NEO began life as AntShares (ANS) in 2014. AntShares, founded by Da Hongfei and Erik Zhang, has been referred to as ‘China’s first blockchain platform’. In 2016, supposedly in response to growing interest in AntShares and a need for blockchain solutions that meet the requirements of both government regulators and private companies, Da and Erik founded OnChain. It was a venture-backed company that provides blockchain-based financial services. In 2017, AntShares was rebranded as NEO.
NEO prides itself for being developer friendly (multiple languages), eco-friendly (no energy waste) and community friendly (supports NEO-based projects). Let’s take a deeper look at NEO cryptocurrency.
The smart-economy proposed by the NEO foundation is based on three different layers.
- Digital assets: users are able to register, trade, and circulate multiple types of assets through a validated digital identity are protected by an immutable blockchain-layer. NEO has two forms of digital assets: (a) global assets and (b) contract assets. Global assets can be recorded in the system space and can be identified by all smart contracts and clients, while contract assets are recorded in a private storage area of the smart contract and requires a compatible client to recognise them.
- Digital identity: it refers to the identity information of individuals, organisations, and other entities that exist digitally (like a government issue ID number).
- Smart contracts: the NEOcontract smart contract system is based on multiple languages like c#, java and python, which allows for a quick integration with other protocols.
|Purpose of Token||TPS||Confirmation Time||Consensus Algorithm|
|NEO, to be used as PoS token to generate GAS, a token needed to write transactions into the blockchain||1,000
Token – NEO/GAS
Currently, there is about 65% of the total NEO supply in circulation:
- Total supply: 65,000,000 NEO
- Circulating supply: 100,000,000 NEO
GAS is the fuel token for the realisation of NEO network resource control, with a maximum total limit of 100 million. The NEO network charges for the operation and storage of tokens and smart contracts, thereby creating economic incentives for bookkeepers and preventing the abuse of resources. The minimum unit of GAS is 0.00000001.
About 100 million GAS, corresponding to the 100 million NEO, will be generated through a decay algorithm in over 22 years time to address holding NEO. If NEO is transferred to a new address, the subsequent GAS generated will be credited to the new address.
Technology behind NEO cryptocurrency
NEO is a blockchain-based protocol. Much like Ethereum, it’s focused on creating a digital economy around decentralised smart contracts. NEO, however, utilises a different consensus mechanic based on dBFT as well as a dual token system.
NEO employs a consensus mechanism called Delegated Byzantine Fault Tolerance (dBFT). Participants in the system are able to designate certain nodes as bookkeepers who must maintain a minimum balance of NEO and meet certain performance requirements.
Bookkeepers are tasked with verifying the blocks that are written to the blockchain. If two-thirds of the nodes on the network can agree with a bookkeeper’s version of the blockchain, consensus is achieved and the proposed version of the blockchain is validated. If consensus fails, an alternate bookkeeper is called and the process is repeated.
Because this consensus only needs to be replicated across a subset of the network, it is said to be more efficient than classic Byzantine Fault Tolerance. The network as a whole consumes fewer resources and can handle higher transaction volumes.
Other NEO core components and parts are:
- NeoVM – Universal Block Chain Virtual Machine: NeoVM is a lightweight, general-purpose virtual machine, similar to a virtual CPU. It reads and executes instructions in the contract in sequence, performs process control based on the functionality of the instruction operations and so on. It has a good start-up speed and versatility, is very suitable for small programs such as smart contracts and can also be ported to non-blockchain systems.
- InteropService – Interoperable Services: used to load the blockchain ledger, digital assets, digital identity, persistent storage area, NeoFS, and other underlying services.
- DevPack – Compiler and IDE plugin: for easy development and integration.
- NeoContract: can create a smart contract call tree through static analysis before running a smart contract.
- NeoX: a protocol that implements cross-chain interoperability. NeoX is divided into two parts, “cross-chain assets exchange protocol” and “cross-chain distributed transaction protocol”.
- NeoFS: a distributed storage protocol that utilises Distributed Hash Table (DHT).
- NeoQS (Quantum Safe): is a lattice-based cryptographic mechanism to protect NEO against the quantum computing threat.
I believe dBFT seems to bring considerably more disadvantages to the end user as, on top of a weaker security, participants also need to trust a central authority. However, there are incredible scalability gains from increased centralisation, meaning in order to improve TPS and increase block-size, concessions have to be made. The overall development of NEO is quite interesting and I do hope to see what the next couple of years will bring.
At the end, NEO has been able to develop quite an impressive community of developers and projects, as well as, a user base of die-hard followers. I personally argue the NEO is here to stay.
Do you want to know more about different types of blockchains? Read our definitive guide series.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.