Last Updated On November 13th, 2018
What is NEM? NEM is an acronym for the cryptocurrency known as New Economy Movement. The digital token that powers its network goes by the name XEM. NEM is the first-of-its-kind Smart Asset blockchain framework. The good news is that Smart Asset system is designed for infinite customization options and can, therefore, be used to create various applications.
Its foundation blocks comprise an API interface on top of which one can create other blockchain solutions using any coding language of choice. It simply functions as an API gateway and developers using the platform would only need to access API calls in order to fully utilize the potential of this technology.
The options are endless as to how the apps designed on its blockchain framework can use the technology. They can choose to access the NEM API server directly or make NEM requests while also using other servers. They could also adapt any existing servers to be able to use NEM behind the scenes.
The Smart Asset functionality on the blockchain is not new in any sense. But most of the existing blockchain models offering similar features have not really managed to make any significant impact. They are especially limited when it comes to blockchain uses beyond the cryptocurrency space.
In this regard, the NEM cryptocurrency has excelled as it is trying to push the technology to its limits and beyond. The model’s unique design allows it to transcend existing models in most ways. This is because it was built from the ground up with that data capacity in mind, unlike other models that are incorporating revisions to their code to accommodate afterthoughts.
What is NEM Coin?
NEM coin refers to the token used on, XEM. Unlike the tokens on most blockchain networks, XEM is not a currency. So, precisely what is NEM coin and why does the platform care about trading it if it is not a currency?
The coin is necessary for carrying out activities on NEM’s platform.
For instance, companies who implement the use of NEM coin will need to transfer their smart assets from place to place. Doing this will require sending information across the network, a feature that attracts transaction charges. These charges will be paid for in XEM. This means that the higher the number of users it has, the higher the value of XEM.
This is because of the fact that only 9 billion of NEM’s coins will ever be in existence. Therefore, the higher the demand for XEM, the higher its value will be.
A Brief History of NEM
NEM.io, the organization behind the name, is a non-profit organization in Singapore. NEM was set up in 2015 and when it was new, it sought to be more than just another cryptocurrency. Its objective was to develop a superior, technologically advanced information model on the blockchain.
The initiation of the NEM cryptocurrency was a result of a bitcointalk discussion forum user referred to as Utopian Future. During that time, this client was propelled by the NXT blockchain and NEM was initially supposed to be a hard fork of this chain. Its developers, however, decided to rewrite the code base and make it completely independent.
News of plans for the extensive new project got underway in January 2014 when a fresh call for interest was initiated on the bitcointalk forum. That time, the idea of the discussion was to create a new cryptographic currency right from the onset. The group behind the project came up with the idea to get contributions from interested parties and issue out stakes to them. Each of which was worth 2.25 million XEM.
The contributors would be able to recover their investments in time as the model advances. The group of developers set to work on the project. News of the release of an alpha version came in June 2014 and a beta version in October the same year. The first stable version was dispatched in March 2015.
What Exactly Does NEM Do?
The main defining aspect of NEM is the Smart Asset functionality as mentioned above. Smart Asset technology has four major components:
These refer to digital data on a supported blockchain, for instance, a custom network token. They could represent information like other forms of currency, shares of stocks or even reward or bonus points. In whatever form the information takes, they allow the transfer of assets held in addresses.
These are the containers used on the blockchain system for various assets such as business records, deeds, currency or contracts. All of the data here are unique to a particular protocol and can be updated as changes occur on the network.
These allow you to put your Smart Assets to work by completing various actions. This could be through configuring address ownership or transferring existing mosaics to and from different addresses on the system.
These are space naming systems within the whole. In each space, an individual can create several subdomains to handle external business accounts or specific uses within his business. The namespace also creates and maintains a notoriety system for the aforementioned mosaics.
Use Cases of NEM
With the four major components of the NEM blockchain system in place, there are quite a number of use cases for the platform and apps built on its blockchain framework. These include:
- Secure record-keeping
- Escrow payment services
- Loyalty reward schemes
- Mobile payments
- Ledger software for financial institutions
- Tracking transactions for investment firms
- Storage and sharing of important government documents like Birth Certificates
- Stock management
The above use cases just scratch the surface of the NEM network potential. Some of the functions listed are in themselves entire industries. Others are features present in almost all existing business organizations.
Benefits of Using NEM
Low Transaction Costs
The platform charges a very low transaction fee of 0.01%. Compared to other cryptocurrencies like Bitcoin or Ethereum, and popular payment methods like PayPal (2.6%) or credit cards (1.5% to 3%), this is highly cost-effective. An important feature that makes this possible is a new code that maximizes the transaction efficiency. This makes it possible for the network to enjoy transaction speed of about 6 seconds with confirmation times of around 20 seconds.
NEM is highly scalable and with some scheduled updates taking effect, it should be able to carry out thousands of data transactions per second not like Ethereum and Bitcoin. Ethereum blockchain currently supports roughly 15 transactions per second. Bitcoin blockchain, on the other hand, can only handle a maximum of seven transactions per second.
NEM uses a different system to generate a blockchain. NEM’s new coins is generated quite unlike the mining system the crypto communities of Bitcoin and Ethereum and the like are accustomed to. A new blockchain is generated using local and delegated harvesting. We will consider these in detail further on.
But for now, suffice it to say that the new blockchain technology leads to a more lucrative reward system than mining. This is great news for those who want to take part in this.
Features that Make NEM Unique
There are two methods used to create a blockchain in NEM. These are local and delegated. Harvesting uses a concept referred to as Proof-of-Importance to determine the person who can mine the next block.
Proof-of-Importance (POI) and Vesting
Every node on the network calculates its importance score that determines how often it can participate in harvesting. One of the factors determining importance is referred to as vesting. When you place XEM tokens in a wallet, they are initially considered unvested. But the more time they take untouched, they become vested.
A wallet has to have a minimum of 10,000 vested XEM for it to qualify for importance scoring. Transactions on the network are also assessed such that priority is given to nodes that contribute frequently to the network. A combination of vesting and transaction works to get the overall importance score.
On the NEM system, unlike most others, running a node and mining are carried out using the same software.
There are no hidden transactions on the network. There are many crypto enthusiasts who view this as bad news. However, considering the high level of risk associated with untraceable transactions, the blockchain system prefers to implement a totally transparent framework.
This protects all users on the network and could be the reason why there have been no attacks on the system to date. For a business organization, this aspect improves responsibility. This is because they can account for their spending habits and cut down on unnecessary expenses.
All the coins that are ever going to exist on this network are already in circulation. This means that there is no way additional coins on the blockchain system will result in inflation.
Low Power Usage
Harvesting or running nodes on this network consumes 100 times less electric power than bitcoin does. This is part of the reason behind the low transaction fees on the platform.
Not Limited to Retail Use
Most cryptocurrencies pay so much attention to the token supporting their platforms that the platform takes a back seat. NEM does not focus on the price of XEM or potential retail applications for it. It instead strives to improve the platform and increase its potential use cases in various industries.
Challenges Faced by NEM
NEM’s blockchain system is not without its fair share of challenges. First, it has to contend with Ethereum, the second biggest player on the crypto scene, as its main competitor. It, however, offers a reliable model for building applications for businesses as its features allow developers to pay more attention to progress and not technical complications. It is quite simple to master and therefore very friendly.
The blockchain system also has an uphill task trying to get the public to understand its model and what it has to offer. Explaining why the platform token is not meant for use as a currency is quite difficult.
Developers with knowledge on how to implement the system and integrate it with existing models are also few. Fortunately though, the network has a smooth learning curve and is no major challenge for those interested in learning the ropes. Its API is also built for easy integration. The team behind the model is also working hard to build a support framework by training new developers in their system.
How to Buy NEM
Step 1: Setting up a wallet
Before we consider where to buy NEM, let us take a look at the available wallet options for the cryptocurrency. There are three main digital wallets available for download:
- NEM Node
Anyone who is looking to start harvesting on the network will require the NEM node. With this, it will be possible to set up a full node or supernode, whatever the preference.
- Mobile Wallet
There are different versions of the mobile wallet available for different operating systems. Check out Google Play for the Android version and App Store for the iOS version.
- Desktop NEM Nano Wallet
From the NEM web page, it is possible to download the desired desktop wallet that corresponds to your operating system. There are three versions available: Windows, Linux and Mac OS. The desktop wallet is fully functional but only lacks the capacity to set up a node for those who wish to start harvesting.
All of the above wallet options are simple to use and require no steep learning curve. You will not need any personal information in order to get your wallet.
Step 2: Buying XEM
We will now consider an answer to the above-mentioned query on where to buy XEM for NEM. Like most other cryptocurrencies, XEM can be purchased on a digital currency exchange website. Such websites usually offer the option of buying using fiat currency, Bitcoin or Ethereum.
In most cases, however, you might need Bitcoin in order to make a direct purchase. If you do not have Bitcoin tokens, you will need to register an account on your site of choice. This step usually takes some time. Once you receive confirmation that your account was successfully registered, you might need to transfer cash from your bank account in order to make the Bitcoin purchase.
Once you get your Bitcoin, then you need to exchange it for XEM at the prevailing rate on the site. Transfer the XEM tokens into the wallet you created in step 1 above. In order to confirm receipt of the XEM tokens into your wallet, you need to log in using your newly created password. Make sure that the password you used is easy enough for you to remember, but hard enough so that no one can figure it out. Crypto coin wallet passwords cannot be recovered once lost.
What the Future Holds for NEM
In summary, the NEM blockchain has positioned its Smart Assets as the answer to the major shortfalls of the existing blockchain model. And in this regard, the network does an exceptional job. The fact that its development team is consistently working to improve on the blockchain model is such good news. As time goes by, it can be hoped that more interesting projects will be designed on its blockchain framework and that it will improve the whole blockchain outlook.