NEM stands for “New Economic Movement” and it is a platform for the creation of decentralized businesses, organizations, financial products and payments systems. It was created in 2015 by a group of programmers and introduced a new consensus mechanism called Proof of Importance (POI). The POI consensus algorithm is based on the SHA-3 hash algorithm and functions similarly to a delegated Proof of Stake system. It provides a relatively high transaction throughput of around 1,500 transactions per second. The protocol also introduced a network reputation system that is like a real-world credit score (the Importance Score). Users’ Importance Scores are determined by how often they use XEM for P2P transactions and increases the more users engage in protocol development and/or ecosystem promotion. High Importance Scores translate to high transaction validation power. Since its launch, the project has gained significant traction in Japan, where a private version of the NEM blockchain is being tested by Japan's largest trust bank, SBI Sumishin Net Bank, owned by Sumitomo Mitsui Trust Holdings.
Ethereum is an open source network of computers that enables the creation of smart contracts. Smart contracts are transfers of value contingent upon verifiable events and executed automatically by the network. Many businesses depend on both trust and reputation when transacting with unfamiliar parties, as the enforcement of real-world contracts can be both costly and lengthy. The logic behind many of these business processes, however, is very simple. It can often be represented by the statement, “If X (event) happens, transfer Y (amount) of tokens to Z (recipient).” Ethereum enables this statement to be converted to computer code as a smart contract, which is then stored on the Ethereum blockchain. Once deployed, all smart contracts that sit on the Ethereum blockchain are automatically executed by the Ethereum Virtual Machine (EVM), a group of computers responsible for executing smart contracts based on verifiable events. Since execution requires computing power, mining in the context of Ethereum means not only confirming and validating peer-to-peer transactions, but also executing the code that represents the smart contracts. Recently, Ethereum has become a platform for the creation of digital tokens that leverage the Ethereum Blockchain and EVM. This was made possible after the creation of the ERC20 standard, a set of rules that facilitate the creation of Ethereum-based tokens, commonly referred to as “ERC20 Tokens.”
Cardano is a smart contract platform being developed by IOHK, a blockchain consulting company and one of the current developers of Ethereum Classic, in conjunction with members of the University of Edinburgh, the University of Athens, and the University of Connecticut. The team is led by Charles Hoskinson, CEO of IOHK and former CEO and Co-Founder of the Ethereum project. According to Cardano’s website, the most important part of the protocol is its consensus mechanism; a Proof-of-Stake algorithm called Ouroboros. Proof-of-Stake is a new mechanism used to validate and reach consensus in blockchain networks. Rather than mining using specialized hardware, validators in Proof-of-Stake networks are required to post collateral to validate network transactions. Ouroboros selects these users randomly, and supposedly has a safer security model than current Proof-of-Stake implementations. The Cardano team is also performing research on Proof-of-Stake incentive mechanisms to diminish the attack surface of these algorithms. The Cardano team updates its roadmap monthly.
NEO, formerly known as Antshares, is a smart-contracts platform that enables the creation of digital assets and also has a blockchain-based identity and reputation system. It is the first public blockchain project to be based in China, and has been nicknamed “the Ethereum of China.” NEO differentiates itself from Ethereum by allowing its smart contracts to be coded using popular programming languages. Developers accustomed to Java and C#, two of the world’s most popular languages, can develop NEO smart contracts, which are then compiled and processed by the platform’s own Virtual Machine. This architecture carries several trade-offs, as the use of high-level programming languages introduces potential security vulnerabilities. To attract more developers to the ecosystem, the project aims to further improve its software compiler and make compatible versions that accept the most popular programming languages. According to Da Hongfei, founder of NEO, the project is working closely with Chinese certificate authorities to map real-world assets using its smart contracts.
QTUM is a smart contracts platform that fuses the Bitcoin blockchain with the execution environment of the Ethereum Virtual Machine (EVM). Technically, QTUM is a fork of Bitcoin Core version 0.13. By leveraging Bitcoin’s light client model, QTUM enables the use of mobile wallets that can be used not only for P2P transactions, but also for mobile-based smart contracts. Compatibility between the QTUM Virtual Machine and the EVM also allows developers to migrate Ethereum smart contracts to the platform and build upon pre-existing code. Like NEO, the project’s biggest competitor in China, QTUM uses a Proof of Stake consensus algorithm for transaction validation and protocol governance. Another key feature of the QTUM protocol is built-in oracles, which are data sources that arbitrate the execution of a smart contracts based on real-word, externally verifiable events. The team is led by Patrick Dai, formerly known as Steven Dai, who was involved in the BitBay scandal. Investors include Bo Shen of Fenbushi Capital and Roger Ver, CEO of Bitcoin.com.
Ethereum Classic was created in July 2016, when the Ethereum network split following a disagreement regarding how to respond to The DAO Hack. Approximately 5% of the total supply of Ethereum tokens was stolen during the hack and the Ethereum Foundation acted quickly to engineer a fork to reverse the theft. The resulting fork is now called Ethereum, and the original chain is known as Ethereum Classic. The Ethereum Foundation’s decision to fork the protocol was rejected by part of the community who believed that no single event, or even a hack, could justify compromising chain immutability. This small constituency of users continued to use the original blockchain and rejected the bailout. No large-scale projects have been built using Ethereum Classic and it has been predominantly used for peer-to-peer transactions rather than sophisticated smart contracts.