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In the last couple of years, China has proclaimed itself as a pro-blockchain and not a pro-Bitcoin country on multiple occasions. The Chinese government doesn’t support decentralized cryptocurrencies and sees them as the newest medium for illegal trading.
On the other hand, they believe that the underlying technology has a lot of potential and possible use cases. Judging by that, it comes as no surprise that the leading blockchain projects are based in China.
Chief among them is NEO, “the Chinese Ethereum”, an open payment network of the new “smart economy”. Keep reading to find out more about this project and the values it stands for.
What is NEO
NEO’s story began in 2014, when two Chinese software engineers and future entrepreneurs, Da Hongfei and Erik Zhang, started working on a joint project. They had a common interest in cryptography and, as Bitcoin supporters, followed everything that was new on the crypto scene.
The two of them shared the vision of a world economy that would soon transition into a completely digital economy or “smart economy” where everything will be recorded, stored, and protected using blockchain technology.
In that same year, the Ethereum team introduced its smart contract protocol to be used for building decentralized applications (dApps) on the Ethereum blockchain. This was exactly what the founders of NEO, which used to be called AntShares back then, intended to do.
In 2017, Antshares was rebranded and got the name NEO from the Greek prefix “neo” (νεο-) which translates as “new”, “modern”, or “young”. For NEO, the new name signifies the constant movement in the direction of “innovation” and “progress”.
NEO’s white paper begins with the following definition: “Neo is the use of blockchain technology and digital identity to digitize assets, the use of smart contracts for digital assets to be self-managed, to achieve ‘smart economy’ with a distributed network.”
Let’s explain these key concepts that make up for NEO’s smart economy.
Digital assets are programmable assets that exist in the form of electronic data. (NEO’s white paper)
Digital assets are blockchain-based currencies that can be used and created by users with a verified digital identity. They are decentralized, trustful, transparent, and traceable. Once recorded on NEO, these digital assets become protected by law.
Users get the option to create two types of digital currencies:
- Global assets.
These assets are recorded in the global NEO ecosystem, available to all clients, and suitable for different blockchain services.
- Contract assets.
These assets are recorded in the private storage area of a user’s smart contract and can only be used and accessed by that user and their partners.
Digital identity refers to the identity information of individuals, organizations, and other entities that exist in electronic form. (NEO’s white paper)
If a company or an individual wants to use NEO, they have to register for an account and create their digital identity. As a trustworthy platform, NEO complies with KYC and AML policies and asks its users for a government-issued ID, fingerprint, and voice recognition among other multi-factor authentication methods.
Having a verified and reliable digital identity puts your business partners at ease whenever they have to transact with you or enter into an agreement.
The smart contract was first proposed by the cryptographer Nick Szabo in 1994, only five years after the creation of the World Wide Web. According to Szabo’s definition: When a pre-programmed condition is triggered, the smart contract will execute the corresponding contract terms. (NEO’s white paper)
Anyone with digital identity is able to create digital assets to fuel smart contracts or, in NEO’s case, NeoContracts.
Plus, NEO’s blockchain uses a different consensus mechanism called dBFT, short for Delegated Byzantine Fault Tolerant, “a Byzantine fault-tolerant consensus mechanism that enables large-scale participation in consensus through proxy voting” (NEO’s white paper).
As a result, NEO has greater scalability and processing power. The network can process up to 10,000 transactions per second! This sounds incredible once you realize that Bitcoin can only process as much as 7 transactions per second.
NEO Management Model
The NEO network has two tokens: NEO and GAS.
NEO is the main token that’s used to run the network. The ownership of NEO gives you the right to vote for bookkeeping or make network parameter changes. Unlike other cryptocurrencies, 1 NEO can’t be subdivided. The limit supply is set at 100 million NEO.
GAS, on the other hand, is a fuel or utility token exchanged when using one of NEO’s services such as smart contracts to incentivize the consensus nodes and prevent spam attacks. The minimum unit of GAS is 0.00000001.
Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.