Back in 2014, one idea was very popular in the crypto space: creating a blockchain alternative to Bitcoin’s where developers could build their own digital assets, and the native cryptocurrency of this network would fuel transactions on it. Many projects were simply modifying the Blockchain’s code, while the others were creating something new. This is how Ethereum emerged.
NEM enables easy transfer of any digital asset such as tokens, contracts, or files. Its blockchain can send data from one internal enterprise network to another, which makes it popular among businesses. XEM token powers the network. Users can profit from NEM with harvesting — getting rewards for the validation of blocks. This is possible as NEM leverages the Proof of Importance consensus algorithm that considers not only the size of your stake but also your activity in the network.
Let’s see how all this works.
What is NEM?
NEM intends to build a more advanced and efficient distributed ecosystem. It calls itself a Smart asset blockchain — a network for tokens that represent tangible real-world assets and intangible ownership which you can buy and sell.
NEM was created in 2014 by Bitcointalk forum users Jaguar0625, BloodyRookie and gimre. Today, it’s operated by the NEM.io foundation based in Singapore. NEM created their own codebase: first, the project was considered as a fork from a DApp platform NXT, but then, the developers decided to write NEM from scratch. Today, NEM stands at the #67 position on the Coinmarketcap’s list, whereas NXT dangles somewhere in the eighth hundred.
How does the NEM’s Smart Asset System work?
Smart assets in the NEM network are the digital representations of real-world assets or intangible ownership that one can buy, sell, or exchange. This can be a car, virtual goods like Bitcoin, or an equity share. NEM gives developers the tools to configure the smart asset exchange with namespaces and mosaics.
Mosaics are digital assets linked to what is called a Namespace. A namespace is a text string pointing to an account address in the NEM blockchain. Think of the namespace as a domain name on the internet, and mosaic as the files located there. There are also subnamespaces that allow namespaces to be divided into more specific subgroups. Namespace creation or renewal costs 100 XEM.
This system allows digital assets and addresses to be represented in a human-readable way. Using namespaces and mosaics, developers can create schemas and organize assets in many ways.
An example of a ticket company organizing its assets (tickets) for different events (subnamespaces).
What is XEM Coin?
XEM coin powers the NEM blockchain. It’s paid for network transaction fees and is used for determining network governance decisions. XEM is used within the NEM ecosystem for value transfers and payments, widening NEM’s use cases to shipping tracking, loyalty reward points, encrypted messaging, anti-counterfeiting, etc. Those who validate transactions (harvesting) get rewards in XEM.
What consensus algorithm does NEM work on? What is Proof of Importance?
To understand PoI, let’s take a look at the more traditional consensus algorithm’s drawbacks. In Proof of Work, nodes compete in terms of computing power; a lot of needless work is done, which makes PoW cumbersome and energy-inefficient. Moreover, the competition is won by those having more money for expensive hardware, which makes the value distribution uneven and creates centralization risks.
Proof of Stake is more energy-efficient, but has the same drawback: it gives too many preferences for block validation to those who own more crypto, and richer users become richer faster. PoS stimulates only stockpiling of coins, not their usage.
In NEM’s Proof of Importance, your stake’s size is taken into account along with how often and to whom you send your tokens — something that drives the network’s growth. Each user is given an Importance score which determines their chance to validate a block. PoI empowers regular users by rewarding them — this is what’s called harvesting.
How to profit from XEM?
Think of harvesting as mining in Bitcoin, but without the need for complex hardware. You validate transactions and get rewarded in turn.
Anyone who has at least 10,000 XEM is eligible for harvesting. These tokens need to be ‘vested’, meaning they have spent some time in your wallet: +10% of XEM that you store are counted as vested each day.
Local and delegated modes of harvesting are available.
The local one goes by default. Your computer has to be on for running a NIS (NEM Infrastructure Server). This is a NEM node where your private keys will be transferred to sign transactions. NIS nodes run the entire NEM blockchain: they fuel light and mobile wallets, 3rd party apps that need to be synced with the blockchain.
Delegated harvesting is performed on remote NIS. You can choose any NEM node without the fear of losing your coins. Here’s how it works: you delegate your importance score to another account that has no XEM in it. You also send your private keys to this node because the node needs it to sign transactions. The node contains only your importance score, not your XEM: so your tokens are safe. The rewards are sent to your NEM wallet. For delegated harvesting, your computer doesn’t have to be running 24/7.
To start harvesting, see instructions in the NEM blog. Mind that the instructions on the website suggest installing NEX Nano Wallet that doesn’t operate now. Use the official NEM wallets.
Supernode is a high-performance blockchain node with at least 3 million XEM on balance that ensures the smooth operation of the NEM network. Anyone with advanced tech characteristics can run a Supernode from a local computer or a cloud-hosted server. Supernodes are tested 4 times a day for their bandwidth, computing power, ping, and responsiveness.
Where do I buy XEM?
Buy XEM if you feel like investing in this coin or you want to get passive income through harvesting. If you already have an account on Binance, Huobi, or OKEx, you can easily buy your coins there. However, storing your coins on centralized exchanges is considered not totally secure, as you don’t own your private keys. And, if you want to do the harvesting, you’ll have to transfer your XEM into a wallet from the exchange anyway.
To avoid these risks and to control XEM in your crypto wallet, use ChangeNOW instant exchange service. We swap your coins in 5 minutes on average, don’t ask you for your email or private keys, and allow buying NEM with 200+ other assets.
Where should I store XEM?
The best place to store your XEM coins will depend on how you’re planning to use them. If you want to harvest XEM and get the most from the NEM ecosystem, use the NEM official wallets. If you want to store XEM securely as a means of investment, choose Trezor. If you want to have your XEM always at hand and able to easily swap it for other coins, download Atomic or Freewallet.
NEM Desktop Wallet
This is the official NEM wallet designed by the team. Although its interface is simple, NEM Desktop Wallet offers plenty of features for interacting with the NEM network. Here, you can harvest XEM coins, leverage the asset exchange, see NEM coin news. You can also create mosaics, manage namespaces, create polls, and send messages to other users.
NEM Desktop Wallet stores private keys on your device: the team has no access to them. Multi-user and multi-sig account creation are possible.
NEM Desktop Wallet replaced NEM Nano Wallet a few years ago. Today, it’s available for Windows, macOS, and Linux.
NEM Mobile Wallet
This is a mobile version of the NEM official wallet. Same as in the desktop version, the interface here is quite concise, but the main functionality is preserved. NEM Mobile wallet is available for Android and iOS.
Atomic is a wallet available for desktop and mobile that allows storing over 500 crypto assets. If you want to manage all your portfolio at once, choose Atomic. Here, you can swap coins for one another right inside the wallet, buy some new with a credit card, check the NEM chart online, see your transaction history, and much more. No KYC or registration is needed to start.
Trezor is a hardware wallet that stores your XEM offline: this ensures the highest level of security possible. It is a USB device that you can connect to your computer with USB or your mobile phone with Bluetooth. To move your coins, you’ll have to connect your Trezor, which makes the wallet more convenient for storing your coins than actively moving them. Over 1000 crypto assets can be stored in Trezor.
Freewallet is a software multi-asset for storing NEM and many other cryptos. It’s available for Android, iOS, and Web. To start using the wallet, you’ll need to log in with your Facebook, Gmail account, mobile number, or email. You can swap your coins here, buy them with fiat, and check their exchange rates online. Freewallet allows you to customize the protection of your funds on several levels, including the protection from a device loss. 2FA, pin-code, and Fingerprint support are possible.
During over 7 years of existence, NEM showed the sustainability of its approach to building blockchain ecosystems. Many companies worldwide leverage NEM and its easy and profitable harvesting model attract many users eager to get passive income.
We hope this NEM guide was comprehensive and useful for you. If you feel like learning more about NEM, feel free to read their docs and follow their Twitter.