NEM (XEM)

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NEM
Nem logo-resized.jpg
Founded 2016
Headquarters Singapore
Key People Lon Wong, Former Founding Board Advisor; Alex Tinsman, President; Jeff McDonald, Founding Board Advisor; Ronel Li, Secretary; Ken Chan, Treasurer
Employees 11-50
Twitter @nemofficial
LinkedIn Profile
Facebook ourNEM
Website NEM.io
Blog NEM Official Blog

NEM is an open-sourced cryptocurrency token, abbreviated XEM, and a blockchain platform. NEM stands for New Economic Movement, a blockchain project which created both a decentralized digital platform for decentralized applications, and a digital asset of the same name.[1][2][3] An alpha version of the platform was launched in 2014, before a more stable version was launched in 2015.[4][5]

With a market capitalization of $344,522,622 and a circulating supply of almost 9 billion, XEM was the 18th largest cryptocurrency in early February 2019.[6]

Overview

NEM differs from many other blockchain and cryptocurrency projects in several ways. A key point of the project's marketing materials emphasizes that NEM's blockchain platform is built around what it calls the "Smart Asset System," an application programming interface (API) which is designed to make it easier for software developers to create new applications on NEM's blockchain.[7] This is facilitated by allowing developers to create a "Namespace" (like a mini-website) on the blockchain, in which a "Mosaic" (like a file stored on the NEM website) can be created. This Mosaic can be used to develop peer-to-peer applications of all kinds, similar to Ethereum. In fact, NEM's token, XEM, is technically a Mosaic.[8]

Another nuance of NEM is the way its blockchain network verifies transactions. Instead of a proof-of-stake or proof-of-work algorithm, NEM uses a Proof-of-Importance algorithm. In essence, the more transactions you make, the more you mine, the higher your "importance score," which determines how often you can "harvest," or mine XEM.[9] This process replaces the standard practice of mining, with the added condition that those who have a higher "importance score" can mine more than others.[10][11] In order to increase their "importance scores," users simply need to make more transactions using XEM. Doing this "vests" their tokens, while keeping them in their wallets causes them to remain "unvested." To qualify for an importance score, users need to have at least 10,000 XEM vested. This incentivizes users within the NEM blockchain to participate in the network.[12] Unlike bitcoin, whose blockchain is dominated by nodes with more powerful hardware, NEM is designed to run its network through nodes that do not require powerful, energy-guzzling hardware, thus reducing the environmental impact of its network, and allowing those with even a standard computer to contribute based on its "importance" to the network.[13] Furthermore, the NEM blockchain network is built using a modified version of the Eigentrust++ algorithm, which includes a function that regularly monitors the network for "bad actors," or nodes that are hostile to the network. Nodes that have demonstrated a positive impact on the network are indicated as such through a reputation system, while those with poorer "reputation values" are cut off from the network.[14][15]

Financial challenges, layoffs

In January 2019, the NEM Foundation requested 160 million XEM tokens from its community in order to mitigate the organization's significant financial woes, thus "rescuing" the Foundation. According to Coindesk, at the time there were about 9 billion XEM tokens in circulation. The more tokens the community gifted the Foundation, the company said, the fewer of its 150-person staff would need to be laid off.[16]

Later, the NEM Secretariat Office posted in the NEM Foundation's community forum in order to answer "questions and anticipated questions" regarding the status of the Foundation. The post said that, although the NEM Foundation had submitted a funding request to the NEM community, the Foundation and the open-source NEM project are separate entities, and that NEM "remains strong and thriving," and is "unaffected by the financial situation of the NEM Foundation." The post said that the NEM Foundation "is not firing any staff," but that "due to budget constraints, there are layoffs." The post also said that the company was completely restructuring itself, and that every effort was being made to transition staff into new roles to avoid firing as many employees as possible, and that any who end up being laid off would get priority consideration for future openings at the NEM Foundation. NEM Foundation President Alexandra Tinsman said in a separate statement that NEM has begun the process of applying for a new funding grant from an established venture capital firm.[17][18]

Background

NEM started in its pre-production stage as a conceptual hard fork of NXT. However, the community behind it decided instead to start a new platform from scratch using totally original code.[19]

The project heads originally wanted NEM to house its blockchain network on Microsoft's Azure, a cloud-based platform. After spending a "considerable" amount of time reading the terms of the agreement required for Azure users, NEM decided not to sign the agreement, citing conditions that would force them to give up certain rights. Instead, they decided to pay Microsoft to put NEM on the Azure cloud as a docker, which would make them a customer of Microsoft and would not require them to waive rights.[20]

In January 2018, Coincheck, one of the largest cryptocurrency exchanged in the world, was attacked by hackers who stole $534 million worth of XEM. Unlike the similar attack on the cryptocurrency exchange Mt. Gox in 2014, the response to this attack began before major media outlets began widely reporting the story. Coincheck promised to refund the value of the XEM stolen from nearly 260,000 of its users. [21] The NEM Foundation announced that they were tracking the stolen XEM tokens, citing the flexibility offered by utilizing their API for the task.[22]

Key People

  • Lon Wong - Former Founding Board Advisor
  • Jeff McDonald - Founding Board Advisor
  • Alexandra Tinsman - NEM Foundation President
  • Ronel Li - Secretary
  • Ken Chan - Treasurer

References