No CommentsWhile the Nxt core software continues to evolve and incorporate new features, enterprising coders are building features and tools that leverage existing functionality. One of the most exciting of these is the Multigateway service (or MGW): an automated system that lets you automatically transfer other cryptocurrencies into the Nxt blockchain, where they can be traded on Nxt’s fully-decentralized asset exchange.
Several cryptocurrencies – Nxt, Mastercoin, and Counterparty, for example – have created decentralized asset exchanges on their platforms. These exchanges let users issue assets which can be traded on a trustless, fully-decentralized system. The functionality is exciting, but every implementation faces the same basic problem: users of the systems must trust that the assets they are trading are backed by something real, since there is no way to prove that a person who issues “Bitcoin” on another cryptocurrency’s trading system actually has that Bitcoin. The Nxt Multigateway solves this problem elegantly.
The Nxt Multigateway was created by nxtforum.org‘s jl777 (also known as James), with a graphical user interface created by longzai. Three secure, independently-controlled servers are created for each currency that is to be traded on the Nxt asset exchange. In order for a coin to be issued as an asset on the Nxt blockchain, coins must be deposited to a unique address, which is generated for you by the system. Deposits to this address are verified using multi-signature transactions, and are issued on the Nxt Asset Exchange only when two of the three servers agree that the coins are real. Withdrawals are handled through the same mechanism, and every action is handled by a Nxt transaction for the cost of Nxt’s low transaction fee. Here’s how it works, using Bitcoin as an example:
- Access the MGW interface within the Nxt client, and generate a unique Bitcoin deposit address.
- Using your favorite Bitcoin wallet, send bitcoins to your deposit address
- Once the transaction is confirmed by the Bitcoin blockchain and verified by two of the three gateway servers, your Bitcoins will be issued and added to your account as “mgwBTC” assets
- Use the Nxt Asset Exchange to place buy and sell orders with your bitcoins, or to transfer them to other Nxt accounts.
- When you want to withdraw your Bitcoins, simply specify a destination Bitcoin address in the “withdrawal” section of the MGW interface, and wait for the transaction to be confirmed.
At no time during this process are your coins exposed to any human being or centralized server. For the first time in cryptocurrency history, the Nxt community has created an almost-trustless method for moving cryptocurrencies from one blockchain to another so that they may be used and traded on a fully-decentralized platform. It lets you keep complete control of your Bitcoin or Litecoin, and it eliminates the possibility that they will be lost due to the collapse of a centralized exchange or a hacker attack.
The core MGW service currently supports Bitcoin and Litecoin, but new “universal multigateway” software allows you to create your own MGW service for any other cryptocurrency that supports multisignature transactions. All you need to do is set up three secure, independently-controlled servers to support your gateway.
Nxt’s Multigateway service is now live, and Nxt users can trade Bitcoin and Litecoin on Nxt’s Asset Exchange after following the installation instructions in this forum thread. If you’re brand new to Nxt and need a few coins to help cover the fees for generating an address and getting set up, post here to get some free coins to start with.
The Nxt Multigateway forms one part of a larger NxtServices platform being built by jl777. This platform forms the foundation for a number of value-added Nxt services, including encrypted real-time chat, automatic dividend calculation and disbursement for Nxt assets, coin privacy services, and more. Stay tuned as new features are released!
