The race to the moon just got a little more interesting. NXT has announced a decentralized exchange that accepts BTC and LTC and works completely trustless.
NXT's decentralized exchange, dubbed Multigateway, has been running for a week now, long enough that the developers feel comfortable inviting the general public in. It allows users to trade BTC, LTC and NXT coins easily and in a trustless, decentralized system, meaning that getting “Goxxed” should be a thing of the past.
Working decentralized exchanges have been a bit of a holy grail for crypto developers since the Mt. Gox meltdown. There are several versions in the works now, Mastercoin, Etherum, Colored Coins and a few others. Ripple claims to have a decentralized asset exchange, but its assets requires the trust of individual people, something that tends to not work out online. This seems to be the first case of a true trustless system.
The decentralized nature of the exchange is secured using multisig wallets and the NXT asset exchange. However, unlike Ripple's Asset Exchange that essentially relies on IOUs, the multigateway works by requiring each coin issued is backed up by an actual version of that coin. This means that if you buy bitcoins from someone on Multigateway, those bitcoins are held in a multisig wallet controlled by multiple servers. When you want to move those bitcoins into a bitcoin wallet, all the servers have to agree and issue their keys to release the bitcoin. The same applies to any other coin on the network.
The CoinAssets, as they are called, can be traded on the NXT asset exchange with other users, without the need to trust those users, and can be traded out for actual coins at any time. Currently only BTC and LTC are supported, but DRK, DOGE, VTC (Vertcoin) Maxxcoin and Earthcoin are also in development. The developers stressed to me that they are looking at other communities and stated that they are willing to help nearly any coin that wants to utilize the technology.
I was given a list of coins that could support the asset exchange almost immediately, they include: BTC*, LTC*, DRK*, DOGE, CGB, BTCD, VRC, PPC, NMC, XC, VRC, ZET, QRK, RDD, XPM, FTC, CLOAK, VIA, MEC, URO, YBC, IFC, VTC, POT, KEY, FRAC, APC, VOOT, GML, SYNC, CRYPT, RZR, ICB, CYC [* denotes already implemented]. Other coins could also work with the exchange but they either haven't been tested or would need some additional coding.
Perhaps just as significant, is that the NXT team has released the code to the public, meaning that any altcoin community could make their own decentralized exchange that works with NXT. Potentially, this gives any new or struggling altcoin a way to create their own decentralized exchange, complete with one of the more popular altcoins out there. It wouldn't be as helpful as being included in a BTC exchange, but for coins that aren't on any exchanges, this could provide an option early on in their life cycles.
We will have a full hands-on report on Multigateway shortly.
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