NEM: A Blockchain Platform for the New Economy

Launched in 2015, the NEM blockchain project is a digital asset management platform capable of creating fintech systems, logistics tracking systems, initial coin offerings, notarizations, and decentralized identity verification, all tailored to specific needs. As an open-source, decentralized, and self-sustaining public blockchain, NEM allows anyone to use the blockchain autonomously. Developers can also build upon NEM to create their own applications. XEM, the native currency of the NEM network, facilitates instant payments and transfers globally. Additionally, XEM can be used to pay transaction fees, create new coins, encrypt messages, and access other functionalities.

I. Project Features

NEM boasts a unique namespace/smart asset system, akin to the domain/page structure of the internet. This system enables users to easily apply for their own namespaces and issue on-chain assets on the public blockchain. XEM itself is an on-chain asset issued on NEM's base namespace. As a blockchain system built from scratch using Java, NEM and its digital asset XEM possess the following key features:

• Perfect Store of Value: XEM has a fixed total supply, ensuring it remains inflation-proof.

• Convenient Transactions: The blockchain's robust transaction capacity ensures high TPS (transactions per second).

• Harvesting System: Users can earn passive income by holding XEM.

• High Efficiency: The blockchain operates without demanding excessive power consumption.

• High Demand: Using the public blockchain for recording transactions and issuing smart assets requires XEM.

II. NEM Blockchain Architecture

Figure 1. NEM Blockchain Architecture (Please insert relevant image here)

The NEM blockchain platform is built on a network of nodes, each running the NEM core node server software. These nodes provide a powerful, easy-to-use, stable, and secure platform for conducting smart asset transactions, conducting searches, and permanently recording them on the blockchain ledger. The nodes on the network perform two primary functions:

1. API Gateway Servers

Each node provides API gateways that applications can use to access the blockchain and its functionalities. This eliminates the need for applications to run complex node software. All functionalities are accessible through API interfaces available on each node within the network. This accessibility enables the use of lightweight code in any programming language to create diverse solution architectures on the blockchain.

Figure 2. Examples of API Gateway Server Solution Architectures (Please insert relevant image here)

1. Blockchain Node Network

Each NEM node works in conjunction with other nodes to form a peer-to-peer blockchain network. This network collectively creates and supports the blockchain itself. The NEM node software verifies transactions, maintains the database, synchronizes with other nodes, and maintains stability and trustworthiness to create a fast, secure, and scalable network.

Key Features:

• Proof-of-Importance (PoI): NEM's consensus mechanism relies on the unique Proof-of-Importance algorithm, which leverages a technology similar to Google's PageRank to prevent various attacks on the trustworthiness of blockchain transactions. This mechanism serves the same purpose as the typical Proof-of-Work (PoW) mechanism used by Bitcoin and others but offers greater scalability and energy efficiency. Consequently, nodes can run on almost any hardware while still providing a highly secure network capable of infinite scaling.

• Eigentrust++: NEM implements a modified version of the Eigentrust++ algorithm, allowing nodes to intelligently judge the "reputation" of other nodes, reject bad actors, and optimally balance the load across the network.

• Spam Protection: NEM nodes implement built-in spam filters to prevent a flood of transactions from overwhelming the network, automatically ensuring throughput without rejecting legitimate transactions.

• P2P Time Synchronization: To achieve time synchronization independently of external entities like NTP, NEM utilizes a custom time synchronization protocol. This ensures that nodes remain constantly synchronized, achieving network time consensus and guaranteeing reliable timestamps, which are crucial in blockchain technology.

• Network Incentivization through Harvesting: The expansion of the public blockchain is self-incentivized through "harvesting." Anyone can create a public node, thereby increasing the network's capacity. The ability of nodes to collect fees associated with any transactions they happen to process provides an incentive for increased capacity. The likelihood of any given node harvesting is determined by its account's PoI "importance" score, rather than its processing power.

III. NEM Project Applications

1. Financial Payments: Financial services companies can utilize NEM to make instant payments and transfers anywhere in the world. One of NEM's key advantages is its ability to seamlessly interface between public and private blockchains, enabling the transfer of currencies, tokens, or documents from within a company's internal network to another company's network via the public blockchain.

2. Creating Your Own Cryptocurrency: NEM's smart asset system enables users to define and launch their own tokens or cryptocurrencies without requiring programming knowledge. Simply access the client and define the name, number of coins, divisibility, transferability, and levy to complete the process. The newly created coins can be traded for free, or transaction fees can be set at any desired amount.

3. Mobile Payments: Users can utilize XEM, NEM's native cryptocurrency, or create their own cryptocurrency on the NEM platform. NEM is particularly well-suited for mobile retail payments. With blocks completed every 60 seconds, NEM enables rapid transaction confirmations for everyday use. Transaction fees remain sufficiently low to facilitate even small purchases. Furthermore, NEM's mobile wallet supports barcode functionality for easy payments without requiring address input.

4. Stock Market: Stock markets often suffer from inefficiencies in post-trade clearing, payment, and settlement processes. While trade matching occurs at hundreds of transactions per second, the clearing and settlement of inventory can take more than two days. Given that current systems and practices rely on outdated legacy processes, stock markets should consider a complete system overhaul. NEM blockchain technology is a suitable core component for redesigning the stock market ecosystem, potentially saving the industry billions of dollars annually in operating expenses.

5. Escrow Services: NEM can serve as the foundation for escrow services. Users can establish trustless accounts to manage the transfer of currencies, tokens, data, or any other asset. The system also allows for setting the minimum number of digital signatures (up to 32) required before a transfer can be executed.

6. Liquid Asset: The network has set XEM to a permanently fixed quantity, eliminating the risk of inflation. Every transaction on the public blockchain requires a small transaction fee, ensuring sustained demand for XEM coins over time. Users also need XEM to pay for token creation, encrypted messaging, and other functionalities. These factors make XEM a valuable store of value.

Related Links:

• https://nem.io/technology/

• https://nem.io/enterprise/