The final quarter of 2018 appears little different than the previous – the market remains mostly stagnant with little to celebrate. However, several shining outliers are making gains despite the downturn. Japan’s most well-known digital currency, NEM (XEM), is showing renewed vigor as trading resumes on the Coincheck exchange.
Trading was initially suspended due to a massive security breach in January of this year. Over 500 million of NEM’S XEM token evaporated from the exchange’s accounts in an instant – leading to losses in the realm of half a billion USD. Understandably, Coincheck immediately suspended trades of the NEM token to prevent laundering of the coin from the hacker’s addresses.
The Coincheck Incident In-depth
As investigators delved into the situation, it was readily apparent what had allowed the theft. A recurring theme from 2018 hacks, the NEM coins were held in an exchange hot wallet. These accounts are used to transfer funds back and forth between exchange users at a surface level – allowing easy deposits and withdraws of funds. However, the ability to access these wallets remotely also provides a path for malicious actors to seize funds.
Despite the negative publicity and the marking of 500 million coins as ‘stolen’, NEM’s investors continued to support the coin. The increasingly cryptocurrency positive governmental environment in Japan has encouraged unprecedented level of ownership in the country. While NEM itself is Singapore-based, the software is in heavy use with Mijin, a private blockchain service that provides certain banking features to enterprise level clients. Chief among these clients is SBI Sumishin Net Bank, one of the largest trust banks in Japan.
Success and Persistence
In part, NEM owes their success to the pioneering of the Proof of Importance algorithm. Rather than a simple proof-of-stake (PoS) that rewards hoarding, PoI instead encourages an active participation in the NEM economy. Nodes that are involved in a larger swath of transactions are considered more ‘important’ and therefore have a higher chance of taking part in the delegated harvesting method of coin production.
Although NEM appears completely blameless in the Coincheck hack, their name is still associated with one of cryptocurrency’s greatest black marks. Should they successfully move past this reputation, NEM remains a strong coin that could perform well going into the future – and recent market trends suggest that this may already be happening.
Article By: Adam Stone
