NEM, or the New Economy Movement, wants to develop a smarter and more technologically-advanced blockchain. It positions itself as being not just another altcoin, on not just another blockchain
NEM, which calls itself the Smart Asset blockchain, is a technology platform that seeks to be an efficient way to manage assets and data easily and at low cost.
Let’s explore NEM, its working, features, advantages, and its potential applications.
What is NEM (XEM)?
NEM evolved in March 2015 as a fork-out version of the NXT, another popular blockchain-based virtual currency and payment network platform.
It is operated by a Singapore-based non-profit organization called NEM.io Foundation. Following the fork, NEM.io decided to develop its own codebase for advancing NEM, to make it more scalable and faster. Thus emerged a new NEM cryptocurrency platform, which was completely different from the original NXT.
NEM has its own cryptocurrency, called XEM. Though XEM is not being used by merchants as a means of payments as bitcoins are, XEM has nonetheless grown significantly in value and currently has the twelfth-highest market cap among cryptocurrencies.
NEM currently supports one wallet, called Nano wallet.
NEM’s Efficiency Pillars – Proof-of-Importance and Harvesting
NEM aims to build a “better” blockchain, and it tries to achieve that using two key concepts of proof-of-importance (POI) and harvesting.
Other cryptocurrency networks, like Bitcoin, use a proof-of-work (POW) or proof-of-stake (POS) system, which requires a mining device to work for the blockchain. The rewards are allocated to the miners based on their work contributions.
However, in POW, the miners with higher computing/processing power have undue advantage over those with less powerful machines. Additionally, POW leads to more power consumption making the process energy inefficient. In POS, coin hoarders have the undue advantage as the participants with more coins have higher chances of getting more coins through mining and transaction processing. It also promotes cryptocoin saving, instead of cryptocoin spending.
NEM addresses the issue using its POI mechanism, as it gives more “importance” to how much one is “invested” into the NEM system, with realistic “vested” interest. The XEM coins in the wallet and the holding period plays a key role in gauging the importance.
One needs to hold 10,000 “vested” XEMs in one’s wallet to qualify for generating and earning new blocks and for earning various transaction fees.
How POI works
For example, assume Martin gets 20,000 XEMs in his wallet today. With each passing day, NEM’s mechanism allocates 10% of holdings as vested. After day one, 2,000 XEMs of Martin’s holdings will be vested, leaving 18,000 non-vested XEMs. On day two, 10% of 18,000 will further qualify as vested, taking the total vested XEMs to 3,800, and so on. On the seventh day, the vested XEMs will cross the threshold of 10,000, which will qualify Martin to seek blockchain rewards.
Additionally, POI also rewards users who make transactions with others in the network. Conducting more transactions above a minimum size also adds to a participant’s POI score, which helps him/her gain more chances to claim a reward. To prevent misuse through back and forth dummy transactions among a group of users, NEM considers the net transaction amount for improving POI score.
Harvesting is an alternative to the standard mining process that is commonly followed by other popular blockchain-based platforms like Bitcoin and Ethereum.
Through mining, newly identified cryptocoins are added to the blockchain ecosystem, and the various transactions occurring on the network are verified and added to the blockchain public ledger. Unfortunately, the traditional mining method is power-intensive, and may also take a lot of time that leads to slower transaction processing and network congestion.
NEM’s harvesting approach works differently. Instead of each miner contributing its mining power in a cumulative manner to a computing node, a harvesting participant simply links his account to an existing supernode and uses that account’s computing power to complete blocks on his behalf. Essentially, one lends his POI score to the supernode that increases the chances of block harvesting jointly without there being any need for increasing the processing power.
As soon as a transaction occurs on the NEM blockchain, the first node or computer that catches and verifies it notifies other users, which creates a propelling wave of information increasing the chances of block generation.
A participant’s mining device or computer need not be running to perform the harvesting process, and that helps in power saving. Instead, harvesting is done automatically using a user’s wallet. Harvesting needs no special hardware like that required for mining bitcoins.
NEM uses the Eigentrust++ algorithm that maintains a “reputation system” for the various nodes on the network. It helps to balance the load on the network, and even decide on removing the non-contributing nodes keeping the network efficient and agile.
Example of NEM Usage
NEM offers seamless ability to interface between public and private blockchains. It enables easy transfer of any digital asset – like tokens, contract, or files – from a privately held internal enterprise network, routed via a public blockchain, and finally to another business’s private network. Today, a user cannot move money directly from his/her Paypal account to a Venmo account. NEM private to public blockchain interfacing can make such transfers possible, provided all involved parties agree.
NEM is capable of handling everything – financial assets, contracts, documents, and a variety of digitized assets.
One can create one’s own Paypal or Venmo on the NEM network. For example, NEMPay, an open source payment app already exists on NEM, and it can be easily customized by a participant to use his/her own custom crypto tokens for easy money transfers.
Other uses of NEM include a retail store chain using it for maintaining and tracking its loyalty rewards points program for customers, or a shipping company using it for maintaining data about shipping and handling, or as an open, secure, end-to-end supply chain logistics management system.
Other social uses include secure voting, record keeping, registration, and access control. For example, to pass a majority resolution in a constituency meeting, NEM’s in-built multisignature feature can be used to automatically decide whether the minimum N out of the total possible M signatures have been received or not.
NEM also allows a participant to easily create, distribute, and trade cryptocoins and tokens that are compatible with the wallets and other trading apps available in the NEM ecosystem. One can even conduct initial coin offerings (ICO) on NEM using this facility.
Technically, NEM is API compatible, so it allows any global application to be linked and utilized on the NEM platform. Any new or existing mobile app, web app, database, or other programs can easily connect to the NEM blockchain and interact with it in a secure manner through the use of API Gateway server and API calls. It allows one to easily and completely customize how they allow the access and use of NEM, in an open and self-scaling framework.
The Bottom Line
“Smart Asset Blockchain, Built for Performance” – NEM’s tagline sums it up perfectly for a new-age blockchain that has opened up a wide variety of possibilities for building better and improved blockchain systems. NEM hits directly on the pain points of the existing blockchains – lengthy processing time and network congestion. It also attempts to marry the much needed private and public blockchains, making it a suitable candidate with wider adoptability potential in the future.
How to Buy NEM (XEM)? – A Step-by-Step Guide
The first step in the process of buying NEM coin is to set up a NEM wallet that can store your XEM coins following the purchase. The wallet will also be used when looking to sell XEM coins, with the coins needing to be transferred to the exchange.
Step 1 – Create NEM (XEM) Digital Wallet
As is the case with other cryptocurrencies, it is always recommended to select a wallet from the cryptocurrency’s website. In the case of NEM, the proposed wallet is Nano wallet, which can be downloaded directly from the NEM website. The Nano wallet is compatible with Windows, OSX, Linux and more.
Once the wallet has been downloaded and run, you can then set the name and create a secure password that, if forgotten, could result in the loss of all coins from within the wallet. The creation of the private keys is next and, once the process is complete, needs to be stored somewhere safe along with a backup of the wallet. (The private key will be a series of numbers and letters that allows a wallet holder to open their wallet from any computer). The loss of the private key could also result in losing all XEM coins held.
Step 2 – Buy NEM (XEM) Coin
Once the wallet has been created, there are two ways in which XEM coins can be purchased. The first option to buy NEM (XEM) would be with fiat currencies, the second option is obviously with Bitcoin or Ethereum.
Buying NEM with Fiat Currencies
Currently, not many exchanges allow the purchase of XEM with fiat currencies. However, you can still find XEM/USD in HitBTC.
For XEM/USD pairings, the largest trading volume is on the Hitbtc exchange, with the pairing’s volume accounting for 0.68% of total volume. With that in mind, buying and selling XEM coins with Bitcoin would provide significantly more liquidity on the leading exchanges.
Buying NEM with Bitcoin or Ethereum
The most common way to buy XEM is through exchanges that allow the purchase of XEM with Bitcoin or Ethereum.
- Open an account at Coinbase, and purchase Ethereum or Bitcoin. Another option to purchase Bitcoin is through LocalBitcoin.
- Now, after you bought ETH or BTC via one of the exchanges above, sign into HitBTC or Cryptopia and open an account.
- Withdraw your ETH or BTC from the exchange into your HitBTC or Cryptopia account. In order to do that, click the “Funds” tab and search for BTC or ETH, choose “deposit”, copy the ETH or BTC deposit address and paste it to the exchange that you withdraw the money from. The process might take up to one hour (vary according to different exchanges).
- After completing these steps, in HitBTC trading platform, Search for XEM/BTC and proceed with the transaction.
- Now, after you purchased XEM, search for a digital wallet that supports NEM and transfer the coin into the wallet. Click here for NEM (XEM) wallets.
Below are some of the most well-known exchanges that provide XEM:
HitBTC, Coinbase, and POLONIEX.
Trading volumes should also be considered in the selection process, with low trading volumes likely to lead to lengthier time frames when looking to sell the coins.