What Is NEM?

A cryptocurrency with Smart Assets, fast transactions, and a focus on enterprise customers.

5 minute read

NEM is one of the oldest cryptocurrencies, started back in 2014, and one of the most valuable, with a market cap over $15 billion, but it’s also one of the least talked about. That may stem from its origins in Japan, but over the last few years it has expanded its reach to Asia, Europe, and beyond by forming partnerships with major corporations around the world to use the private version of the NEM blockchain.

While there are many new cryptocurrencies that have begun working on ways for large businesses to incorporate blockchain technology into their systems, NEM is much further along and has a working product already being used. With each new customer, NEMs reputation, and its market cap, is growing.

Private or Public Blockchains

NEM can be installed by companies on premises if they want to have a totally private blockchain, or companies can make use of the existing public NEM blockchain if they don’t want to host the entire blockchain themselves or want to be able to interact with other services that already exist on the NEM blockchain.

NEM public/private blockchain hybrid. NEM lets companies interact with the public blockchain while running Smart Contracts privately.

If you want to use Ethereum Smart Contracts, you’re going to need to learn its language, Solidity. NEM has focused on making integration fairly straightforward for developers by using a RESTful API, which means that developers can interact with the NEM blockchain while still using their preferred language. NEM has announced partnerships with many corporations already.

In NEM, Smart Contracts occur off-chain, meaning the execution happens on a company’s private servers with the results being stored on the public NEM blockchain. That means the contracts can be as complex as a normal program, written in any language, and can easily interface with a company’s privates systems and data - none of which is possible with Ethereum.

Smart Assets

Business adopt NEM for a number of reasons, but there’s a growing focus on its Smart Assets capability. Smart Assets are sort of like Ethereum tokens, but easier to create. You can’t do as much with a NEM Smart Asset as you could with an Ethereum Smart Contract, but NEM Smart Assets are far more “click some buttons and deploy” than an Ethereum Smart Contract.

The biggest use of Ethereum’s Smart Contracts is the creation of ERC-20 tokens, which are cryptocurrencies that ride along on top of the Ethereum blockchain. NEM’s Smart Assets can be used in a similar style without having to write code or pay high Ethereum gas fees. NEM has partnered with Blockchain Global to build a financial market of NEM-based tokens, with the ability to host ICOs as well. A number of companies, such as LoyalCoin, have started choosing NEM over Ethereum to host their tokens.

Reputation Based Consensus

NEM has an interesting reputation-based blockchain consensus algorithm called Proof of Importance (PoI), which rewards nodes hold large amount of XEM (the currency of NEM) and those that use the currency by making transactions. Nodes that have a higher reputation are able to “harvest” transactions fees more often than those with lower reputations. A node’s reputation is built up over time as the coins they hold “age”. Sending transactions on the network also gives a short term boost to reputation.

The backbone of the NEM network are Supernodes, which are able to perform the work of creating new blocks and are rewarded by the transaction fees in those blocks. Creating a Supernode requires the node to hold 3 million XEM (worth over $5 million). Users with at least 10,000 XEM interested in getting a piece of those transaction fees can take part in “delegated harvesting”, where they assign their XEM to a Supernode and get a share of the harvested fees.

Catapult Rewrite

To increase scalability and make itself more attractive to customers, NEM undertook a complete rewrite of its source code from Java to C++. Codenamed Catapult, this effort has seen the number of transactions per second the system is capable of grow from several hundred per second, to nearly 4,000 per second. The new version is currently in beta testing, with full rollout expected later this year.

Bottom Line

NEM has flown under the radar of most cryptocurrency enthusiasts, but the NEM Foundation has announced they’ll be spending $40 million on marketing and outreach in 2018. Combined with better scalability, easy to create Smart Assets, and private Smart Contracts, it looks like NEM will soon start grabbing a large share of the ICO market that Ethereum has right now.

How to Buy NEM

Unfortunately, NEM isn’t as easy to purchase as Bitcoin. You can’t buy NEM with a credit card, so you’ll have to use one of the cryptocurrency exchanges to buy NEM.

Buy Litecoin at Coinbase

To start, if you haven’t already, head over to Coinbase and sign up. Coinbase will let you use a credit card to buy Litecoin, which is what you’ll send to an exchange to purchase NEM.

Sell Litecoin for NEM at Bittrex

After you’ve purchased Litecoin, you’ll need to sign up for a cryptocurrency exchange like Bittrex. After you’ve signed up, you’ll send the Litecoin from Coinbase to Bittrex.

After your deposit arrives on Bittrex, you’ll be able to sell your Litecoin for Bitcoin, and then use the Bitcoin to buy XEM (the symbol of the currency of NEM).