I guess the best way to think of NXT is as your
brain wallet with a browser interface. That could actually be made into a slogan. Because people are already familiar with the concept of a brain wallet thanx to bitcoin, they should know that the brain wallet password must be very long and hard to guess. So, yeah, NXT is a brain wallet, that's basically it. If you screw up creating a good long password, your funds become someone else's possession.
NXT being a brain wallet ONLY crypto currency has both good and bad sides.
Good sides:
- you don't need to install additional software if you don't want to (you will be able to access public, maybe even official nodes using your brain wallet password in the future), or install it on localhost if you want to feel secure/a bit paranoid. C-f-B will probably say it's best to install it on localhost for security and he's right, all I am saying, if you need to urgently access your funds and you can't install it at that moment, you can access it from anywhere in the world using any public node. I am sure in the future there will be (semi-)official public nodes with easy-to-remember domain names.
- you don't have to worry about someone stealing your wallet.dat, because there is no wallet.dat, keyloggers might still catch your pass phrase, so still have to be careful about them.
- you don't have to worry about backing up your wallet.dat (but you have to back up or remember well your pass phrase). Hint: could make up a pass phrase in such a way, that if you see the first half of the phrase you can easily remember the second half (creates a sort of association in your mind). But the first half should not give any clue to a stranger about the second half. That way, the first half of the phrase can be stored even right next to your computer. A stranger wouldn't know what to associate it with. I don't advocate keeping even half of the pass phrase next to your computer though
- remembering and trying to reproduce in writing your own and someone else's account number to send or accept funds is easier, because it's only numbers in the account number and there are less of them than with bitcoin and other alt-coins.
Someone please come up with legitimate bad sides regarding security, but please something smarter than what user miztaziggy was able to concoct.