Founded in April’2011; Namecoin (NMC) cryptocurrency is peer to peer based naming system and is a first cryptocurrency that acts as decentralized Domain name System (DNS). It runs on the same software that of bitcoin and also have the same proof-of-work algorithm. The only difference between Bitcoin and Namecoin is; with Namecoin you can register domain names with .bit extension. Bit extension working is similar as .com or .net domains but is independent of ICANN, the main governing body for domain names.
Namecoin User sends NMC to each other signed with ECDSA (Elliptic Curve Digital Signature Algorithm). Unlike bitcoin, Namecoin introduces a new transaction to store and update name data within its own blockchain transaction database. User can store 255 Bytes name and 1023 Bytes value data.
Namecoins can be mined in the same way as Bitcoins by solving the hash puzzles. Same as bitcoin all the transaction of Namecoin are publicly shared to all the users. However, it is recommended to do merged-mining, i.e. Namecoins are mined as a free by-product of Bitcoin mining. Total Namecoins which can be mined are limited to 21 million.
Mining can be done via Eloipool (Fast Python3 pool server) and p2pool (Decentralized Bitcoin mining pool works by creating a peer-to-peer network of miner nodes) software which supports merged-mining.