Proof of Importance is the underlying technology behind NEM which determines who gets to verify transactions. This consensus mechanism is similar to Proof of Stake (PoS) in that it requires a certain amount of cryptocurrency (10,000 XEM in NEMs case) to verify transactions. It differs to PoS in that it solves the issue of a person having more stake being more likely to verify transactions, thus receiving more rewards. In other words, PoS helps the rich get richer, and PoI aims to alleviate that.
New Economy Movement (NEM) started off with the ambition of making sure digital currency distribution was widespread and fair. It is one of the few altcoins whose concept is to address all the inherent issues affecting cryptocurrencies such as Bitcoin. Issues such as scalability, energy consumption, ease of use, incentive to use, consolidation of power by miners and governance are what NEM seeks to address.
NEM: Revolutionary peer to peer crypto platform
Launched in 2015, it brings plenty of exciting new ideas to the blockchain.
As with many cryptocurrencies, NEM developers are pseudonymous and it was started by a Bitcoin Talk forum user called UtopianFutur. The inital design was a fork from NXT, but it swiftly got rebuilt from the ground up on its own source code.
NEM has many unique features such as multisignature accounts, encrypted messaging system, and the Eigentrust++ node reputation system. One of the major advantages is its transaction speed. It is for these reasons it is generally viewed as an evolving solution, replete with an outstanding core blockchain technology. The cryptocurrency that runs on it is called XEM.
NEM is primarily used in Japan, but also elsewhere in the world.
|0.000001||µXEM (microXEM) – smallest unit|
|0.001||mXEM (milliXEM) – thousandth unit|
|Date of introduction||2015|
|Genesis Block Production||Fixed 8,999,999,999 XEM total|
Block time 1 minute
Proof Of Importance
One of the key aspects of NEM is its unique consensus mechanism of Proof of Importance. This looks to overcome the problems that can be found in the Proof of Stake model by identifying an account’s overall support of the network. It does this by accounting for three factors: vesting, transaction partners, and number and size of transactions in the last 30 days.
NEM has a feature called harvesting. It doesn’t require any special hardware, you do need to have at least 10,000 vested XEM coins in a single wallet. Anyone running Supernodes and processing transactions get paid by processing the payments for the network. The advantage of harvesting over mining is that it uses a lot less electricity, which means lower transaction fees. This also means that, NEM is much a more energy-efficient cryptocurrency and better than the environment than a coin like Bitcoin (See our post on Bitcoin’s energy usage).
It’s used in a commercial application, called Mijin in Belgium.
Other than that, NEM is still in the early stages and the only real thing you can do with XEM is transfer between people and wallets; there isn’t yet any tangible things you can buy with it.
Buying and Storing
You’re going to want to download the NEM Nano wallet to your PC or mobile phone, and follow the instructions to set it up.
To purchase XEM, you’re limited to a few exchanges right now. Bittrex allows you to purchase XEM with BTC, USD or ETH.
Proof of Importance
How does it work?
PoI solves this dilemma by assigning consensus addresses and an importance score. The importance score can be thought of as a reputation score (kind of like Karma on Reddit). A higher score means the network trusts you more to verify transactions.
In PoI, your chance of verifying transactions isn’t entirely dependent on how much you have to stake. Instead, it’s based on the number and quality of transactions you’ve previously done.
What is a quality transaction?
Well, simply sending yourself a bunch of XEM between addresses isn’t going to do it. You must have sent at least 1000 XEM to addresses holding at least 10,000 XEM staked within the last 30 days.
One risk of Proof of Stake is that people simply hoard as many coins as possible and reap the rewards from block creation. This concentrates wealth while discouraging transactions. These transactions are what keeps the network running. PoIs importance score means that hoarding results in a lower score. Spreading XEM around increases the score. Therefore, being an active participant pays better than hoarding.
What keeps it secure?
You may think that it’s pretty easy to hold a few addresses, pass some XEM between them and shoot up your own importance score, however, the algorithm attempts to prevent this. One way in which it does so is by actually lowering the importance score for accounts that transfer out, then receive XEM. Also, making everyday purchases or sending XEM to an exchange won’t affect your importance score.
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