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NEM is a dual-layer blockchain similar to Ethereum but written in Java, a popular programming language; its native cryptocurrency is XEM. The platform describes itself as a ‘smart asset blockchain’ which allows developers to build a number of decentralized applications (dApps) for fintech, logistics, Initial Coin Offerings (ICO), and peer-to-peer payments.
NEM stands for New Economy Movement, the premise of the platform is that it combines learnings from other cryptos (such as Bitcoin) with academic research in network theory. Its key advantage is its modular Smart Asset System, which enables businesses to replicate almost any business transaction on the blockchain with minimal development. Because NEM was created using Java, most programs can be easily adapted to utilize the network. It is sometimes described as a blockchain-based cloud platform.
The founding vision of the protocol was to create a system that would give power to users, rather than coin hoarders and mining companies. One of the issues with the Proof of Work system used by Bitcoin (and many others) is that in order to mine tokens, you must use computational power; the greater your machine’s power, the greater the chance of earning coins.
This has lead to a system where only those who can afford the latest and most expensive mining machines are able to profit, while the average person is not able to compete or contribute. Miners of larger amounts also have a tendency to hoard their coins without contributing to the system and if the amount they hold is large enough, they can gain control of the token network.
To ensure a fairer system XEM cannot be mined or staked. Instead, the currency is harvested through the Proof of Importance (POI) algorithm and uses Delegated Harvesting to determine who can vest the next block. NEM’s POI system takes into account how much XEM a participant holds and whether they have actively helped the economy by transacting with others. Each user is given a trust score, the higher it is, the more chance they have of being rewarded.
To begin vesting coins, a participant must place at least 10,000 unvested XEM coins in an approved XEM wallet. Over time, XEM coins pay out dividends (interest) and trust scores increase, as long as there is a balanced transaction history and the holder contributes to the community.
There are 8,999,999,999 XEM in total, 75% of the coins were issued evenly to nearly 3,000 stakeholders after the launch of the genesis block on March 31, 2015. The remaining 25% of XEM was allocated to marketing and development expenses. The equal distribution is to ensure that no one can control the price or gain an advantage over others since each stakeholder only controls about 0.025% of the currency.
The initial framework of NEM was laid out by an anonymous Bitcoin Talk forum user called UtopianFuture in 2014. By July 2018 the organization had grown to include the NEM Foundation and headquarters in Kuala Lumpur, Malaysia, which serve as an incubator, accelerator, co-working space.