Crypto’s Top 50 (Part Four): NEM (XEM), Ethereum Classic (ETC), NEO (NEO), Maker (MKR), and ZCash (ZCASH)

January 6, 2019 / by Steven Lubka

This is the fourth part of a series that will cover all of the top 50 Cryptocurrencies and provide an introduction to what the coin does, why it matters, and any important highlights. The goal of the Top 50 series is to give readers a basic understanding of each coin that simplifies a thorough technical understanding down into a few easy to understand points. The ranking of coins changes on a day by day basis and may not always reflect the order in this article.

16 of 50 — NEM (XEM)

NEM is a blockchain platform that emerged from community collaboration starting in 2014. NEM allows users to access a configurable blockchain framework to build a huge variety of custom applications. It does this through its smart assets and namespaces.

Smart assets are digital assets on the NEM blockchain that can be configured to possess various attributes, not just exist as a unit of currency. The assets are known as mosaics and can represent anything from a unit of currency to a stock, bond, or reward points. They are held by NEM addresses which can be user accounts or something like a package. Assets can also be listed via a namespace, which is similar to a domain name on the NEM blockchain.

Overall, this functionality allows the creation and listing of unique, customized assets to be tracked and traded by the blockchain system.NEM uses proof of importance as a consensus protocol, which is similar to Google PageRank. This means that as more nodes link to and trust a given node, the higher that node is ranked. This is combined with the use of an Eigentrust that allows nodes to rank other nodes in terms of reputation.

Unique to NEM, nodes can harvest transactions that they process but the amount generated by the node is not related to their processing power, but instead to their reputation and rank.

NEM offers both public and private iterations of its software.

17 of 50 — Ethereum Classic (ETC)

Ethereum Classic is the original Ethereum chain. When the DAO incident occurred on Ethereum, the majority of the community decided to fork the network and revert the funding lost due to the hack. Ethereum classic is the original chain which did not fork and has been maintained by a small section of the community that opposed the fork.

Ethereum Classic development is managed by a different team than Ethereum, and it is not backwards compatible with Ethereum. The essence of Ethereum Classic is that the community believes in an “immutable ledger,” meaning the previous fork should not have been allowed to happen as it proves that the ledger can be altered. The Ethereum Classic chain holds this as its core tenet.

Despite being the much smaller of the two chains, ETC has gained its share of attention being added to the Grayscale Investment Portfolio and to Coinbase.

18 of 50 — NEO (NEO)

NEO is a blockchain platform that is able to run smart contracts. It was founded and is operated out of China and has often been compared to Ethereum in terms of functionality, but it has several key differences.

NEO is very scalable. It has fast transactions, and transactions are free. This is because it is not currently a true open blockchain although it plans to decentralize more in the future. It is not possible for anyone to run a node on NEO, but nodes eventually will be managed by a wide variety of companies across different industries. NEO is able to benefit from these trade-offs to achieve greater scalability and cohesion of development. NEO cannot fork, and development is guided by the NEO Council.

NEO features two different tokens, NEO and GAS. It has a robust ecosystem of DApps and developers that have been working to build out a wide range of features. The team behind NEO is also developing Ontology (ONT), which is a industry ready blockchain also based out of China. NEO’s overall goal is to have a huge ecosystem of services spanning many DApps and multiple chains (ONT). NEO founders work closely with Bitmain and Elastos (ELA).

19 of 50 — Maker (MKR)

MKR is part of the Maker Dai Stablecoin system. MKR is half of a two-part system alongside the DAI token. Together, MKR and DAI work together to create a stablecoin (DAI). DAI is designed in a very different fashion from other stablecoins like Tether (TUSD) or the Gemini Dollar (GUSD). This is because there is no central body controlling the Maker Dai system. Instead, it uses a system of smart contracts.

A user must convert Ethereum into DAI in order to purchase it. DAI is structured to always be worth $1, and it accomplishes this by minting and destroying MKR in response to price fluctuations. MKR token holders are paid a fee for stabilizing the DAI system during conversions from DAI into ETH.

The mechanics by which DAI is stabilized are extremely complex and would be described in more detail if not for the fact that they have not worked. The value of DAI has fluctuated dramatically and has not maintained stability.

On certain days of extreme market volatility, we have seen the price of DAI move between 72 cents and $1.25, so the mechanics that stabilize the coin do not appear to work.

20 of 50 — ZCash (ZCASH)

ZCash is a privacy-focused currency that has managed to attract a fair amount of attention and is included by both Grayscale Investments and Gemini.

ZCash shields the sender, receiver, and value of transactions from being read on the blockchain. This is accomplished using Zk-Snarks, a protocol developed by Zcash.

Zk-Snarks is a zero-knowledge proof scheme. This means it allows two users to confirm certain information without ever revealing what that information is. This is the basis to confirming shielded transactions from view while still having the strong trust guarantees provided by proper blockchain systems.

ZCash also allows transparent transactions which are visible, which was crucial to being accepted by Gemini. In more regulated scenarios, ZCash must be deposited using transparent transactions. ZCash has been criticized for this feature because having some transactions private and other transparent, calls attention to the private transactions.