What is NEM?
Last Updated: 1st November 2018
Founded by the pseudonymous individual or group known as ‘UtopianFuture', NEM (New Economic Movement) is a peer-to-peer cryptocurrency and blockchain platform. The NEM source code is not derived from any existing blockchain code, instead, NEM's source code is written entirely in the Java programming language and is completely original.
The aim of the project is to create a secure economic system on the blockchain. The blockchain can function as a remittance network, financial settlement mechanism, messaging service, provide asset trading and smart contracts functionality, and even allow users to create their very own cryptocurrency.
Features such as the:
- Harvesting Mechanism
- Proof-Of-Importance Consensus Algorithm
- Node Reputation System
- Namespaces & Mosaics
- Multisignature Transactions & Encrypted Messaging
Are all functionalities designed to bring about a developed economic ecosystem on the NEM blockchain.
Harvesting is the process by which a harvester (node) will calculate a block of transactions and then add it to the blockchain. Once a block is calculated and added to the blockchain, the harvester is allowed to collect the fees contained in that block. This process is an incentive mechanism designed to encourage harvesters to maintain the network. NEM also utilizes delegated harvesting, under this process, a user can request others to calculate and process the fees contained in a block. Fees collected upon completion of delegated harvesting are given directly to the user that activated the process.
Proof-Of-Importance Consensus Algorithm
NEM’s proof-of-importance (POI) consensus algorithm is used to determine the user that will calculate a block of transactions on the blockchain. A user’s importance is dependent on numerous factors, which include: the amount of coins owned by the user, the number of transactions that a user makes, and with whom the transactions are being made. Taking into account transactions in calculating a user’s importance is intended to encourage users to transact using NEM coins, instead of simply holding them. The higher a user’s importance, the greater the likelihood of a user being selected to calculate and harvest the fees inside a block. The POI consensus algorithm can be contrasted with the proof-of-work (PoW) and proof-of-stake (PoS) consensus algorithm, that do not account for user transaction volumes.
In order to maintain the health of the network, NEM utilizes the Eigentrust++ reputation system to identify and exclude bad nodes operating on the network. Eigentrust++ evaluates a node’s past behavior to determine if it is a bad actor or not. Sending false data around the network and being hostile are behaviors that are likely to result in a node being excluded from the network.
Namespaces & Mosaics
Namespaces found on the network are equivalent to internet domain names, but for blockchain technology. Using Namespaces, a user can create multiple domains and sub-domains for their different projects on the NEM network.
Mosaics are custom assets on the NEM blockchain. These assets can be linked to physical, valuable assets, and are designed to be transferable on the network. NEM Mosaics can also be created to include fees and personalized descriptions of the asset. Finally, each Mosaic is linked to a unique Namespace/domain in the NEM network.
Multisignature Transactions & Encrypted Messaging
The NEM blockchain makes use of multisignature (multisig) technology on its platform. With this technology, multiple users can have access to an account that has been defined as being multisig by the network. With multisig accounts, transactions can only be broadcast onto the blockchain if a previously defined number of users sign the transaction. Multisig accounts can serve as a useful security feature if funds should not be in control of a single person.
The NEM project also gives users the option to send encrypted messages whilst transacting on the network.