Nem is a peer-to-peer cryptocurrency platform that uses its own blockchain system; it is not an altcoin, in that it is not based on Bitcoin infrastructure. Two features especially separate it from other cryptocurrencies; these are the harvesting system and its emphasis on Proof of Importance (POI) rather than Proof of Work (POW).
Nem (XEM) Chart
Nem does not allow for mining of new coin: 9 billion XEM were produced upon its inception, and no further coins will ever be mined. These initial coins were distributed among stakeholders who contributed in some way to the project and who each received 2.25 million XEM. Nonetheless, users who help verify transactions on Nem’s blockchain do receive a reward per block, but this is not set in stone; since it is based on a certain percentage of the fees paid for the transactions contained in the block, the actual amount earned is random.
Proof of Importance
As opposed to cryptocurrencies such as Bitcoin, Nem uses a Proof of Importance system rather than a Proof of Work system. A user’s importance within the system is thus calculated not based on the user’s computer setup or speed, but according to the stake the user has in keeping the network straight, the extent to which the user has invested in Nem. This is calculated according to both the user’s account balance and his frequency of transactions, and it demonstrates how trustworthy the user is deemed by the system.
Non-zero importance and supernodes
In order to become a “non-zero importance” account, a user must have at least 10,000 XEM vested, with 10% of a user’s account balance considered “vested” every 24 hours. Once this level is reached, a user can start harvesting. Once a user has 3,000,000 XEM vested, he then becomes a supernode, which means he will receive 140,000 XEM per day, divided by the total number of supernodes, for running a supernode that meets minimum technological requirements.
Nonetheless, the emphasis of Nem is firmly on investment rather than technological ability; a user’s importance ranking (based on account balance and transactions) decides how quickly he gets assigned new blocks to verify, and thus how much XEM he can harvest. Users therefore have no need whatsoever for advanced equipment and can use a regular CPU for this purpose, even as supernodes.
One of the key emphases of Nem, which sets it apart from for example Monero, is its emphasis on traceability and transparency. Private transactions are not possible and every transaction can be traced back to particular users – which are not, however, compelled to submit any personal information such as name or address when signing up.
This is done for a number of reasons, including the encouragement of mass adoption, since it means the platform can easily incorporate measures for buyer and seller protection. Additionally, it can allow businesses to track spending habits, which encourages them to adopt this cryptocurrency.
New developments for Nem can be suggested by any user and will then be voted upon using the messaging system available on the site. Each user will then pay a very low sum of XEM in order to send “yes” or “no” to the system; newly adopted developments are then funded partially from a fund created at the inception of Nem and partially from a percentage of each transaction fee. This ensures democracy among users in terms of the future development of the platform.