Proof of importance (POI) is a new mechanism developed to cover up for the shortcomings of proof of stake. NEM is the cryptocurrency that introduced proof of importance into the crypto space. Credit to the proof of importance, NEM is beginning to move from its obscurity to popularity.

In this article, we will have a sneak peek into the concept of proof of the importance and its advantages.

Shortcomings Of Proof Of Stake Mechanism

With the creation of the proof of importance to serve as a saving grace for some features the proof of stake could not provide, it is important to understand three major shortcomings of the proof of stake.

1. People who can hoard cryptocurrency are largely favored by the proof of stake. This appears to be a self-limiting mechanism as cryptocurrency is purposeful for fiat currency replacement. With the proof of stake, the mechanism works well for holders of large amounts of cryptocurrencies.

2. Rich investors are the major beneficiaries of the proof of stake mechanism. This is because individuals or groups of people who have enough money in their accounts have the likelihood of forging a block.

3. investors who can hold on to their cryptocurrency for a short time are rewarded with the proof of stake. What matters here is the amount of cryptocurrency available in the wallet when forging is about to take place.

Proof Of Importance Mechanism

The proof of important works in the following manner:

1. Proof of importance does not only take cognizance of the number of coins available in the wallet, it also counts the length of time of holding the coins. This mechanism helps encourage people to hold on to the coins in their wallets. The coins are said to be vested after they have been held for a certain predefined period. It is only the vested coins that the proof of importance score.

However, a certain minimum number of vested coins are the prerequisite to avail people to harvest. Harvest is the terminology used in the proof of importance as forging is proof of stake.

2. Investors who make transactions often with others on the network have a higher score with the proof of importance. This feature makes the proof of importance mechanism stable and dependable as it works with even distribution of coins.

A! so, its algorithm was built to detect illicit trading among a small number of investors. Hence, fake accounts with the intent of increasing their proof of importance score would be easily detected and removed.

3. There is a preference for rewards in the proof of importance, such that larger transactions allude to much more important than the smaller transactions. Also, frequent transactions get more rewarded than infrequent transactions.

4. The proof of importance score is a composite score that is a derivative of many factors. Some of these factors are the number of transaction partners, the number of vested coins, net transactions undertaken in the past 30 days, etc.


From every indication, the proof of importance has been able to remedy some problems associated with the proof of stake mechanism. With the mechanism, the rich do not have the absolute likelihood of getting richer and the cryptocurrency acts like the decentralized currency that it should be. However, the proof of importance has not yet gained popularity among crypto investors.