Cryptocurrency is just a little too complicated for the average person. So let’s take a moment to discuss some beginning concepts about NEM.
First, we will start off by explaining what a ‘Blockchain’ is. Then go on to explain ‘Harvesting’ and the idea behind the ‘Proof of Importance’ algorithm. Lastly, we are hoping to shed some light on some of the interesting and innovative features that we have on our Blockchain platform.
What is a Blockchain?
A ‘Blockchain’ is sort of like that piece of paper in a checkbook that allows you to keep track of everything. The NEM ‘Blockchain’ keeps track of how much was spent, with whom, on what day, and even keeps track of the exact time. Now imagine if everyone in the world shared a piece of paper like this. It has everyone's spending on it. If you make changes everyone can see it, but you can only make changes if everyone agrees that this change actually happened. Everyone, at any time, can look at it and check to make sure it's right. Now, we all agree that this piece of paper is right. Usually, 'Blockchains' keep track of who owns what money and when it is moved around. In NEM, this is still true - but NEM also keeps track of other kinds of things, which will be talked about at the end of this blog.
What is Harvesting?
In NEM, your computer is watching the ‘Blockchain’. When your computer sees someone spend money, it tells the next computer. Then that computer will tell another computer, until everyone knows. Now, everyone can agree that someone sent some of their money, and who the new owner of that money is. As your computer is doing this, you have the chance of getting some free money for adding other people's spending to the 'Blockchain', and then telling everyone else what you've added. Isn’t that great? Free money! This is called ‘Harvesting’. There is a catch - you can only begin 'harvesting' once you are important to the group. This helps to keep people from lying to the rest of the group.
What is a Vested Balance?
A ‘Vested Balance’ is when you have some money and let it sit in your account for a while. It becomes ‘vested’ as it becomes old. When you have ‘vested’ enough money, you start to become important to the group!
To become important, a person must own at least 10,000 XEM that have become ‘vested’ from getting old. If you have less than 100,000 XEM it will take longer than a day to have enough ‘vested balance’ but most of the time it can happen in less than a couple of weeks. If you have more than 100,000 XEM, it will only take 24 hours to get at least 10,000 of it ‘vested’. What’s the reason for this? It takes a lot of time (or a lot of money) to do, so it makes it hard for someone to fake being important. This helps the NEM network to stay safe.
What is Proof of Importance?
'Proof of Importance' is a way in NEM to make sure that all the computers on a network agree with each other and helps decide who can ‘harvest’. This helps to keep everything safe from hackers and keeps NEM working well. It’s a big part of how we make sure people are telling the truth about the things that our ‘Blockchain’ keeps track of, like how much money a person owns. ‘Proof of Importance’ helps to make sure that every person using NEM can agree on everything and stops people from spending more than they have. It uses mathematical formulas made from information about an account to decide how important a person is to the group.
The more important you are, the better chance you have of getting that free money when you’re ‘Harvesting’! That means people want to be important, so they won’t lie! Once you are important, there are a couple more things that decide just how important you actually are. Your ‘Vested Balance’, who you send money with, how often you send money, and how much you send are all considered when figuring out how important you are. To fake all of these things would take more money than a liar would stand to make. The best part? This means we can always trust an important person.
Putting it All Together!
When you send money to someone, all the up-to-date nodes see it, and they tell everyone else. They want to be important and ‘harvest’ because they all get a chance to get some free money. Now that everyone knows you have sent money, everyone also knows that someone else owns that money. You can’t send it again or pretend you never sent it. With the help of ‘Proof of Importance’, we can make sure that people are sending money around and keep them from trying to lie to get free money. This means that the only way to get the free money is to ‘harvest’ without lying about what is happening on the ‘Blockchain’.
So far, we have only been discussing people using NEM to send money, but actually NEM does a whole lot more (it’s what we call a ‘Next Generation Blockchain 2.0 Platform’). The same advanced mathematics used to send money can also be applied to any type of data we want to store on our 'Blockchain'! Though harder to understand for a beginner, we have the ability to store anything from official documents like birth certificates, all the way to other assets or shares in large companies. NEM can send messages, encrypted (it means secure and private!), unencrypted, and hex messages (a format of messages used by programmers). NEM has a built in system for people to register names called Namespaces. These names can be used to run a business on the blockchain. It also has a way for people to create their own assets. This asset feature is called Mosaics and allows for many different kinds of assets to be made with many different properties. NEM also has a unique m-of-n multisig feature built into the protocol that allows for single accounts to have multiple signers, like a joint bank account. ‘M-of-n means something like 2-of-3 or 5-of-10. NEM has a network of nodes called Supernodes. A Supernode is a server that is harvesting and telling other computers on the network about the transactions taking place, but these servers are stronger and faster than average. Because they help other computers so much, they get paid bonuses for their work. And NEM has many more features to come!
So, if you’re a beginner - come join our secure network and be a part of the NEM ecosystem! If you’re a developer looking for a new project, we have a very active development community that is always coming up with awesome ideas! And please stay tuned for a few more ninja releases in the coming weeks! You can follow us on Twitter or Facebook to find out more!