Start of the ‘New Economy Movement’
Whether it’s selling a product, offering a service, or providing insights, people are willing to pay for what they value. At its core, business relies on payments, and a better payments network can lead to better business globally.
NEM, dubbed the ‘New Economy Movement,’ was created in 2015. Initially launched as a hard fork of the NXT blockchain, the project soon shifted to its own codebase intending to cater to businesses, improve scalability, and implement faster transaction speeds.
Currently, NEM can handle well over 2000 transactions per second, rivaling the likes of traditional payment networks like Visa and Mastercard. While it is not usually used to make payments, its token XEM is actually quite versatile and is also used to pay transaction fees on the network.
Various businesses worldwide rely on NEM to bridge private enterprise blockchains, and Japan’s Ministry of Agriculture is even using the platform to track the export and sale of game meat. Before we look further into this project and its token, let’s take a look at XEM’s price performance.
XEM Price Performance
The XEM token reached its all-time high value of €1.28 in January 2018 and has depreciated by nearly 80% since then. However, the token’s value has increased by around 45% since last year and over 220% since March this year.
This year, the team has primarily focused on setting up the NEM Group, which plans to launch its Symbol hybrid blockchain in December. Symbol’s focus lies more in providing for the security tokens space and has already been adopted by fintech companies and banks months ahead of launch.
Symbol will launch in parallel with NEM, with an equal number of its native cryptocurrency, XYM, allocated to wallets containing XEM. This means that any XEM holder will be able to use Symbol at launch, even though there are no plans to port any other public chain data from NEM.
Mission and Vision
When people talk about institutional blockchains, it’s usually a reference to a permissioned network. These blockchains allow the transfer of assets to different parts of the organization, with privately-owned nodes maintaining the system. These private blockchains are not inherently interoperable, preventing the transfer of assets or funds between disparate private blockchain-based payment networks.
NEM enables interoperability between both private and public blockchains, which is incredibly valuable for enterprise applications. The network is also capable of performing aggregated transactions using multi-level multi-signature accounts.
While it’s easy to dismiss NEM and its token as just another altcoin, this blockchain was launched only months before Ethereum’s initial token sale in 2015, and has some unique capabilities. Though there are a few blockchains similar to NEM (such as Ethereum and Hyperledger), none of them work in quite the same way.
Like ETH, XEM is primarily used to pay for services on the blockchain. Its fixed supply of 9 billion tokens makes it a scarce asset that’s resistant to inflation. Instead of a Proof-of-Work or Proof-of-Stake consensus algorithm, NEM uses a Proof-of-Importance mechanism to validate transactions.
This allows participants to ‘harvest’ their XEM tokens to increase their importance value and delegate authority to validator nodes. At its core, NEM uses a ‘Smart Asset System’ that allows for the creation of new tokens and transferable asset representations called ‘Mosaics.’
NEM’s unique project architecture makes it incredibly customizable and caters to many use-cases in the enterprise blockchain arena. In January 2018, when the XEM token was at its peak value, a Japanese cryptocurrency exchange (CoinCheck) was hacked, allowing the attackers to run off with $500 million worth of XEM tokens.
Contrary to popular belief, this hack was perpetrated through a vulnerability on the exchange platform and not the NEM blockchain. However, with institutions paying more attention to blockchain now than ever before, the Singapore-based team behind NEM has many problems to solve in the years to come.
Though more businesses have started using blockchain technology, the barrier for entry is still relatively high. Blockchain requires highly skilled developers capable of integrating traditional protocols into blockchain-based platforms. This can even require learning a new programming language, which can be challenging and expensive, making companies hesitant to use the technology even if they understand its benefits.
NEM solved this through its Smart Asset System, which allows businesses to build on top of the protocol without the need for a unique language or complicated implementations. As the NEM Group continues to test, update, and maintain the network, the team is likely to solve other pressing issues that hinder adoption today.
As mentioned earlier, there are other blockchains out there that provide similar functionality to that of NEM. Ethereum, for example, can do most of what NEM does and has a much bigger user-base and developer community. However, where Ethereum is used to run code on the blockchain through smart contracts, NEM deploys code off-chain.
This makes bug-fixes and patches easier to roll out while maintaining the decentralized nature of the system. Cosmos is another competing network that offers blockchain interoperability. Developed and supported by Tendermint and the Interchain Foundation, Cosmos provides a public platform for the needs of users and businesses alike, though it is more general-purpose than NEM.
Hyperledger, an enterprise-grade private blockchain, uses its own version of smart contracts called ‘chaincode.’ It’s most well known for its swift compile times and is considered more useful for large corporations. NEM, on the other hand, is perfect for smaller organizations looking to grow and beats most other DLT systems in terms of sheer performance.
NEM Coin’s Community
The NEM community is quite enthusiastic, producing new discussions on the official forums every day. The team also runs a Twitter account with over 200,000 followers, and a subreddit with around 18,000 members, where the community and developers actively engage with each other.
Despite sub-par marketing efforts in the past, NEM has done a lot in the last few years to reign in users and create a beloved, thriving ecosystem.
News & Views
From onboarding businesses to releasing updates, the NEM team has been busy since its inception over five years ago. Though NEM made headlines after the 2018 exchange hack, people have talked about it for various other reasons over the last few years.
In February last year, the NEM Foundation announced that it was facing financial difficulties, with only a month’s worth of operating expenses left in fund reserves. Created just two years after NEM was launched, the foundation found itself in dire straits after this announcement, which wiped over $65 million from the XEM market capitalization in just one day.
In June this year, the foundation announced that it was shutting down to be replaced by the NEM Group, which would take over all operational execution responsibilities. Since the announcement, XEM has grown by 140%, and with Symbol purportedly launching later this year, this blockchain interoperability platform could be one to look out for.