A year in the life of NEM (XEM) cryptocurrency
Cryptocurrency NEM – designed from the ground up for speed – has been gaining traction over the past year as a business tool, offering commercial blockchain solutions, particularly for companies in the fintech sector.
NEM is currently (5 June 2018) the 15th biggest cryptocurrency, with a market capitalisation of $2.19bn.
Over the past 12 months, NEM’s price has risen dramatically, albeit from a very low starting point. Between 25 March and 24 May 2017, NEM’s price spiked by an astonishing 1,983% from $0.012 to $0.25.
The spike followed the announcement that NEM was releasing a beta version of its new Catapult blockchain technology, aimed at the private sector, though it will also be incorporated at a later date into the public blockchain.
Catapult has been developed in conjunction with Japanese firm Tech Bureau, and is a development of the latter’s mijin technology, a type of ‘permissioned’ blockchain used for storing data within companies, or data-sharing with partner firms.
Named after a ninja weapon made from three chains that would tear an enemy apart, the developers claim mijin will have the same effect on conventional IT infrastructure.
NEM is actively encouraging take-up of its blockchain technology in the commercial sector by awarding development grants.
Jacob Bushmaker on investinblockchain.com says that with the diverse business functions NEM can perform, there is a large potential customer base.
“In addition, NEM plans to release Catapult this year, which will add even more improvements to its current Mijin software. This will only put NEM further ahead of its competition,” he adds.
One of several companies looking to use NEM is Scanetchain, which is launching the first commercial Dapp (decentralised application) built on the platform, and is raising cash by selling its own SWC tokens via an ICO (initial coin offering), which runs until 7 June.
Scanetchain uses augmented reality (AR) technology to digitally identify products, brands and images, both online and offline, by assigning a scannable marker to each object. Users will be able to scan items using smartphones with an AR-enabled camera, such as the iPhone X, and the objects will be instantly linked to the blockchain so they can be used for searches, buying and advertising.
Hit by Bitcoin crash
NEM’s price peaked again in December-January 2017-18, soaring from $0.22 on 1 December to an all-time high of $1.90 on 4 January, a meteoric 763% rise. This time the price rise, and subsequent fall, mirrored almost precisely the Bitcoin bubble peaking and finally bursting.
On 26 January NEM hit the news when hackers raided Coincheck, a Japan-based crypto-exchange, stealing $523m-worth of XEM tokens. How much the theft affected the price is hard to gauge, since the chart continued to mirror Bitcoin’s plunge, staging a slight recovery, before falling again to around its current level.
The fraud was made possible by poor security at Coincheck, rather than any fundamental issues with NEM itself, but there were calls to create a new fork to protect the currency. NEM refused, instead setting up a tagging system that ‘followed the money’ and marked any account with stolen XEM.
However, the NEM price has stubbornly failed to recover much ground since the raid and is currently flatlining at around the $0.25 mark.
Perhaps the most interesting event over the past year – and perhaps a pointer to the longer term – is the adoption of the NEM blockchain by the oil-rich but bankrupt country of Venezuela. Its oil-backed Petro token was launched in February 2018, with president Nicolas Maduro claiming to have raised more than $5bn, although CNN reported “the prevailing sentiment among analysts is that the claim is patently false”.
Bitcoin magazine has reported that “Venezuela has guaranteed buyers that the Petro will carry the full weight of legal tender, acceptable as payment for fees and taxes and exchangeable for the nation’s hard currency, the bolivar”.
Despite the possible negative publicity of being associated with a country such as Venezuela, with Maduro widely accused of rigging the May presidential election, some pundits believe the move can only benefit NEM.
“The Petro token will give the NEM platform much-needed impetus that is only good for a cryptocurrency looking for real-use adoption,” said Mir Khaleq Ali in a blog on nemcoin4u.
“My only concern would be how NEM (XEM) itself handles the situation to avoid antagonizing XEM holders. But if I have to advise any investor who already holds XEM, it would be this: Don’t sell; NEM is going to be bigger this year.”
So what does the rest of 2018 hold in store for NEM? Will it recover from the fallout from the heist? Much will hinge on the release of the delayed Catapult software update, which will dramatically increase the speed of the NEM blockchain.
Finder.com says NEM “has the opportunity to be at the forefront of the large-scale integration of blockchain into the business world”, but warns it is operating in a very competitive space.
Time will tell, but Venezuela’s move – notwithstanding the country’s reputation – could help NEM gain long-term traction with other big national and corporate players. Long-term, it could be one of the big players.