The case of BTC-e is a cautionary tale on keeping tokens based on online services.
So, the alternative is to run the official Namecoin client, which is decidedly not user-friendly.
Namecoin is thus not so easy to own as a speculative trading asset, as ease of handling is lower compared to other coins and tokens.
The Verdict on Namecoin
Currently, Namecoin is a token for users who would be comfortable with Poloniex. The obscure service, the hard-to-run wallet and the presence of other similarly priced assets makes Namecoin a bet for advanced users or for hardcore fans. The technology, while a good idea, remains experimental and only has a niche audience. Namecoin market price has been volatile, so it is best not to invest funds you cannot afford to lose.