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The New Economic Movement is a blockchain project founded in Singapore in 2016. It has created a decentralised blockchain (called NIS1) and a token to go with it (called XEM). The idea for the NEM can be traced to three then-pseudonymous contributors to the Bitcointalk.org forum, back in 2014. Since then, the ideas have grown exponentially.
NEM came to be as a hard fork of NXT, but this legacy was all but discarded as the community later decided to create an entirely new platform from scratch. At one point, the project leaders were considering basing the new network around Microsoft’s Azure system for cloud computing. Ultimately, they found that doing so in the traditional way would have required an unacceptable surrender of their digital rights. Instead, they decided to pay Microsoft for use of the Azure cloud as a docker.
- NEM started life as a fork from NXT, but the codebase has since been redeveloped from the ground up.
- There are a total of just under nine billion coins (more accurately, 8,999,999,999 coins).
- All coins were all created at the start of the project, meaning that no new coins can now be mined.
How does NEM work?
NEM is distinct from other types of blockchain technology in several ways.
Rather than using the proof-of-work system favoured by Bitcoin, XEM uses something called a Proof of Importance algorithm, which rewards users who make more transactions and harvest more XEM.
The problem with traditional Proof-of-Work is that it nececssarily places power in the hands of those with lots of computational power. As an ordinary consumer, even one with a powerful PC, you are not going to be able to compete against a server room filled with specialised mining machines. This inherently concentrates wealth into the hands of the few indivuduals who hold the vast majority of Bitcoin. This becomes a problem when that wealth becomes stagnant, and those who hold on to it don’t actually spend it.
Alternatives like Proof-of-Stake also similar problematic incentives for users. The richest users have far more ability to sign the next block, and extract the resulting rewards. The net result is therefore the same: the richest users accrue wealth while the rest of the network doesn’t.
The Proof-of-Investment method still rewards users not only for having a large balance, but for trading with others.
Blocks of XEM are not ‘mined’ but ‘harvested’. A given node will calculate blocks and add them to the chain. Each block contains a record of every transaction that takes place in a single minute, and consequently a new block is added every minute. The node which harvests the block is allowed to keep the transaction fees, which incentivises users to contribute to the actual ledger-keeping bit.
There are a few complications. In order to act as a harvester, an account will need to have at least 10,000 ‘vested’ XEM in balance. This ensures that everyone who acts in this capacity has a stake in the system, and a reason to act in its best interests (albeit not a flawless one).
But what does ‘vested’ mean? Put simply, it’s a measure of how long you’ve been trading. Whenever XEM is deposited into your account, it will be entirely unvested. Then there’s a two-phase cycle that gradually makes it vested. After twenty-four hours, 10% of the balance becomes vested; then, after another twenty-four hours, 10% of the remaining unvested total is vested. You can still trade with these tokens, but both kinds of token will be used proportionally, such that the ratio between vested and unvested coins is kept constant.
Delegated harvesting is a method through which a harvester can act through a proxy private key. This is another way of saying that the Proof-of-Importance rating can be transferred to an empty account, whose private key can be safely shared without fear that the funds inside the original account will be compromised.
NEM price history
As with most currencies, the XEM price was negligible when the currency was first launched. In July 2016, it moved up from around $0.003 to a then-incredible $0.012 in a matter of a few weeks. A year later, it was trading at $0.24, following another two-week bull period. Its trajectory from there was remarkably turbulent, but still generally upward moving. The XEM token reached a record high during the crypto bubble of late 2017, during which the price peaked at around $1.90.
At the turn of 2021, the XEM price was hovering at around $0.20. In March of the same year, NEM launched another blockchain project called Symbol, based on the more traditional proof-of-stake method. This precipitated a crash in the price of XEM, from $0.60 to $0.40, though the crash was also because the preceding boom was being driven by an airdrop giveaway of symbol tokens (XYM) to holders of the existing currency. Consequently, demand for XEM was inflated in the build up to the launch of the new project, and relaxed afterwards.
How does symbol differ?
Symbol is a project focussed more on enterprise, which uses a hybrid blockchain that lacks full transparency to everyone, but still retains many of the advantages inherent in the technology, like security. Symbol, like many modern blockchains, offers interoperability, which allows it to act as a medium for seamless transfers between different blockchains.
NEM price prediction
It’s impossible to say with certainty what the price of a given currency will be in the future; if it were, then there would be no risk in investing. In the case of crypto, there’s exceptional volatility, and the danger that any given token will become completely worthless over time. As such, it’s vital that investors perform their own research, and that they invest in full awareness of the risks involved.
In the first half of 2021, crypto in general experienced an unprecedented boom. If this persists, then we might expect NEM to swell to $7 by the end of the year, and twice that by the end of 2022.
More conservative estimates put the currency at well below those levels, but they still see sustained growth in the value of the currency over the medium term. Unlike many of the other cryptocurrencies which have experienced growth in 2021, NEM spiked and then relaxed to a fairly stable $0.40, suggesting that there’s further room for growth to come.
What affects the price of NEM?
Trust in the technical resilience of the NIS1 blockchain will go a long way toward determining the success of NEM in the long-term. Any negative headlines associated with the technology will help to drive down the price.
The currency also suffers from the volatility that comes with having a relatively small user-base. If just a few players were to sell at once, (perhaps shifting to a rival) then the price could come down significantly.
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