NEM (XEM) “New Economy Movement” is a Java-based blockchain that enables numerous ledgers on its crypto tiers. NEM’s ecosystem, which debuted in 2015, is designed to link and exchange any form of digital assets across blockchains, be it private or public.
The NEM blockchain is powered by XEM, a cryptocurrency. In order to validate transactions, NEM employs a one-of-a-kind consensus technique known as Proof of Importance or POI.
Read on to learn more about how the NEM blockchain works and how POI is helping it address the shortcomings of conventional blockchains.
Connecting Your NEM Blockchain Address To ZenLedger For Your Crypto Tax Forms
- To import your NEM Blockchain transactions into ZenLedger for your crypto tax forms, all we need is your public address
- Select the proper blockchain or wallet from the dropdown list
- Paste your address into the address field in ZenLedger
- Select if the wallet is based in the USA or not
- Then hit ADD COIN button
How Does NEM Blockchain Work?
In the crypto world where most of the well-known blockchains are exploiting proof-of-work (POW) and proof-of-stake (POS), the NEM Blockchain is built on two foundation pillars: harvesting and proof-of-importance (POI).
Designated harvesting allows you to get rewards for producing new blocks on the NEM blockchain without having to run a node.
But what makes it different from mining? Harvesting is an effective method of pooling account functionality without disclosing any private keys.
So you must be wondering how the NEM blockchain works on the principle of harvesting? Let’s break it down!
Traditionally each miner contributes its mining power to a computer node in a sequential way. However, while harvesting, the participant just attaches their account to a preexisting supernode and utilizes that account’s computational power to finish blocks on their behalf. In the case of harvesting in the NEM blockchain, one contributes their POI score to the supernode, which raises the possibilities of collaboratively harvesting blocks without the need for more processing capacity.
Proof Of Importance (POI)
The next foundation pillar of the NEM blockchain is Proof of importance or simply, POI. Proof importance uses other various metrics such as net transfers, amount of vested currency, and activity clusters in order to evaluate nodes.
POI also pays users who carry out transactions with other users in the network. More transactions over a certain threshold increase a participant’s POI score, giving them more possibilities to collect a payout. NEM analyzes your net transaction while upgrading the POI score to avoid exploitation through the back and forth false transactions among a group of users.
When a transaction takes place on the NEM blockchain, the very first node detects, verifies and alerts other users. This results in a propulsive wave of data that increases the likelihood of block production.
So how is harvesting different from mining? Harvesting is carried out automatically through the usage of a user’s wallet and does not necessitate the use of specialized hardware such as that necessary for bitcoin mining.
The NEM blockchain employs the Eigentrust++ algorithm, which maintains a “reputation system” for the network’s nodes. It assists in balancing network traffic and even deciding whether to remove non-contributing nodes to maintain the network function and flexibility.
Utility Of The NEM Blockchain
NEM addresses a number of concerns that are now affecting the cryptocurrency sector.
The private blockchain sector is now seeing a surge. Investors are pouring billions of dollars into this technology. However, the issue is that each of these blockchains is now functioning in isolation — they are unable to exchange digital assets with one another. The NEM blockchain’s primary goal is to improve intercommunication across these private blockchain networks.
Interoperability can take several forms. The NEM blockchain allows for the simple transfer of any digital asset, such as coins, contracts, or data. Furthermore, the blockchain is designed in such a way that data may be sent from a privately held internal corporate network to another business’s private network via a public blockchain.
The Bottom Line
The NEM blockchain has demonstrated the long-term viability of its method to establish blockchain ecosystems since its establishment. Many businesses throughout the globe utilize NEM, and its simple and successful harvesting mechanism attracts a large number of users looking for passive income.
NEM directly addresses the shortcomings of conventional blockchains, such as long processing times and network congestion. It also tries to combine the much-needed private and public blockchains, making it a viable choice with future adoption potential.