The Executive Interview series, as part of Tech Investment Insights, provide you with exclusive interviews with newsmakers, industry leaders, and experts in the technology industry.
Interviews do not imply endorsement of the company, its products, or any associated securities. Rather, it is meant to provide you more information for your consideration from those currently directly in the industry itself.
Recently I had the opportunity to interview Jason Lee, Interim Vice President of the NEM Foundation. The Singapore-based NEM Foundation is the primary developer organization in support of the cryptocurrency NEM. NEM, which stands for the "New Economy Movement," utilizes as its crypto the "XEM."
NEM (XEM-USD) stands out in that it utilizes a "proof-of-importance" for its blockchain creation and fee harvesting in contrast to the "proof-of-work" and "proof-of-stake" of many other notable cryptocurrencies.
Currently NEM has a market capitalization of about $518 million and is ranked #22 among cryptocurrencies in total value. During the 2017-2018 cryptocurrency bubble NEM hit a high of $1.88 a NEM in early January 2018 for a market capitalization of about $16.89 billion. This past year its market capitalization has generally ranged from $500 million to $1 billion.
In January 2018 NEM gained some infamy after it was subject to the largest cryptocurrency exchange hack in history when about $530 million in NEM was stolen from Coincheck in Japan. The stolen NEM was tagged and followed for some time afterwards due to the structure of the NEM blockchain.
NEM has seen some uses in the civic sphere, as the government of Ukraine in late 2018 utilized NEM as part of a series of trials for electronic voting, with generally positive results from a security and cost-effectiveness standpoint.
The NEM Foundation in early 2019 underwent a significant shakeup, as there were large changes to its personnel, organization, and structure.
ER: What is NEM? What are its distinctive attributes and how does its XEM stand out from other cryptocurrencies?
JL: NEM is a blockchain protocol. Like an internet protocol, the NEM blockchain protocol is the base layer which powers multiple applications. Think of the NEM blockchain as a superhighway with many vehicles using the multiple lanes; XEM is one of the more prominent ones, but there are many other vehicles that are also utilizing the same blockchain protocol.
XEM stands out because it has withstood the test of time and is now one of the oldest cryptocurrencies. As the native currency of the NEM blockchain, it is used to pay for transactions in order to incentivize its network of public nodes that process and record transactions for businesses and users. This means that XEM has real fundamental value as the currency of a functioning economy. The launch of Catapult will see additional functionality and versatility in how XEM is used.
ER: NEM uses a modified version of Eigentrust++ for node security. How does this work and what impact does it have on NEM?
JL: Eigentrust is a reputation management system which is combined with the algorithm for PageRank (similar to what is available on search engines). It was possible to improve proof-of-stake by integrating network node activity to the equation. This ensures that over time, dormant accounts lose their benefits. Accounts need to be active in order to get the best returns out of this proof-of-importance algorithm.
Google uses PageRank to improve search results; NEM uses Eigentrust++ and NCDAwarePageRank algorithms to keep track of nodes’ reputation.
ER: How do users and businesses utilize NEM and what particular things may stand out for them?
JL: Users and businesses can utilize NEM as a plug-and-play solution which can function as an add-on to their business solutions. NEM provides a platform to deploy the best of blockchain technology for businesses both quickly and securely, whether that be drastically simplifying accounting, supply chain management, records keeping, asset tracking, and more. Businesses that leverage the strengths of a blockchain database will likely recognize huge operational efficiencies and maybe even fundamentally change the way they interact with their customers.
ER: What is the role of the NEM Foundation?
JL: The NEM.io Foundation aims to introduce, educate, and promote the use of the NEM blockchain technology platform on an international scale to all industries and institutions. This includes highlighting how NEM is higher performance, more customisable, easier to develop on, and more secure than other blockchain solutions — by design.
NEM is built from scratch as a powerful platform for application developers of all kinds, and the NEM blockchain is designed to be the plug-and-play business blockchain. The NEM Foundation also offers consultation services to governments, private & public institutions, SMEs, startups and educational institutions around the world.
The focus of the NEM.io Foundation in 2019 is to support the commercialization and launch of Catapult, the next iteration of the core NEM engine.
ER: In 2018, it was revealed that the government of Ukraine had tested utilizing NEM to facilitate voting, with promising results. What do you think this represents and how might NEM or cryptos in general be utilized for ballot protection services or other public uses?
JL: The NEM Foundation is already in talks with many governments around the world and we are seeing increasing acceptance of blockchain technology, which is a huge step forward for the industry. Governments are more aware of the benefits of blockchain, including how it can increase trust in the electoral process, as well as help optimize and digitize elections.
NEM can be utilized for ballot protection services and other public services through the use of 'mosaics,' which functions as a representation of a digital asset whenever information is moved from one location to another.
With the Ukrainian Central Election Commission specifically, NEM has proven that our blockchain is capable of storing, as well as interacting with, data stored on the blockchain.
ER: What do you see as the most notable trends right now in the cryptocurrency world overall? Do you see the cryptocurrency industry beginning to mature or is there still rapid innovation taking place?
JL: The market is still maturing and there is innovation happening, albeit within the changing regulatory landscape. However, regulation is healthy for the industry as it means reducing the number of outlandish claims with institutional adoption (and therefore, credibility) on the rise.
While crypto market movements still dominate the headlines, there has been a shift from crypto to blockchain as a technology. The number of use cases for blockchain are immense, ranging from securities trading to IoT micropayments, to notarizations and customer relationship management.
Catapult, which will become the core NEM engine in its next phase, is a full-featured blockchain engine that can power both public and private networks with its unique built-in features. These features enable bulletproof digital asset creation, decentralized swaps, advanced account systems, and business logic modeling, and we are excited to showcase this to the world in the coming months.
Explore other segments of Tech Investment Insights' Executive Interview series below: