Overview of NEM
NEM, short for New Economy Movement, is a peer to peer cryptocurrency and blockchain platform that caters to businesses by powering their mission-critical infrastructure. After it forked from Nxt, NEM was built from the ground up on a very sound and solid foundation that offers something different from similar projects. These differences include new methods such as “harvesting” and a new type of consensus known as “proof of importance.”
The proof of importance (POI) consensus algorithm is based on the proof of stake and ensures speed and scalability for the blockchain. In the POI model, network participants (nodes) are selected to confirm transactions depending on their importance in comparison to other nodes on the network. POI requires network participants to stake a certain amount before they can verify transactions.
Asides the amount of cryptocurrency staked, other factors that determine a node’s importance on the NEM network include account balance and how much the node is using the system. Nodes that prove their importance by meeting these requirements are granted permission to authenticate transactions on the blockchain.
That said, accounts with minimum balances can also be allowed to confirm transactions, provided they are using their balance as they should. Eliminating complex verification processes makes the NEM platform highly energy efficient when compared to PoS and PoW algorithms.
“Harvesting,” when used in relation to NEM, refers to the process by which transactions are verified in POI consensus algorithm. This means that harvesting is to the POI model what “mining” is to the bitcoin blockchain. The harvesting process involves authenticating and adding blocks to the blockchain.
Other than the new algorithm and harvesting method, NEM prides itself on offering 1-minute block time and multi-signature accounts. The primary coin used on the NEM platform is called XEM. XEM functions as a currency and digital asset, and has a total supply of 8,999,999 tokens.
For a user to be considered eligible for harvest, they must have maintained a minimum balance of 10,000 XEM over a few weeks in their account. There are two ways a node can harvest with NEM: local and delegated. With local harvesting, you verify transactions on your own machine.
Delegated harvesting means you are entrusting your ‘importance score’ to a supernode to verify transactions on your behalf. Note that you will receive the same amount as transaction fee regardless of the harvesting method you choose.
However, your chances of receiving a transaction fee for your “luck” depends on your proof of importance score as well as the number of transactions executed on the network.
Essentially, NEM aims to create a “smart asset system,” where network operators are allowed to develop customizable blockchains. NEM is grouped into four components, which include:
- Name Spaces
NEM mosaics could be anything from songs to assets, or just anything that a user wishes to add to the blockchain. Similarly, NEM namespaces allow users to name their mosaics and addresses as well as create multi-signature rules for the names entered.
The NEM platform is designed to empower individuals. As a result, it looks to solve some of the structural issues associated with today’s economy. Economic power as is today, is too centralized.
Research finds that the world’s richest 1 percent own half of the world’s wealth. With so much wealth concentrated in a few hands, a vast majority of the world’s population have to toil to make ends meet. NEM aims to disrupt this arrangement, allowing everyone to control the financial aspects of their future.
On a more technical aspect, most businesses willing to use the blockchain technology often find it difficult to do so because they lack the financial and technological capacity to evolve into a smart economy.
Consequently, NEM was designed to bridge this gap by providing a technology that is flexible enough to be adapted to many uses. NEM focuses on improving performance, easing development, supporting deep customization, and improving security, among others.
The NEM Solution
The NEM platform seeks to give individuals more control over their economic activities including over the transfer of funds and information. The system relies on multi-signature accounts to enable economic players to send and receive money securely.
More so, future developments will enable people to send arbitrary digital properties to each other through the colored coins method. The goal is to create a new economy that guarantees financial freedom, offers equality of opportunity, and one that is decentralized enough to give people as much power as they need to control their finances without relying on a central authority.
NEM uses the POI algorithm to give equal opportunity to all individuals because it believes that everyone should have a say in how their finances are being controlled. To achieve this goal, the Proof of Importance uses several factors, as mentioned, to rate the importance of members on the network.
The system measures how active a node is, the number of coins they have in their balance, as well as how important the other accounts they have interacted with in the past are. This approach challenges current arrangements where people’s importance depends solely on how much money they have. In this manner, NEM creates a level playing field for all individuals.
NEM’s team include the following individuals:
- Lon Wong – Former president and founder
- Jeff McDonald – Co-founder
- Kristof Van de Reck – Interim CEO and former board member of NEM foundation
Like most cryptocurrencies out there, NEM has several competitors. Some of these include:
The NEM infrastructure offers several advantages over its competitors including high scalability (3,000 transactions per second), deep customization, low transaction fees (0.01%), high system efficiency, and zero inflation. In addition, all transactions conducted on the NEM blockchain can be traced back to their origin.
NEM is one of the most innovative blockchain platforms around today. It runs on its own blockchain, offers multi-signature accounts, custom tokens, as well as identifiable namespaces for organizations. The project is everything businesses have been waiting for.