MoneyLife

What Is Namecoin?

By Jacinta Sherris
what is namecoin

Namecoin is a type of cryptocurrency originally forked from Bitcoin. That means that it functions on Bitcoin’s code and uses the same algorithm. 

However, Namecoin has the capability to store data on its own blockchain database as well. Namecoin is oftentimes hailed as a cheap crypto to buy. 

With new cryptocurrencies hitting the market almost daily, it can be hard to keep up. It’s even harder to pick and choose the coins with the most potential for investor returns. 

That’s why we’re here! Let us provide you with the latest educational information on all things finance, investments, money management, and crypto. 

So, what is Namecoin and how does it work? We’ve answered all of the most pressing questions about Namecoin below. 

How does Namecoin work?

At its core, Namecoin is a blockchain system used for the purpose of registering domain names. It’s essentially what’s known as a decentralized domain name system (DNS). 

These systems translate readable domain names, such as www.moneylion.com, into machine-readable IP addresses, which are a type of numeric code. DNS helps link different domain identities with numerical IP addresses. 

Namecoin offers the same function, the main distinction being that Namecoin’s system is built on blockchain. Therefore, it is fully decentralized. In a way, this enhances security and privacy. 

Namecoin has been described by its founders 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.”

Does this all sound a bit confusing? You’re not the only one who thinks that! Cryptocurrency can be difficult to break down, and Namecoin is no different. 

It helps to go over the basics one by one. Take a look at the answers to some of the most common questions about Namecoin. 

What is Namecoin used for?

Namecoin has a variety of different functions. Overall, it can be used for the following purposes:

  • Makes website information more difficult to censor
  • Facilitates transactions of the digital currency 
  • Securely records and transfers arbitrary names or numeric keys 
  • Attaches data and other information to said arbitrary names or numeric keys
  • Difficult to censor, change, or erase data, aiding in security and privacy

Is Namecoin a good investment?

It depends. Cryptocurrencies are an extremely volatile investment in general. You should always be prepared for potential highs and lows, as well as the risk of losing your entire principal altogether. 

As an investment, Namecoin closely mirrors Bitcoin’s surges and dips. Even so, it’s much less expensive than Bitcoin. In fact, Namecoin is known as a penny crypto because it’s a fairly cheap crypto to buy.

How do you mine Namecoin?

Namecoin is mined the same way as Bitcoin, meaning it’s mined as rewards for solving complex mathematical problems, which, in turn, aid the blockchain system. Typically, mining Namecoin and Bitcoin requires advanced computer hardware systems. 

Is Namecoin on Binance?

No. At the moment, Namecoin isn’t listed on Binance. However, investors can actively trade Namecoin via Coinbase or directly through the Namecoin official website

Who created Namecoin?

An anonymous user by the pseudonym of Vincent is credited with creating Namecoin by forking Bitcoin’s code.

Factors involved with Namecoin 

Before you jump into buying, selling, trading, or simply using Namecoin, there’s a couple of factors you should know about. 

Potential to improve internet privacy and reduce censorship

Namecoin has gained a following of ardent supporters who believe this cryptocurrency will play a key role in making the internet more secure and private. Similarly, they trust that Namecoin will minimize the effects of censorship on the internet. Proponents of Namecoin consider it an instrumental aspect in the safeguarding of free speech online. 

Related to Bitcoin

Namecoin was derived from Bitcoin’s blockchain, and as such, it relies on Bitcoin’s algorithm. As a result, its highs and lows are closely related to those of Bitcoin. This is especially true when it comes to Namecoin’s performance as an investment asset. Namecoin closely follows the rise and fall of Bitcoin. 

Relatively smaller market cap

Generally speaking, Namecoin has lagged behind other cryptocurrencies in the past in terms of value and market capitalization. For example, it’s nowhere near as widespread as Bitcoin, Ethereum, Filecoin, or other popularized coins. In fact, Namecoin is typically considered a cheap crypto to buy for this reason as well as others.

Ethereum is a competitor to Namecoin

Namecoin is first and foremost a decentralized domain name system (DNS). However, it’s not the first blockchain system to introduce this technology. Ethereum has its own decentralized DNS system. It functions exactly the same way as Namecoin, except Ethereum is built on its own Ethereum network rather than the Bitcoin blockchain.

Advantages of Namecoin

Namecoin comes with several distinct advantages, both as a DNS solution and a cryptocurrency. Here are a few advantages of Namecoin: 

  • Namecoin is a DNS system built on blockchain, so data stored on its system benefits from the heightened security protocols of blockchain, making it less likely to be hacked or corrupted.
  • Namecoin is decentralized, meaning a single entity cannot control or manipulate the data stored in Namecoin’s network.
  • Namecoin is a relatively cheap crypto to buy. It’s essentially a penny crypto, which could make it an enticing investment for some investors, especially beginners. 

Disadvantages of Namecoin

Namecoin does come with its own set of drawbacks, some of which include the following:

  • All cryptocurrencies are volatile investments, including Namecoin. There’s never any guarantee of payoff, and you should never invest more than you could afford to lose. 
  • Namecoin is based on Bitcoin, and therefore, Namecoin shares many of the same issues as Bitcoin, including energy overconsumption and volatility problems. 
  • Many people are enthusiastic about Namecoin’s ability to enhance privacy and render data unchangeable. However, this also makes it easier for black market users and criminals to use Namecoin’s system and remain undetectable.

Namecoin vs Bitcoin 

Namecoin is originally forked from Bitcoin software. In other words, Namecoin was created from a deliberate change in Bitcoin’s blockchain protocol. As a result, Namecoin is identical to blockchain for all intents and purposes. 

Namecoin typically follows the same growth trajectory as Bitcoin, and its volume is also limited to 21 million coins, just like Bitcoin. Even though Namecoin has its own data storage system, it still relies on Bitcoin’s code and uses the same algorithm.

Start investing in crypto with MoneyLion

Namecoin is a cheap crypto to buy. However, this is only true if you’re willing to take the risk that comes with investing in crypto. 

MoneyLion offers a platform for users to buy, sell, and even earn crypto through everyday rewards. While users can’t trade Namecoin on MoneyLion just yet, Bitcoin and Ethereum are both readily available. 

Plus, MoneyLion ensures crypto is accessible to both beginners and seasoned investors alike. You can read all about the latest crypto news and educational material on MoneyLion’s blog and our $1 investment portfolio account when you download the MoneyLion app!

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