Proof of Importance

A consensus algorithm called Proof-of-Importance (PoI) is comparable to Proof-of-Stake (PoS). With this algorithm, nodes can choose to “deposit” their currency, making it possible for them to actively participate in the process of creating blocks. The capacity of PoI to quantify a person’s level of network support sets it apart from PoS. Importantly, the Proof-of-Importance consensus process serves as the foundation for NEM’s cryptocurrency.

Proof of Importance (PoI) is a consensus algorithm used in blockchain networks to ensure security and it was initially introduced by NEM as a novel approach.

In the Proof of Importance algorithm, network nodes are eligible to add blocks to the blockchain through a process called “harvesting.” Nodes that participate in harvesting receive transaction fees as rewards for their contribution.

A node’s significance score affects its chances of being chosen to harvest a block and receive rewards. The likelihood of being chosen increases with importance score. One must have at least 10,000 XEM in their NEM account to take part in this process.

A novel approach to staking and game theory, Proof of Significance considers a node’s total support of the network. In contrast to Proof of Stake, which frequently rewards coin hoarders, PoI takes into account three variables: vesting, transaction partners, and the volume and quantity of transactions during the previous 30 days.

If this idea appeals to you, reading in-depth articles about NEM and other blockchain projects that use the Proof of Importance algorithm will give you more information.