What Is NEM (XEM)?
NEM, or the New Economy Movement, was a blockchain and cryptocurrency project created to improve upon issues other blockchains faced. It positioned itself as not just another altcoin and blockchain, but a project intended to be an efficient way to manage assets and data easily at a lower cost.
Key Takeaways
- The New Economy Movement (NEM) was a blockchain project intended to manage assets and data easily and inexpensively.
- NEM was spun out in 2015 from NXT, a blockchain-based virtual currency and payment network platform.
- NEM had its own currency, called XEM, which is traded but not used as a means of payment.
- NEM turned into Symbol (XYM) in 2021, a new blockchain with a different purpose and protocols.
History of NEM
NEM evolved in March 2015 as a forked version of NXT, another popular blockchain-based virtual currency, and payment network platform.
It was operated by the NEM Foundation, a Singapore-based non-profit organization. Following the fork, the NEM developers created a codebase to advance NEM and make it faster and more scalable. Thus, a new NEM cryptocurrency platform emerged, which was completely different from the original NXT.
NEM had its own cryptocurrency, called XEM. Though XEM was not being accepted by merchants as a means of payment as bitcoins are, XEM grew in value from 2020 to 2021 until its lack of acceptance and market interest caused a decline.
In 2021, NEM transitioned into Symbol (XYM), which uses proof-of-stake plus (POS+) as its consensus algorithm.
NEM’s Efficiency Pillars—Proof-of-Importance and Harvesting
NEM aimed to build a “better” blockchain, and it tried to achieve that using the two key concepts of proof-of-importance (POI) and harvesting.
Other cryptocurrency networks, like Bitcoin, use a proof-of-work (POW), which requires a mining device to work for the blockchain, or a proof-of-stake (POS) system, where users lock their tokens into smart contracts to become validators.
However, in POW, the miners with higher computing/processing power have an undue advantage over those with less powerful machines. Additionally, POW leads to more power consumption, making the process inefficient. In POS, token hoarders have an advantage as participants with more coins are more likely to be selected to validate transactions and receive payments. It also promotes cryptocurrency saving instead of spending.
NEM tried to address these issues using its proof-of-importance (POI) mechanism, which gave more “importance” to how much one was “invested” into the NEM system, with a realistic “vested” interest. The XEM coins in the wallet and their holding periods played a key role in gauging their importance.
A user needed to hold 10,000 “vested” XEMs in a wallet to qualify for generating new blocks and earning various transaction fees.
How POI Works
NEM’s POI worked similarly to many POS systems, but there were some different requirements. For example, assume Martin has 20,000 XEMs in his wallet today. Every day, NEM’s mechanism considered 10% of holdings to be vested. After day one, 2,000 XEMs of Martin’s holdings would be vested, leaving 18,000 non-vested XEMs. On day two, 10% of 18,000 would further qualify as vested, taking the total vested XEMs to 3,800, and so on. On the seventh day, the vested XEMs would cross the threshold of 10,000, qualifying Martin to seek blockchain rewards.
Additionally, NEM’s POI rewarded users who transacted with others in the network. Conducting more transactions above a minimum size also added to a participant’s POI score, which helped them gain more chances to claim a reward. To prevent misuse through back-and-forth dummy transactions among a group of users, the NEM network also considered the net transaction amount to improve the POI score.
Harvesting
NEM’s harvesting approach worked differently than many other systems. A harvesting participant simply linked their account to an existing supernode and used that account’s computing power to complete blocks on its behalf. Essentially, one lended a POI score to the supernode, which increased the chances of block harvesting jointly. There would be no need for increasing processing power.
As soon as a transaction occurred on the NEM blockchain, the first node or computer that caught and verified it notified other users, which created a propelling wave of information, increasing the chances of block generation.
A participant’s mining device or computer did not need to be running to perform the harvesting process, and that helped in power saving. Instead, harvesting was done automatically in a user’s wallet and needed no special hardware.
NEM used the Eigentrust++ algorithm, which maintained a “reputation system” for the various nodes on the network. This helped balance the network’s load, and the network could decide to remove non-contributing nodes.
What Is NEM XEM?
The New Economy Movement (NEM) blockchain was a project that aimed to replace existing blockchain and cryptocurrency frameworks. Its native token was XEM.
How Much Is NEM Worth?
Despite not being developed or maintained anymore, NEM (XEM) is still traded on exchanges. On Oct. 12, 2024, it was trading at about $0.1788 and had a 24-hour trading volume of $4.21 million.
Does NEM Have a Future?
It’s difficult to predict as the NEM project redirected itself into Symbol (XYM). However, it is possible that someone will restart the original NEM project.
The Bottom Line
NEM was a blockchain and cryptocurrency project that used a different approach to address issues plaguing other blockchain projects. Ultimately, it failed to attract attention and a user base and joined the ranks of thousands of other defunct blockchain projects. The XEM token still has market activity and could be used by traders to generate returns, but the project itself, as of October 2024, has little development activity or community interest. Symbol (XYM) is supposedly the successor to NEM.
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