In the present paper we study the rigidity of 2-step Carnot groups, or equivalently, of graded 2-step nilpotent Lie algebras. We prove the alternative that depending on bi-dimensions of the algebra, the Lie algebra structure makes it either always of infinite type or generically rigid, and we specify the bi-dimensions for each of the choices. Explicit criteria for rigidity of pseudo $H$- and $J$-type algebras are given. In particular, we establish the relation of the so-called $J^2$-condition to rigidity, and we explore these conditions in relation to pseudo $H$-type algebras.

Except for minor polishing this version is enriched with two appendices concerning pseudo H-type algebras with J^2-condition. In Appendix A we relate these algebras to division algebras and their split versions. In Appendix B we relate these algebras to real graded simple Lie algebras