What is NEM?
In essence, NEM was developed to be an improvement on existing cryptocurrencies by integrating concepts from different types of cryptocurrencies (e.g. Bitcoin) while at the same time implementing academic research in network theory. The primary technical contribution that NEM brings to the table is a completely new consensus mechanism called Proof of Importance (PoI). PoI is different from prevailing consensus mechanisms, Proof of Work (PoW) and Proof of Stake (PoS), in a few different ways. Unlike with PoW, PoI does not require large scale computing resources to get consensus for the blockchain. Although PoI is somewhat similar to PoS, PoI was developed in such a way to have features believed to be positive for the NEM community. With PoI, NEM attempts to reward active users of NEM. This is completely at the expense of inactive users and removes the “rich getting richer” effect that is inherent to PoS.
It’s important to note that all of the developers of NEM use pseudonyms when interacting with the public. They are still trusted by the NEM community despite their use of pseudonyms. None of the developers ever reveal their actual identity, but the core members of the NEM foundation have public identities on social media.
The vision of NEM is to be the backbone of a thriving cryptocurrency ecosystem, one which emphasizes trustless computing as well as security. When NEM launched, it included built-in support not only for multisig transactions but also encrypted messages as well. Additionally, the peer-to-peer network of NEM uses a modified version of the Eigentrust++ algorithm to secure the NEM network. It does this by finding and reducing the impact that malicious nodes have on the network.
So how, exactly, does NEM’s PoI consensus mechanism work? Each NEM account is assigned an importance score that is based on its importance to the NEM economy. An account with a higher importance score has a higher probability of harvesting a block than an account with a low importance score. Because all of the transactions on the network are publicly available with NEM, transactions between accounts can be audited and verified.
January 19, 2014: Open call for participation in NEM project begins. June 25, 2014: NEM begins alpha testing March 31, 2015: NEM launches its first stable release April 2016: Tech Bureau, the operator one of Japan’s largest cryptocurrency exchanges, Zaif, formed a partnership with NEM by announcing that both Mijin and NEM will share the next version of NEM's technology, Catapult. May 8, 2017: NEM reaches a market cap of $1 billion for the first time.