Harvesting is closely similar to mining in other cryptocurrencies, but it uses unique methods called Proof of Importance and Delegated Harvesting to determine who harvests the next block. Harvesting is necessary to keep the network online and to confirm transactions.
Harvesting has several advantages over other types of methods.
Part of NEM’s founding vision was a system that would give power to users, not to hoarders or mining farmers. Keeping harvesting fair, transparent, and correctly incentivized is central to NEM’s purpose.
When your account harvests a block, it confirms all the transactions in that block, adds it to the blockchain permanently, and you automatically collect all the transaction fees in that block.
Proof of Importance is one of NEM’s major innovations in the blockchain industry. It’s a novel algorithm that uses network theory to assign a rating of each account’s importance in the network. Many other blockchains use Proof of Work (POW) or Proof of Stake (POS) to allocate rewards.
With POW, those who can afford the most powerful computing arrays have an unfair advantage over other users. These POW systems also consume excessive amounts of energy, harming the environment and burdening miners with expensive power bills.
POS gives an unfair advantage to coin hoarders. The more coins they keep in their accounts, the more they earn. This means the rich get richer and everyone has an incentive to save coins instead of spending them. POI solves these issues with an algorithm that looks at 3 factors:
NEM is the first blockchain to implement delegated harvesting. This is an efficient way to pool account power without exposing any private keys. To do this, you connect your account to an existing remote node and use that account’s computing power to complete blocks on your behalf.
Each account has a Proof of Importance (POI) score that determines its chances of harvesting a block. With delegated harvesting, you are lending your POI score to that remote node, increasing its chances of harvesting a block on your behalf.
Some unique features of delegated harvesting are:
You can read detailed instructions about how to set up delegated harvesting in our tutorials section.
Note that while the minimum harvesting balance is currently set at 10,000 XEM, this amount is potentially subject to change depending on adoption, price, and community needs.