Conceptualized in January 2014 and launched in March 2015, NEM is a decentralized blockchain-based peer-to-peer network on which third parties can build their own applications, including cryptocurrencies and crowdfunding tokens. NEM offers both public and private (Mijin) blockchains.

NEM isn't another Bitcoin clone; its code base was written from the ground up to improve on some of Bitcoin's flaws and greatly expand its functionality for enterprise compatibility. NEM's core value proposition is what it calls its smart assets system. It's a blockchain ledger system that can be configured to manage almost anything, including ownership records, financial instruments, supply chain tracking, and much more.

Proof-of-Importance Consensus

One of the biggest differences between NEM and other blockchains is its use of proof-of-importance consensus, as opposed to proof-of-work or proof-of-stake. proof-of-importance is a consensus algorithm that determines who gets to verify transactions on the NEM network based on their comparative “importance.”

Like proof-of-stake (PoS), PoI requires network members to invest a certain amount of cryptocurrency in a network in order to be able to verify transactions (10,000 $XEM). But unlike proof-of-stake, proof-of-importance assigns an importance score to everyone who meets this threshold that takes into account factors beyond account balance, such as size of transactions completed, number of transactions completed, and quality of transactions completed. In other words, even if you're not NEM's richest holder, you can still have a high-ranked account if your account is consistently processing fast transactions.

Like proof-of-stake, proof-of-importance is also an energy saved when compared to wasteful proof-of-work consensus. The NEM network uses 100 times less power than Bitcoin to complete a transaction.

Harvesting Blocks

So if you want to rank high in importance, you need to be processing transactions with your NEM account. How do you do that? Harvesting.

The process of verifying transactions within the NEM platform is called harvesting, which is equivalent to mining on the Bitcoin network. It involves using your computer to process algorithms and add blocks to the NEM blockchain. Unlike in Bitcoin mining, no special computer hardware is required to harvest NEM, but you do need to maintain 10,000 $XEM in your account over a couple of weeks in order to be eligible for a harvesting account.

To set up a harvesting account, you have to link to someone else's super node – basically a remote server that is required to process transactions 24 hours a day. In essence, you would be allowing the server to borrower your proof-of-importance score, meaning you would not necessarily have to download the blockchain to your computer or use your computer to process transactions. However, because you're enabling that node to process those transactions by ‘lending' it your importance ranking, you can keep transaction fees from the block that the super node adds to the NEM blockchain for you.

In other words: harvesting does not create new XEM, it just allows you to earn transaction fees contained within blocks. It takes about 60 seconds to complete this task, so a new block is added to the blockchain roughly every minute.

Other advantages of NEM

NEM's next-gen blockchain also boasts a number of additional advantages over Bitcoin and its ilk, including:

Scaling

NEM is significantly more scalable than Bitcoin. While the NEM blockchain can complete up to 3,000 transactions per second, the Bitcoin network averages about four transactions per second.

Messaging

NEM has a messaging feature that you can use to add messages to your transactions. Messages take about 17 seconds to show up and they currently cost one additional XEM per 15 characters, meaning that 140 characters would cost about 10 NEM or $0.10 to send.

Privacy

Unlike some other cryptocurrencies, NEM does not offer private transactions. All transactions are traceable. While this may seem like a disadvantage, it allows for buyer and seller protection. More importantly, it allows businesses to track consumer spending habits, increasing NEM's value proposition for enterprise clients.

Mosaics

NEM Mosaics are basically assets that can be traded on the NEM blockchain. NEM's native currency, XEM, is a mosaic, but developers can create their own Mosaics, including cryptocurrencies, and run them through NEM's blockchain.

Multi-signature Accounts

The standard NEM wallet comes with multi-signature feature that requires multiple people to approve a transaction. This improves security, transparency and accountability. Currently, it costs about 0.5 #XEM to set up a multi-signature wallet on NEM.

Updates

Virtually any member of the NEM network, including everyday users of the platform, community members and developers, can suggest developments and updates. Development is paid for via a fund created during the creation of NEM. Other funding sources include community funding, investors, and people with large stakes in XEM who want to improve the network in hopes of growing their XEM value.

NEM's cryptocurrency: XEM

XEM is the currency of the NEM network. About 9 billion $XEM coins were created and distributed to about 1,500 original trusted supporters of the project who later distributed the coins to the community. To protect XEM from inflation and ensure it retains its value over the long term, no additional XEM will be created.

Transferring and using $XEM is designed to be both easy and cheap. At just 0.1%, NEM's transaction fees are among in this space. For instance, it costs just $0.01 to send $100 worth of $XEM.