With the continued rise and popularisation of blockchain technology, it's certainly inevitable before the world's corporations and institutions enter the fray. But rather than spending a lot of time, energy, and resources to build their own blockchains from scratch, why not adopt one that has already been tried and tested on the market? This is what leads us to compare NEM vs. Ripple, two enterprise-grade blockchain networks designed for speed, efficiency, security, and scale.
When large companies need a robust digital architecture to underpin their global business, it's the ecosystems and technologies built by projects like NEM and Ripple that get their vote. But which among them is the best of the best. Would it be NEM‘s focused on creating a low-cost, high-speed smart contracts platform or Ripple‘s peer-to-peer bridge to interconnect the world's currencies together? Our NEM vs. Ripple Comparison here hopes to find, if possible, a winner between them.
NEM vs. Ripple Comparison Table
|Native Cryptocurrency Tokens: XEM||Native Cryptocurrency Token: XRP|
|Market Capitalization: $3,133,222,659||Market Capitalization: $72,455,121,725|
|Market Cap Rating: 49||Market Cap Rating: 4|
|Token Supply: 8,999,999,999 XEM||Token Supply: 45,404,028,640 XRP|
|Transaction Speeds: 4,000 TPS||Transaction Speeds: 1,500 TPS (Up to 65,000 TPS in current update under optimised conditions)|
|Real-World Use Cases and Applications: Use of smart contracts to manage data or assets; supply chain tracking, personal data protection, trading, banking, etc.||Real-World Use Cases and Applications: Processing and bridging international currencies for cross-border payments, remittances, and settlements|
NEM vs. Ripple – Main Differences
Although both NEM vs. Ripple are designed for enterprise and mission-critical applications that require high computational speeds and scalability, they differ in who they've been programmed for. Ripple is a distributed ledger, not a blockchain, and one that was developed mainly for processing global payments and cross-border settlements. NEM, on the other hand, is a more modular blockchain network that leverages its smart contracts in a wide-ranging number of industries.
What Is NEM?
NEM is an abbreviation of the ‘New Economy Movement,' and considers itself a “smart asset” blockchain network. Primarily, it is a smart contracts platform that aims to be a much faster, cheaper, and more efficient means for managing and exchanging digital assets or data.
Founded in 2015, NEM was a fork of another blockchain network, NXT. However, a lot of its underlying technology is very distinct, as well as NEM having written a completely new codebase from NXT.
As an open-source protocol, NEM's key focus is on high performance and versatility for large-scale use, as well as creating an interoperable bridging layer between public and private blockchains. In this way, NEM is targeting the enterprise and institutional sector, where NEM's blockchain can be deployed as a permissioned, privatized ledger. NEM's blockchain is, therefore, highly modular and can be used for governments, banking, retail, logistics, healthcare, telecommunications, and more.
What Is NEM's Proof-of-Importance (PoI) Blockchain?
As we'll learn more later on in our NEM vs. Ripple comparison, NEM is significantly more versatile compared to Ripple, in that NEM's blockchain solutions could be adopted by a more diverse variety of industries. This is all thanks to the use of NEM's NIS1 blockchain, which relies on a unique Proof-of-Important (PoI) consensus algorithm. PoI enables anyone, even with low-end or older computing hardware, to be able to easily run a full node of NEM's NIS1 blockchain.
PoI works through a process called ‘delegated harvesting,' in which it measures each node's token holdings, the frequency in which they transact, and who they transact with on the network. This automated process will then gauge these metrics to assign an approximate ‘importance score' for each node on the PoI-based NIS1 network. This measures both a node's overall importance to the blockchain, as well as their trustworthiness to operate in the best interest of NEM's ecosystem.
Nodes will then receive a portion of the fees which they've helped to process as a reward and continued incentive to continue powering NEM's blockchain. PoI is claimed to be a fairer and more efficient method for consensus and governance without sacrificing decentralization or security. It's more energy-efficient (and thus environmentally sustainable) than Proof-of-Work (PoW) blockchains while also being better secured compared to Proof-of-Stake (PoS) networks.
How Does “Harvesting” Work on NEM?
For our NEM vs. Ripple comparison, we'll take a close look at how NEM's NIS1 blockchain can utilize token “harvesting” in place of PoW-style mining that can be subject to poor scalability; which, in turn, leads to network congestion, slow processing times, and high gas fees. On NEM, a network participant would only need to link their account to an existing super-node. With this, regular node validators can utilize the super-nodes computational resources to complete blocks.
This is instead of having to invest in hardware themselves. Regular nodes can lend their PoI score to super-nodes and thus jointly increase the chances of them being able to process new blocks. This partnership can reduce energy consumption, as the work is being done only by the super-nodes. In fact, a node validator's computer doesn't even need to be running throughout the “harvesting” process. As long as they are connected to a super-node, the fees will be divided fairly.
The key advantage here is that PoI is able to leverage the same scalability as PoS blockchains, with high throughput and low fees, not to mention being readily interoperable and made to be highly robust. NIS1 has apparently never had a single downtime or malicious breach since its main-net launch in 2015. Performance is a prime focus, with each NIS1 block being able to process up to 120 transactions, with a total computation capable of more than 4,000 transactions per second (TPS).
What Can NEM Do in the Real World?
NEM as we have learned thus far in our NEM vs. Ripple comparison is a highly scalable smart contracts blockchain built for adoption by enterprises that require reliable, secure, and fast computation. Thus far, NEM has partnered with dozens of companies in adopting their NIS1 blockchain. FIX Network, a Lithuanian-Israeli telecoms company, is using the NSI1 blockchain to beef up the security of billions of SIM cards around the world and prevent exploits like SIM swapping.
Meanwhile, LuxTag is aggregating data collected from countless NFC trackers, QR, and barcodes placed on goods around the world onto the NIS1 chain, meant to certify and prevent the flow of counterfeit goods. GUBI is one of the world's largest artwork trading platforms and the biggest of its kind in China. They've since integrated their entire database onto NEM's blockchain. Dragonfly Fintech, on the other hand, is using NEM's network to accelerate affordable cross-border payments.
These are just some of the partnerships struck with NEM to adopt its NIS1 blockchain. However, this will soon expand even further, thanks to the very recent March 2021 main-net launch of NEM's brand new blockchain. Called Symbol, the four-year-long development of this enterprise-grade Proof-of-Stake+ (PoS+) blockchain will bring new innovations from NEM, such as improved interoperability, performance, as well as advanced tokenization. A symbol will sit alongside and complement NIS1.
What Are NEM's XEM Cryptocurrency Tokens?
Following the Q1 2021 launch of Symbol, NEM technically has two unique cryptocurrencies in their ecosystem; NIS1's XEM and Symbol's XYM. For our NEM vs. Ripple guide, we'll focus more on the older XEM tokens, as XYM is still too fresh to analyze properly. As the primary currency of the NIS1 decentralized public blockchain, XEM tokens are mainly used as a medium for transactions or paying fees across the chain, as well as rewarding and incentivizing nodes powering the network.
NEM has built XEM along with a deflationary tokenomics model, where the total supply of all XEM tokens is fixed to 8,999,999,999 XEM. The value of NEM's native XEM took a huge hit back in 2018 when it was reported that over 523,000,000 XEM tokens were stolen in a cyber theft attempt against Japanese exchange, Coincheck. At the time, the value of all those cryptocurrencies was valued at around $500-million. Since then, the value has been steadily going up since late 2020.
As of this NEM vs. Ripple comparison, the price of one XEM is around $0.348136. On top of its circulating supply of 8,999,999,999 XEM, this would give NEM's NIS1 native cryptocurrency a market capitalization value of $3,133,222,659, making XEM the 49th-most valuable token. Although they sit side-by-side for the time being, Symbol is meant to replace NIS1, meaning that there will be a token migration event in which XEM holders can opt-in for a 1:1 exchange into Symbol's XYM.
What Are NEM's Future Roadmap Updates?
At the time of writing this NEM vs. Ripple review, the most crucial roadmap for the NEM network would be the so-called ‘NEM 2.0' update. This was completed as of the main-net release of the Symbol blockchain on March 17th, 2021, and is still undergoing. NEM 2.0 will mark a transition from the NIS1 blockchain to the new and improved Symbol blockchain. The symbol is meant to be an all-around improvement compared to NIS1, as well as introduce new features targeting the enterprise.
Mostly, Symbol will see even greater performance and scalability compared to NIS1, as well as improving on efficiency that would bring down costs and introduce smoother interoperability with other blockchains. This migration needs to happen, as the technology built for NIS1 isn't compatible with the newer Symbol, which runs on a modified Proof-of-Stake+ (PoS+) system. Other benefits of Symbol include a four-tiered architecture, which should make it more robust, secure, and speedier.
In wrapping up the first half of our NEM vs. Ripple comparison, we can conclude that NEM's blockchain ecosystem – encompassing both NIS1 and Symbol – continues to show that they are open and ready for business. Whether it's a large multinational conglomerate or a global governmental organization, NEM's resilient, efficient, and fast blockchain has proven itself to be a highly powerful and versatile tool in managing big data and assets powered by smart contracts with ease.
What Is Ripple?
The underpinnings of Ripple are based on an open-source distributed ledger called the XRP Ledger, or XRPL, that is built around a large global ecosystem of peer-to-peer systems. Therefore, unlike NEM, Ripple isn't a blockchain. However, it is nonetheless a decentralized network. Compared to NEM, Ripple also differs in its focus and design. Rather than focusing on building a highly modular computational structure, Ripple was engineered to focus mainly on monetary and financial sectors.
This includes international or cross-border payments, settlements, and remittances through its permission-less XRP Ledger. In that sense, Ripple's primary goal is powering trillions of dollars in real-time and seamless global money transfers and exchanges at speeds with very little cost. Moreover, they are also building bridges for easy interchanging between different regional currencies. Ripple believes this system allows for more scalability than a traditional blockchain.
How Does Ripple's XRP Ledger Work?
One thing that's worth highlighting in our NEM vs. Ripple comparison is the relative slowness of the traditional and familiar methods of sending money across borders, which is extremely inefficient, time-consuming, and costly. This issue will be solved both ways using Ripple's XRP Ledger. This is, in part, thanks to XRPL's use of a distributed ledger instead of a conventional blockchain design, which meant that it had turned Ripple into one of the fastest decentralized systems to date.
XRPL can happily handle at least 1,500 transactions per second (TPS) and can scale upwards of 65,000 TPS even in its current iteration. This has allowed for settlements, including the massive chunk of billions of dollars settled by banks across borders, to be done in a relatively short amount of time and with little to no fees. Ripple claims that simple payments sent or received anywhere in the world can be processed and settled in just 3-5 seconds. Meanwhile, average transaction fees on XRPL are around $0.0002.
This is a significant improvement over the current system, where overseas transactions might take several days and tens of dollars in fees alone. This new system is thanks to several innovative technologies built on its network. One of them includes the functionality of a smart contract, similar to NEM. With this, Ripple's XRPL can decouple regular or smaller payments using those smart contracts on its distributed ledger from larger settlements, which optimizes accelerates processing speeds.
What Else Could Ripple's Distributed Ledger Do?
Aside from just processing money transfers big and small, Ripple's XRP Ledger is also a currency “bridge.” This helps to facilitate a seamless exchange between different regional currencies. In fact, Ripple's network has its own decentralized exchange built into the ledger itself. Also powered by smart contracts, this exchange allows users on Ripple to trade assets such as XRP tokens, IOUs, and so on. On Ripple, IOUs are obligation-like assets that can digitally represent a physical asset.
This includes bringing tokenized value for other cryptocurrencies, fiat currencies, commodities, derivatives, airline miles, credit card points, and more. This convenience factor is evident in seeing how Ripple is highly scalable, thanks to the fact that it can be integrated easily into existing payment channels and could thus monumentally increase its transactions-per-second count. As we looked earlier on in our NEM vs. Ripple comparison, Ripple is also very energy efficient.
Compared to NEM's innovative PoI (and soon PoS+) consensus algorithm, Ripple practices Federated Byzantine Agreement to find common ground for its on-chain governance, where nodes can vote to validate transactions and allow data to be included in the ledger. This system is designed to ensure maximal decentralization and preventing abuse of the system from network participants, as well as making its distributed ledger far more secure and robust than rivaling blockchains.
How Has Ripple Been Used in the Real World?
Although we've seen thus far in our NEM vs. Ripple overview that NEM has had some success with attracting corporate partners, Ripple has experienced more real-world adoption. More than 100 of the world's biggest banks and financial institutions are either using XRPL or any one of Ripple-built solutions. Within the XRPL, Spain's Banco Santander has processed more than €450-million worth of transactions, with other banks such as Mitsubishi MUFG and Standard Chartered joining in.
The primary interface for anyone using the XRPL would be RippleNet, which is their global payments and settlements system. Widely available in more than 55 countries, RippleNet is paired with more than 120 fiat currencies worldwide. Ripple later built ‘on-demand liquidity,' or ODL. With this, Ripple's XRP tokens can act as a bridge between two fiat currencies, thus allowing financial institutions to no longer have to pre-fund their destination accounts, with helps to lower cost.
Next up, Ripple offers a line of credit for RippleNet users, thus allowing the use of XRP tokens to secure upfront credit arrangements on the fly. Apart from that, Ripple is building new tools to complements its existing solutions. RippleX is a development platform to build tools onto XRPL or to integrate that into existing applications. The huge benefit that Ripple presents is how XRPL can work seamlessly with legacy solutions, hence not needing expensive overhauls of existing IT equipment.
What Are Ripple's XRP Cryptocurrency Tokens?
The native currency of the Ripple distributed ledger is the XRP token. As we've studied earlier, XRP tokens mainly act as a bridge currency to enable the bridging of value from one fiat currency to another. This is what enables Ripple's XRPL to power quick, easy, and cheap forex exchanges of different currencies around the world. Meanwhile, XRP could also be collateral, such as through ODL or a line of credit, which ensures that cross-border settlements can be done more efficiently.
Otherwise, XRP tokens may be used within the built-in decentralized exchange to trade tokenized versions of real-world assets or IOUs. It's this usability that has prompted Ripple to face a suit by the US Securities and Exchange Commission, or SEC, over whether Ripple's adoption of XRP cryptocurrencies in its worldwide network classifies them as securities, which is still ongoing as of this NEM vs. Ripple comparison. Owing to this, the price of XRP tokens has been highly volatile.
While writing this NEM vs Ripple comparison, one XRP token is worth around $1.60 and is continually gaining higher following continued optimism of a good outcome on the SEC suit. Thanks to this increased momentum, Ripple's XRP tokens now occupy a market capitalization of $72,455,121,725, making it the 4th-largest cryptocurrency. XRP's overall tokenomics was designed to be deflationary, with a capped total supply. However, large escrow releases have overtaken the XRP market with a lot of liquidity.
What Are Ripple's Future Roadmap Updates?
In completing our NEM vs. Ripple comparison, we've not been able to find a single roadmap or timeline published by Ripple. We can imagine that for now, Ripple will retain its focus on its civil suit with the SEC. Otherwise, we can speculate that Ripple will be expanding its core offerings. To start, we have Interledger which is an open-source protocol designed for money transfers and payments across different ledgers, opening up interoperability with other networks outside of Ripple's XRPL.
This includes adding benefits of the XRPL, such as quick processing times and low fees. Something else that is being worked on through RippleX is PayString, which is a new universal payments identifier that adds some of the interoperability functions of Interledger. With PayString, a special payment address allows users to send or accept monies across completely different networks. It is actively being deployed for P2P transfers, e-commerce, subscriptions, invoices, and more.
Now ending the latter half of our NEM vs. Ripple comparison guide, we can see quite clearly that Ripple doesn't share the sheer flexibility of NEM, in that it has only been tested and intended for use in settling payments or large money transfers.
However, this has allowed Ripple to excel in their singular goal, and one which we hope can bring a strong disruptive force to upend the current system to bring about a much-needed evolution for cheap, fast, and seamless flow of money.
NEM vs Ripple – Conclusion
And there you have it, an in-depth look between NEM vs. Ripple. But, as this is a competition, there surely must be a winner, right? Could there be a champion among these two business-ready, enterprise-friendly blockchains (and one distributed ledger)? This isn't an easy choice to make, as both NEM and Ripple have very different target audiences. For our NEM vs. Ripple comparison, though, we're going to nominate Ripple as our champion, and there are some good reasons why.
Putting aside the fact that Ripple is a larger and more popular “blockchain” than NEM in terms of value, Ripple's XRPL distributed ledger deserves to be celebrated. Thus far, there's not yet been a competitor that could stand on the same level as Ripple as far as building a decentralized network that could power billions worth of payments and settlements around the world to be processed within seconds and costs little to nothing, while also having been chosen by this many corporations.
With large banks around the world as its customers, Ripple has gotten very close to widespread enterprise adoption of blockchain-esque technology that we've seen so far. Nevertheless, it's not as though NEM doesn't deserve a worthy mention. It remains to be seen whether they can stand on their own given the tough competition, such as Ethereum. Even so, its innovative ideas have resulted in the creation of a blockchain that is powerful and putting on a rare show of seamless interoperability.