What is the NEM cryptocurrency? Described by some die-hard enthusiasts as the ‘Smart Asset Blockchain,’ NEM is an ambitious project that uses its native utility token, XEM, to move several blockchain-based assets quickly and seamlessly.
Pseudonymous developers are not uncommon in the world of cryptocurrencies. In the case of NEM, it took four peculiar usernames in Jaguar0625, BloodyRookie, gimre, and UtopianFuture on an online Bitcoin forum to create an intriguing utility token using blockchain technology.
Such is their grand vision that they dubbed the new cryptocurrency platform the ‘New Economy Movement’ (NEM), which has now earned the term ‘Smart Asset Blockchain.’
Since 2015, NEM aims to function as an efficient mechanism for the moving of versatile blockchain assets using its native cryptocurrency XEM. XEM itself is a standalone digital currency that facilitates an efficient, peer-to-peer medium of exchange.
NEM has proven to be a wildly lucrative investment since 2020, increasing by 1,700% from about $0.026 to its current approximate value of $0.36. NEM’s market capitalization is roughly $3.2 billion and is the 21st-most traded cryptocurrency (all data correct as of February 10th, 2020).
This article will cover in broad detail what NEM does, how it works, and what makes it a special cryptocurrency project.
The core developers or founders of NEM are all traceable to the popular online forum, Bitcointalk.org. Almost as a nod to Bitcoin’s mysterious founder, Satoshi Nakamoto, the actual creators of NEM are referred to by their pseudonymous.
Various sources consistently mention four distinct usernames, Jaguar0625, BloodyRookie, gimre, and UtopianFuture, all of whom had some degree of involvement in 2014. One recurring narrative was that UtopianFuture was inspired by another cryptocurrency, NXT, to the point that NEM became its fork in March 2015.
Through the development of a separate codebase, NEM was rebuilt from the ground up not long after. As with most digital currencies, the expansion of NEM is now in the hands of the Singaporean non-profit organization called NEM Foundation, established in 2016.
Despite a widely-publicized hack in January 2018 on Coincheck that stole about $530 million worth of coins and an overall bearish cryptocurrency market in the same year, NEM’s value has effectively increased close to 430,000% (from $0.00008482) since September 2015 (according to coingecko.com).
How does NEM work?
As already established, NEM is the umbrella of the XEM cryptocurrency, or that XEM is a utility token on NEM’s blockchain.
While different projects form the core of NEM, the main one related to digital currencies is allowing developers to create decentralized applications (dApps) and smart contracts on their flagship NIS1 blockchain (which will become Symbol).
NEM asserts that Symbol is the next-generation open-source, decentralized platform better designed to connect businesses to blockchain technology. The powering token for all this work is XEM. However, XEM can act as its own separate cryptocurrency available on countless exchanges, offering lightning-quick confirmation times and low fees.
Upon project launch, a finite amount of 9 billion XEM was created, the current circulation. One has the option of either purchasing these coins or earning them as a reward through ‘harvesting’ (covered in the next section).
One of the unique elements of NEM is the consensus mechanism employed on its blockchain, known as proof-of-importance (PoI). The network does away with the popular proof-of-work (PoW) and proof-of-stake protocols (PoS) in favor of a concept they pioneered.
PoI isn’t starkly different from PoS as there is a requirement to stake or (‘vest’) a minimum account (10,000 XEM) (NEM is not a mineable coin).
However, unlike staking, which promotes the hoarding of coins, PoI also considers how often holders interact on the network, who they transact with, and their reputation. This system fosters participation rather than merely staking.
A score of importance is assigned based on the ‘vested’ amount and the overall participation. Running an ordinary node needs at least 10,000 XEM in a designated wallet. There is also a ‘supernode,’ and this requires at least 3 million XEM. The equivalent of mining or confirming transactions on NEM is known as ‘harvesting.’
To quickly summarise, a supernode ‘harvests’ while an ordinary node partakes in ‘delegated harvesting.’ In other words, based on their stake and PoI score, a standard node will earn XEM coins as a portion of what the supernode has harvested.
What makes NEM valuable?
NEM does away with the power-consuming PoW using its analogous ‘harvesting.’ The latter does not require expensive equipment and ongoing electricity costs, making XEM a far more scalable token than the competitors.
Many analysts consider staking a far more efficient means of creating coins than the heavily energy-reliant mining. The grand vision, though, for NEM is ‘blockchain interoperability,’ one of the buzzwords in platforms seeking to integrate private and public distributed ledgers.
In simpler terms, many companies with their own cryptocurrencies want to ensure blockchains can communicate with each other since many exist in silos. There is a lot of investment by private companies in the blockchain sector, and most of NEM’s focus is on businesses.
Blockchains aren’t just necessary for creating cryptocurrencies or tokens; they also enable the incredible transfer of many digital assets such as files, contracts, and just about anything of value. Another highlighted area where NEM has proven to be worthwhile is supply chain management and logistics.
NEM is one cryptocurrency venture to watch for those particularly interested in the growing blockchain sector. We see that not only is there an interest in the actual digital coins, but that blockchain technology will revolutionize far more than just money.