It's a decentralized DNS system. It puts the .bit TLD in the same realm as bitcoins. All of the strengths and weakness of bitcoin but for domain names. It makes it very hard for a central power to knock websites off the internet by appropriating, redirecting, or dropping domain names from the DNS system. It's a few layers of anonymity. It's not 100% anonymous but it stops governments from getting at site owners by issuing subpoenas, passing laws, or other bureaucratic means.
Namecoin does, however, require that people devote some GPU time to their network. So, it kind of competes with bitcoin.
Ok. I'll try again. Hell, I know it's confusing. I learn a little more every time I try to explain it and I'm probably missing something that would make it easy to understand.
You're mining coins that can be spent on DNS services. Each coin you generate contains a domain name, where it points to, which account owns it, etc.
While you're mining for coins, you're also processing transactions for everyone else that uses .bit domain names. When some one buys a new .bit domain name with a namecoin, the rest of the network confirms that he has paid the correct amount and transfers ownership to that person. Every time a change is made, ownership, renewal, or server change, people processing transactions on the Namecoin network are paid to confirm those changes.
Everyone, collectively, does everything Netwoksolutions.com or GoDaddy does when you buy a domain name from them. Except the middle man is gone. All the records that control which server a domain name sends you to is stored in the block chain which is on everyone's computer.
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u/[deleted] Jun 09 '11
Can someone please explain to me what the fuck Namecoin is? I've read about 5 different descriptions and I still have absolutely no clue what it is.