Crypto 101: A beginner’s guide to NEM

The birth of digital assets introduced a new age in the finance and banking sectors. Financial transactions online have become more accessible and cost-effective and transparency is now prioritized.

But despite these technological leaps, the crypto sphere still struggles with weak consensus protocols that limit cryptocurrencies from harnessing their full potential. To solve this issue, NEM or the New Economy Movement was introduced.

What is the New Economy Movement?

The New Economy Movement or NEM is a peer-to-peer platform designed to enable smooth transactions between digital currencies in both private and public blockchain. This multi-layer blockchain technology acts as a bridge through its native token called XEM. The token can be used as a form of incentive to nodes that maintain and ensure the smooth movement of the network.

The NEM blockchain was launched in 2015 as a fork of the blockchain-based currency called NXT. NEM’s initial release took place in 2014, but it wasn’t until 2015 that a more robust version became available.

NEM.io Foundation is the main governing body of the NEM blockchain. It’s an NGO based in Singapore, one of the leading crypto-centric countries in Asia. The foundation further researched and developed the codes when the NEM fork took place.

With its fast processing time, the NEM blockchain can accommodate 4,000 transactions per second. Furthermore, the blockchain is also versatile because it can handle various requests such as financial transactions, contracts, documents and other virtual holdings between two parties and not just cryptocurrencies.

What makes NEM stand out from other blockchain-based currencies?

NEM’s unique consensus protocol is what makes it stand out among other blockchain-based currencies. Usually, other blockchains utilise Proof of Stake (PoS) or Proof of Work (PoW) but NEM uses neither. Instead, it uses a different kind of protocol called the Proof of Importance or PoI.

The PoI and PoS are often likened to each other because of their similarities. However, these two protocols are entirely different and have key functions that set them apart.

In PoS, someone who wants to become a validator has to stake a certain amount of tokens that will determine his validating power in the chain. For example, if you’re a validator and you staked more than the required amount of tokens, your likelihood of being selected by the algorithm is increased.

Meanwhile, in the PoI protocol, the system has to verify if the node meets the requirements to validate transactions through vesting and the number of transaction partners accommodated in the last 30 days.

NEM features you should know about

Proof of Importance

While most cryptocurrencies use PoW and PoS protocols, NEM is known for its unique consensus mechanism called Proof of Importance or PoI. Through this unique protocol, token manipulation by nodes who have more stake in the network is prevented.

In the PoI protocol, the system prioritizes the nodes with more stakes than others. Nodes that have ‘invested’ in the blockchain have more chances of getting selected by the AI.

Validators have to stake at least 10,000 NEM tokens in the blockchain to be able to process transactions. They can increase their status by storing their tokens in the NEM blockchain built-in wallet. When validators use the wallet, their vestings increase by 10% every day.

Other than the 10% increase, the PoI also incentivizes nodes from other networks. When the validators reach the required points, they can use it to redeem their prize.

Harvesting

Harvesting is an important feature of the NEM blockchain. This protocol serves as the link that connects users to supernodes in the network.

Supernodes in the NEM blockchain function as the network’s overall support that can perform advanced actions such as enabling users to use their PoI score, generating new blocks and utilising minimal energy as possible.

Validators with 3,000,000 or more XEM tokens can become supernodes in the blockchain by using the local or cloud-hosted server. A supernode can accommodate transactions in the network for 24 hours.

Multiple-signature technology

Before a transaction in the NEM blockchain is executed, it must have multiple signatures in the network. For example, XEM tokens can’t be used until all the validators ‘sign’ the transaction.

Best wallets for NEM

When it comes to storage, there are several wallets you can use for your XEM tokens. Here are some of the brands you can look into:

NEM Community Client (NCC)

The NCC wallet is one of the most advanced wallets you can use for your XEM tokens. This wallet is specifically designed for harvesting tokens. What makes the NEM Community Client a good choice is that it works across different operating systems such as Windows, Linux and Mac. Before installing this wallet, make sure your laptop or device is updated for more optimal results.

NEM Nano Wallet

The NEM Nano Wallet is considered one of the most functional wallets for users because it’s compatible with all OSes. Additionally, it also has heightened security features and hard wallet integration.

Additionally, this crypto storage allows users to send their XEM wallets along with other digital assets such as mosaics, messages and namespaces. To increase the security of your assets, this wallet also allows you to create on-chain multi-signature and multi-user accounts.

Trezor wallet

Another ideal storage for XEM tokens is the wallet by Trezor. This hard wallet comes in a USB-like device that features an OLED screen that can be connected across devices such as your phone and computer.

When using the Trezor wallet, you have to provide a nine-digit pin that you will also use if you use the wallet across any device. What makes this wallet a safe option for users who prioritizes safety is that the code is randomly generated. So even if any of your devices are compromised, your assets are still safe.