NEM, short for “New Economy Movement,” is a blockchain smart contract platform with one of the best websites in the entire game.
Seriously, check it out. I’ve never had a better experience doing preliminary research on a blockchain. The purpose of this project is clear, well defined, and with ample documentation.
While EOS gets all the hype as the “ethereum killer,” I gotta say, NEM might be another contender for that title. They offer a cutting edge platform for smart contracts, including what has up until now been Ethereum’s killer feature of smart token issuance.
Questions to Answer
The question is: What differentiates NEM from ETH, and what kind of team is working on this project? How does the whole thing stack up against Ethereum, basically?
Another question is: Despite the great appearance on the surface, what complaints / criticisms are being lobbed at NEM? Are these valid?
We’ll dig into these two issues in this post on NEM. In the process, you’ll become better educated about a token that has been in the top 10 for many months.
About This Series + Disclaimer
This post is part of a new series where I investigate each of the top 50 coins by market cap (based on coinmarketcap.com's rankings on October 11, 2017). My goal is to help steem’s userbase become the most knowledgable blockchain community in the world.
Disclaimer: I am not an investment expert and will not be providing investment advice. I will teach you about the top 50 coins, and you can do what you want with that info.
Differences Between NEM and ETH
All branding aside, there is one key difference between NEM and ETH: The consensus model.
A lot of time has been spent debating the merits of consensus models for blockchain. Bitcoin’s Proof-of-Work system has been famously expensive in terms of computing power - though it isn’t “wasteful” per se, since it serves the purpose of making bitcoin possible.
Some blockchains, such as Steem, use a variation of the Proof-of-Stake system. This is a consensus model where the amount of tokens held in your account (in Steem’s case as Steem Power) determines how strong your “vote” is on which blocks should be mined.
PoW uses a lot of resources while PoS may lead to over-centralization or general mismanagement of a blockchain. Nobody knows the perfect answer.
NEM introduces a novel method called Proof-of-Importance. Proof of Importance measures several factors:
- Number of tokens held (Stake)
- Number and size of transactions from this address over the last 30 days
- Who those transactions were with
The more transactions you have, with as diverse a group of people as possible, and while holding as many tokens as possible, all adds up to your total “Importance” and therefore your ability to mine blocks and authenticate transactions.
It’s like Proof-of-Stake, but theoretically better. This is a big difference from Ethereum, who are still moving towards basic PoS. In other words, ETH is two steps behind NEM with consensus.
Other Differences Between NEM and ETH
Reddit user jlmeyers points out that NEM and ETH may be complimentary overlapping technologies, rather than direct competitors. He also gets a great snarky response from an ETH dev:
It’s hard to make any definitive statements on which of ETH and NEM (or the other competitors, like Lisk) are actually better.
Which one is more secure/fast/scalable? It’s a lot of he said/she said, each project’s developers slinging shit at the other projects in favor of their own.
Meanwhile very few blockchains have actual users using dapps and doing things. In fact other than Ethereum’s Crypto Kitties and other silly stuff in that vein, Steemit is one of the few examples of a blockchain with a lot regular non-financial traffic.
So I choose to stay neutral. All I know is NEM has a great public face and appears by all measures to be a promising blockchain.
Criticisms of NEM
We already saw Ethereum developer Matt Ferrante slam NEM in the previous section for being insecure and unstable. What other criticisms are being put against NEM?
The main source of criticism that I found comes from an old post from @tokenguide on Steemit. In the post, they lay out the following criticisms:
- Not enough technical details on the future development of NEM
- As of 8 months ago, there were not enough recent updates
- Does “not stand up to competitors” regarding enterprise-level solutions.
That post’s final verdict says that they believe NEM has potential, but only if the technology successfully keeps up with the competition.
Eight months later, we can see that NEM has retained its top 10 position despite incredible volatility among the top 25 tokens in the last several months. To me, that’s a vote of confidence in the technology.
The only way that NEM can truly disprove the criticisms is to actually be used for enterprise level applications. I’ll be waiting to see if that happens in the near future. If not, some doubts about the protocol seem inevitable.
The NEM Team & Community
Major members of the NEM team have participated under aliases up until the present day. As such there is no singular narrative of one person or group founding and leading the project - it’s more of a scattering of information and people.
Smith + Crown offers some great info on the founding of the protocol:
There is a lot more good information over there in Smith + Crown’s article about NEM.
The NEM blog has a major announcement from 2016 detailing a plan to increase the regional presence of the NEM community and grow from there. Here’s their list of steps in the plan:
Unfortunately there are no follow-ups to this post on the blog, so I don’t know if they followed through on these steps. This is the kind of thing I’d love to see updates on.
More recently, the blog is focusing on use cases and technical development:
It looks good and active, with lots of diverse initiatives. In this way NEM seems much more decentralized than some other projects - there isn’t really one person taking central credit for anything. This is a good sign to me.
Market History
All time history price chart:
Three month history:
Both charts are from Coin Market Cap as usual.
Right now the entire cryptocurrency market is fluctuating up and down by 20-35% per 48 hours with absolutely no regard for logic or human emotion. Your guess is as good as mine on what comes next.
Final Thoughts
I like NEM. The website is so good and it seems like they’re all action, no hype. The fact that this token has been top 10 for so long, while chugging along with such little hype, makes me optimistic about the future of this technology.
Anybody who wants to argue about NEM vs ETH and other options is missing the point. NEM is a potentially great blockchain - let’s support it and see what happens.
In the best case, both NEM and ETH along with a host of other smart contract platforms all can thrive and help different users with different use cases. We’ll learn as we go.
What is your opinion about NEM?
