NEO is a blockchain platform and cryptocurrency which enables the development of digital assets and smart contracts. The project is based in China and was originally launched in 2014 as AntShares. The project can support up to 10,000 transactions per second. NEO tokens can be staked to produce GAS tokens which are used as the fuel of the platform, to pay for computation or deployment of smart contracts within the NEO network.
A Step-By-Step Guide To Neo
The History of Neo Blockchain
According to the Neo website, Neo is a “non-profit community-based blockchain project that utilizes blockchain technology and digital identity to digitize assets, to automate the management of digital assets using smart contracts, and to realize a “smart economy” with a distributed network.”
Neo’s main aim is to be the distributed network for “smart economy”.
Neo was developed by Shanghai-based blockchain R&D company “OnChain”. Onchain was founded by CEO Da Hongfei and CTO Erik Zhang. Research on Neo started around 2014. In 2016, Onchain was listed in the Top 50 Fintech Company in China by KPMG.
The Neo Project was funded by two crowd sales. The first crowd sale took place in October 2015 lasting for 10 days during which 17.5 million NEO tokens were sold for $550,000. In the second crowd sale, the remaining 22.5 million NEO tokens were sold for $4.5 million.
Neo Blockchain and Smart Economy
As the Neo website states, the three components that makeup Smart Economy are:
- Digital Assets
- Digital Identity
- Smart Contract
Neo Blockchain and Digital Assets
A digital asset is anything that exists in binary format and with the right to use. It is critical for a digital entity to have that “right to use” for it to qualify as a digital asset. While it is possible to have digital assets in a centralized environment, it can be extremely risky.
With the advent of the blockchain, it has become far safer to own digital assets. The blockchain technology makes the digitization of these assets decentralized, safe, trustworthy, and free of a third party.
There are two forms of digital assets that one can use in NEO:
- Global Assets
- Contract Assets
Global assets are recognized by the whole system and can be identified by all smart contracts and clients. Contract assets are assets that are only recognized in their specific contracts and cannot be used in other contracts. Eg. GNT the golem token can be used in Golem but it cannot be used in Bancor.
The Two Tokens: NEO vs GAS
The Neo ecosystem has two tokens:
- NEO – formerly known as Antshares (ANS)s
- GAS – formerly known as Antcoins (ANC)
NEO has a total of 100 million tokens.
Ownership of the NEO gives the holder rights to manage and make decisions for the network. These rights include bookkeeping, NEO network parameter changes etc.
The NEO token can’t be subdivided into decimals with the least possible unit being 1.
The 100 million NEO tokens is divided into two portions. The first portion of 50 million tokens was distributed during their ICO.
The second portion is 50 million was locked up for a year (till October 16 2017) and is to be used only for long-term growth and support of NEO projects and for the long-term development, operation, and maintenance of the NEO ecosystem. The plans for these 50 million tokens is as below:
- 10 million tokens will be used to motivate NEO developers and members of the NEO Council
- 10 million tokens will be used to motivate developers in the NEO ecosystem
- 15 million tokens will be used to cross-invest in other block-chain projects, which are owned by the NEO Council and are used only for NEO projects
- 15 million will be retained as a contingency
- The annual use of NEO in principle shall not exceed 15 million tokens.
If NEO is the token that gives you voting and decision making rights in the community, then GAS is what fuels smart contracts and get things done. It is, as the name states, the fuel of the network. GAS is what will be exchanged as currency inside the ecosystem and it is what is going to economically incentivize the various projects taking place in it.
Quite like NEO it has a total limit of 100 million tokens, however, unlike NEO it is divisible. The minimum unit of GAS is is 0.00000001.
There is another major point of difference between the two.
The 100 million NEOs have already been generated in the genesis block, i.e. the first block of the blockchain, of the NEO network. The 100 million GAS has not yet been generated. They will be generated corresponding to the 100 million NEO via a decay algorithm in about 22 years’ time to the address holding the NEO. If the NEO is transferred to a new address, the GAS generated will be credited to the new address.
2 million blocks will be generated each year with a downtime of around 15-20 seconds between consecutive blocks. The initial GAS generation is going to be 8 GAS per block and that is going to reduce by 1 GAS per year or 1 GAS per 2 million blocks till only 1 GAS is produced per block. At the 44 millionth block, the total GAS generated will reach 100 million after which there will be no GAS generation.
According to the algorithm:
- 16% of the GAS will be created in the first year
- 52% will be created in the first four years
- 80% GAS will be created in the first 12 years
The GAS will be released proportionally in accordance with the NEO holding ratio to the corresponding addresses. The NEO holders can claim these GAS tokens anytime they want. If you want a tool which will calculate how much GAS you are eligible to in accordance the amount of NEO you hold then you can use this.
In order to create a better user experience, the NEO network will vote and set a threshold to exempt GAS from a certain amount of transfer transactions and smart contract operations.
If a large number of spam transactions does occur, users with NeoID can get their transactions and smart contract prioritized over the others. If, however, you don’t have a NeoID then you can prioritize your transactions by paying more GAS.
New features for Neo
- NeoX: Will enable cross-chain interoperability.
- NeoFS: It is a file storage protocol that uses distributed hash table technology. It indexes file by utilizing the hash of its content rather than the file path. Large files will be divided into fixed-size data blocks and distributed and stored in various nodes.
- NeoQS: NeoQS (Quantum Safe) is a lattice-based cryptographic mechanism. Quantum computing poses a genuine threat to cryptographic systems based on RSA and ECC. This means that Ethereum and Bitcoin, both of which utilize ECC, are potentially at risk of being hacked by quantum computing. Neo is looking to address that issue via NeoQS.
What is the future of Neo?
So how is the future looking for the “Ethereum killer”?
It is too soon to say whether it can live up to the moniker or not, but the biggest advantage that it has over Ethereum is the relatively low barrier to entry. Since the developers don’t have to learn a new language to create smart contracts it can definitely look appealing. How it fleshes out in the future remains to be seen. However, Neo is backed the Chinese government and bigshots like WINGS and Alibaba.
We are not sure whether it will “kill” Ethereum or not, but what we do know is that it presents an amazing platform for developers to add to the ever-expanding cryptosphere.
Here is where you can buy Neo: