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NEO and The Smart Economy

Jul 13, 2018

About NEO

NEO is a non-profit and community-based blockchain project founded as AntShares in 2014 and located in China.  NEO is very similar to Ethereum in function. Like Ethereum, NEO’s utilities include creating smart contracts and fostering ICOs on its blockchain. It is even dubbed by many as “Chinese Ethereum”. However, whereas Ethereum’s goal is to be a platform for developing Decentralized Apps (DApps), NEO aspires to go even further and be the platform for transitioning into a new smart economy. A smart economy is an ecosystem where all assets are digitalized and recorded on a decentralized blockchain, focusing on asset management and asset exchange.  Transactions would be done without the need of a middle man – this is called a peer-to-peer network – and would securely connect all real-world assets.

 

NEO’s formula for a smart economy is: Digital Assets + Digital Identities + Smart Contracts = Smart Economy. NEO understands these components in the following way:

 

Digital Assets: using smart contracts to digitize traditional assets, decentralizing them and giving them protection by law by assigning them digital certificates of ownership on the blockchain, guaranteeing trust.

 

Digital Identity: giving electronic identity information to individuals and entities which can be used as multi-factor authentication mechanisms (i.e. fingerprints, facial & voice recognition, etc.). This provides the connection between the traditional physical assets and their digitized counterparts.

 

Smart Contracts: set of legally binding commitments defined and executed via programming on the blockchain. Smart contracts are decentralized, secure, reliable, and more easily enforceable than traditional printed contracts. NEO Universal Lightweight Virtual Machine (NeoVM) is the intelligent contract executor NEO uses.

NEO System Components

Delegated Byzantine Fault Tolerance (DBFT) algorithm: NEO’s consensus algorithm operates unlike traditional Proof-of-Stake or Proof-of-Work algorithms. Blocks are generated and validated as long as ⅔ of the network nodes are in consensus. This consensus algorithm consumes much less resources than some other algorithms and can support higher transaction volumes. The downside to this consensus method is that it often leads to higher centralization.

 

NeoVM: executes NEO’s smart contracts, which unlike other platforms, integrates many of the main programming languages such as Python, Java, and C#.  NeoVM is a stack-based virtual machine which “has the advantage of high certainty, high concurrency, and high scalability for smart contracts based on the blockchain.”1

 

NeoX: allows NEO smart contracts to work along different Blockchains by use of a cross-chain Assets Swap Protocol and Cross-chain distributed transaction protocol, achieving atomic swaps (exchanging tokens without going through an exchange) of different assets with high consistency.

 

NeoFS: service supporting decentralized information storage (i.e. if Dropbox was on a distributed network)

 

NeoQ: lattice-based cryptography creating encryptions unable to be solved by even powerful quantum computers

Coins

NEO (NEO): NEO is the investment token of the NEO blockchain. As such, it constitutes a security token representing ownership in NEO. NEO holders possess voting power on changes to the NEO blockchain protocol. In addition, NEO holders decide on the consensus nodes. NEO was pre-mined during the genesis block creation. 100 million were created, and no more will be created in the future. It is not divisible; the smallest unit is 1 NEO. NEO holders receive economic payments from two sources: GAS created with new blocks; and GAS created from extra service charge.

  • Max Supply: 100,000,000 NEO
  • Total Supply: 100,000,000 NEO
  • Circulating Supply: 65,000,000 NEO
  • Remaining Supply: 35,000,000 NEO
  • Average 15 seconds per confirmed transaction
  • 1,000 transactions per second (tps)
  • Can theoretically scale to 10,000 tps

GAS (GAS): GAS is the utility token serving as the fuel for the NEO blockchain. It is used to pay for functions and services on the NEO blockchain, such as prioritized transactions, Smart Contracts, creation of new assets, etc. Importantly, consensus node operators are required to hold GAS as collateral. GAS is currently mineable and is divisible down to .00000001 GAS. 

  • Max Supply: 100,000,000 GAS
  • Total Mined Supply: 17,190,378 GAS
  • Circulating Supply: 10,128,375 GAS
  • Remaining Mined Supply: 7,062,003 GAS

 

The major challenge to NEO are the current China regulations prohibiting cryptocurrency exchanges, and the banning of ICOs. The current regulatory environment of China creates an uncertain future for NEO.

 

Sources

  1. https://masterthecrypto.com/guide-to-neo-blockchain-protocol/
  2. https://coinmarketcap.com/currencies/gas/
  3. https://coinmarketcap.com/currencies/neo/
  4. https://neo.org/
  5. https://coinsutra.com/neo-cryptocurrency/
  6. https://hackernoon.com/neo-versus-ethereum-why-neo-might-be-2018s-strongest-cryptocurrency-79956138bea3
  7. http://docs.neo.org/en-us/sc/introduction.html
  8. http://storeofvalueblog.com/posts/neos-secret-scaling-issues/
  9. https://coincentral.com/what-is-neo-cryptocurrency/