If you dabble in cryptocurrency, then chances are that you are looking for that under-the-radar altcoin that could give you that 1000x return on your money.
In this article, we'll tell you about Nimiq's technology in straight-forward English, how the project could play a crucial role in the red hot DeFi and NFT space and explain why NIM could be that small-cap gem you have been looking for.
What Is Nimiq?
In a nutshell, Nimiq is a decentralized and censorship-resistant payment system in which the NIM token is used as a transfer of value and a medium of exchange. In other words, NIM is intended to be used as digital cash. A bit like many other cryptocurrencies, for example, Litecoin.
We need to be straight up and say that the market for payment coins like this is exceptionally competitive. However, NIM users do enjoy some of the lowest transaction fees out there at less than a cent per transaction. To put that into context, at the time of writing, Bitcoin has a transaction fee of 44 cents.
Nimiq is also different from other payment coins by having a strong emphasis on designing everything for mass adoption. What we mean here is that Nimiq takes the complication out of crypto by simplifying the Nimiq user experience/interfaces wherever possible. All this is geared to making Nimiq easy, convenient and accessible for everyone. It's a similar strategy to what Apple used to dominate the tech hardware markets. Regular users of tech simply do not like complicated or confusing interfaces and tend to gravitate to solutions that are simple to use. This means Team Nimiq could really be onto something here when it comes to designing a payment coin primed for mass adoption.
Another interesting thing about Nimiq is its charitable slant, with 2% of the final NIM supply being allocated to Nimiq Charity which has the sole purpose of supporting projects of high social and ecological impact.
So, we've told you that Nimiq is a censorship-resistant payment protocol. However, where it differs from other projects is that it is native to the web.
To explain how this works, let's take a look at other blockchains like Bitcoin and Ethereum where your browser needs to connect to a node in order to access the blockchain network. The problem is that it's not practical for most people to set up their own node due to the hardware and technical knowledge required to do so. The result is that most users on the likes of Bitcoin or Ethereum are dependent on nodes run by other people to access the Bitcoin or Ethereum networks.
With Nimiq, things are different because of Nimiq's unique architecture. This sees your browser actually becoming a node in the Nimiq blockchain network. In other words, this means that anyone using browsers like FireFox, Chrome, Safari and Brave can run a Nimiq node easily and with no technical knowledge. Another thing to point out is that this lack of reliance on third party nodes is what makes Nimiq an exceptionally censorship-resistant payment system.
Now, this may sound a little complicated. However, all you need to know is that backbone clients do the heavy lifting, whilst the browser clients, used by users, are what makes Nimiq native to the web.
Why Is A Crypto Native To The Web A Big Deal?
To wrap your head around this, a good analogy is thinking about how you used to have to buy Microsoft excel and install that software on your computer to use it. Times have changed and you can now use Google Sheets within your browser with no downloads at all. Google sheets is super simple to use and it just works.
One thing that tech giants like Apple and Google have taught us in recent years is that mainstream audiances like complicated technology to be made simple and quick. That's exactly what Nimiq's browser-first approach aims to achieve.
All that is combined with top notch design and simplified interfaces. The result is that it's faster to create a Nimiq account than it is to create a Google one. Don't believe that it takes less than 30 seconds to get started with Nimiq? Why not try it out for yourself and get some free NIM to mess around with whilst you are at it. Create a Nimiq account now!
The Nimiq Blockchain
Right now, Nimiq uses the proof-of-work consensus mechanism which is combined with a bit of tech called Non-Interactive Proofs of Proof-of-Work. In short, this allows for super lightweight nodes to reach consensus in literally seconds, even on a mobile device.
Because the Nimiq project is dedicated to simplicity, the team have intentionally chosen not have a scripting language. However, the Nimiq blockchain does have a good level of compatibility with other blockchains through its support of atomic swaps and being capable of supporting off-chain transaction like the Lightning Network. The Nimiq protocol also supports something known as Hash Time Locked Contracts (HTLC). The result is that NIM can be locked into vested contracts and released at a certain time. These HTLC's have even been used to create vesting contracts to lock up NIM for Team members, which shows their long term commitment to the project.
Nimiq Partnerships And Research
Nimiq has two core research efforts that are set for completion in 2020.
Research Effort One: Nimiq OASIS
Nimiq OASIS stands for the Open Asset Swap Interaction Scheme. This is a blueprint for a crypto-to-fiat bridge, which makes fiat currencies like the Euro behave as if it were a token on the blockchain. This could provide a unique way of connecting the traditional banking world to the crypto universe and enables people with a SEPA bank account to buy or sell crypto directly through their bank.
"What we are seeing is a collection of standards being created [that] will inevitably converge over the next three to five years to create a situation where you can move information and value between all these different systems ー not just Bitcoin to Litecoin to Ethereum to Cardano ー but also your regular bank account"
In a nutshell, that's exactly what Nimiq OASIS would empower users to do. However, instead of waiting five years, the solution is set to be rolled out in 2020.
Team Nimiq have also said that they intend to use this new tech to offer a crypto payment solution to online merchants. This has been called 'Nimiq Checkout'. This would see Nimiq offering:
- The first non-custodial multi-crypto payment solution – so a merchant with zero technical knowledge can accept crypto and get fiat without ever touching it.
- Integrated merchants to get Euros paid quickly directly into their SEPA instant accounts – so it eliminates crypto volatility risks.
- Crypto enthusiasts like you and me can enjoy the convenience of paying in NIM, Bitcoin and Ethereum.
Nimiq Checkout has the potential to provide a remedy to two of the core problems holding back merchant adoption of crypto.
- The volatility of crypto.
- Making it easier for merchants to accept it.
This is one of the main reasons to be bullish about Nimiq's prospects for merchant adoption.
The Partnerships Behind Nimiq OASIS
Yes, Nimiq OASIS is still a blueprint and is not a working product just yet. However, there seems to be some serious substance behind this research. In April 2019, Nimiq announced the acquisition of a 9.9% stake in WEG bank to further solidify the partnership between Nimiq and this German bank. Other shareholders include the likes of Litecoin and point of sale terminal providors Salamantex.
Since then, WEG Bank has formed its crypto banking arm called Ten31 Bank. A brief look at the website will show the collaboration between the bank and Nimiq on delivering a fiat smart contract powered by Nimiq OASIS tech.
The reason why this banking partnership is so important is that it means that Nimiq OASIS can access the SEPA instant banking network through WEG Bank. This extends the potential reach of Nimiq OASIS (and by extension Nimiq Checkout) to 2,000+ European banks in 20 countries.
Although nothing concrete has officially been announced yet, you can see on Twitter that point of sale terminal provider Salamantex acquired a stake in Ten31 Bank as well.
That could be a massive deal as it would not be surprising if the plan was to integrate Nimiq OASIS into Salamantex's point of sale terminals. If that happens, then we could see Nimiq's tech be rolled out and used by both online and brick and mortar merchants. Now, that's pretty exciting for anyone interested in real crypto adoption.
Research Effort Two: Albatross (Nimiq 2.0)
The second main research effort of Team Nimiq is known as the Albatross proof-of-stake consensus algorithm. This aims to provide a solution to the scalability issue faced by many blockchain projects. This has been developed in collaboration with Trinkler Software. What's even better is that the Albatross demonstrator is already out and can be viewed here!
In terms of performance, Albatross is apparently capable of speeds close to the theoretical maximum of a single-chain protocol. Nimiq intends to implement this new consensus algorithm into Nimiq 2.0 in 2020 and this is set to be a major upgrade to the Nimiq blockchain.
To place things into context, if Albatross is able to hit its expected 1,000+ transactions per second, this would mean that Nimiq 2.0 would be able to process five times more transactions per second than PayPal. Pretty scalable if you ask us.
Another benefit of this move to proof of stake is that NIM holders would be able to earn more NIM by staking. Unlike other projects like Ethereum (who require you to own an outrageous 32 ETH to get any staking rewards whatsoever), Nimiq will empower anyone with 1,000 NIM (around $1) to reap the benefits of staking and start earning NIM rewards.
Team Nimiq have recently released some news about the new supply curve for Nimiq 2.0. These can be seen in Nimiq's recent blog post here.
The key things to know are:
- The initial rate of NIM issuance would fall from 29% currently to between 3% – 7%.
- The staking reward return would be in the range of 6% – 14%.
The final supply curve is still a work in progress. However, we hear that a NIM staking calculator is in the works and that this should be made available to the public real soon.
Nimiq And DeFI
In terms of what's happening over there in DeFi, the most common use-cases are:
- Borrowing money
- Supplying money to earn interest
To understand how Nimiq could fit into this sector of crypto, it's important to understand what DeFi actually is. In short, the way to think about DeFi is that it's non-custodial finance – where you don't need to trust a third party, like a bank, with your money.
Non-custodial is probably a word that most people do not know. It simply means that you still hold the keys to your crypto and do not trust them with a middle-man like a banker.
The thing to know about DeFi is that you need to use a web 3.0 wallet like MetaMask to get in on all that DeFi action. For example, lending out money on Compound Finance and earning 8% interest. The problem is that we've not been able to find a non-custodial crypto to fiat gateway that's integrated either a web 3.0 wallet or a DeFi lending or trading platform. That makes things pretty hard for crypto newbies to get involved and reap the benefits of DeFi due to the numerous hoops they need to jump through.
Things would be much easier if there was a quick and easy way to get euros from a bank account, converted into Ethereum and onto some of these DeFi platforms. That's where Nimiq OASIS integration could provide a very neat solution and actually solve this pain point. The really exciting thing is that this would make DeFi more accessible to regular people and that's probably very good news for wider crypto adoption.
Nimiq And Non-Fungible Tokens
Non-fungible tokens or NFT's are essentially digital collectibles. They have four key characteristics:
- They cannot be replicated.
- They cannot be counterfeited.
- You can't print them on demand.
- They have the same ownership right and permanence guarantees as Bitcoin. However, the collectible can be personalized and unique.
Fungible tokens on the other hand are perfectly interchangeable. A bit like gold on World of Warcraft. I don't care what gold I get, the only thing to worry about is the amount. The same is not true of special in-game swords which would be non-fungible.
Right now, the main use-case for NFT's are in computer games with all the top NFT platforms being games. Now, to give you an idea of how big that market is, the PC gaming market is projected to be worth over $3.3 trillion in 2020 alone.
What's really interesting is that there are emerging loan platforms like Tinlake that allow users to draw loans against NFT collateral.
The problem here is that there is no way to get Euros paid directly into your bank account through these platforms right now. That's something that a Nimiq OASIS integration could solve and is a really interesting potential application of this tech.
At the time of writing, Nimiq is sitting at a market cap of ~$5 million. Now, that's exceptionally low when you consider the potential of the project. Nimiq's focus of ease-of-use and simplicity seems to be a tried and tested strategy from the likes of Apple and that does make a lot of sense. Most crypto newcomers struggle with the current levels of complexity and we think that this does need to be tackled for crypto to be mass adopted.
Nimiq could be primed to ride the wave of DeFi's and NFT's rising popularity with Nimiq OASIS's potential application for these niches. Nimiq 2.0 is also set to be a big deal for Nimiq staking and we like how only $1 worth of NIM is required to receive those sweet staking rewards.
On top of all that, you have Nimiq Checkout and merchant adoption to be excited about and there is a lot in this project's pipeline to indicate that Nimiq is very undervalued.
However, despite all that, Nimiq does have some challenges. The NIM token has relatively low trading volume and liquidity. This means that those who want to enter or exit big NIM positions could see significant slippage. NIM coin holders are also gambling that the Nimiq ecosystem will become increasingly adopted and it still remains to be seen if consumers and merchants will embrace and use Nimiq.
With all that being said, Nimiq seems like an asymmetric play. Either it will go to the moon or crash and burn. However, if you are looking for hidden gem crypto projects, Nimiq is certainly one that you should be keeping an eye on.
Interested in trying NIM out for yourself? Why not create a Nimiq account within 30 seconds and grab your free NIM to play around with?
Featured image courtesy of Nimiq team.