WHAT IS NEO? AND HOW IT WORKS?

Definition of NEO

NEO is an open source project driven by the community. Previously, it known as Antshares, and often considered China’s response to Ethereum. It utilizes blockchain technology and digital identities to digitize assets and automate the management of digital assets using smart contracts. Using a distributed network, it aims to create a “Smart Economy”. Its was founded in 2014 and open sourced on GitHub in June 2015. Its Main Net was released in October 2016 and has been running in stable capacity for two years. Its vision of a “smart economy” was set up along with the project rebranding in 2017.

What does “Smart Economy” mean?

NEO Smart Economy is the next generation of economy and trade where trade agreements are written in programming code using a Smart Contract.

Digital Assets + Digital Identity + Smart Contract = Smart Economy.

  • Digital Asset

The underlying infrastructure of this coin support multiple types of digital asset. User can register, transfer and trade asset at their own. It verifies digital identities with a variety of multi-factor methods including facial features, fingerprint, voice and SMS. Once the information is located in the blockchain, it will be protect by law.

  • Digital Identity.

Digital identity are supported to build trust into the public chain. This provide full legal protection for all assets digitized through the NEO platform.

  • Smart Contract.

Turing-complete smart contract, which has high certainty and finality, support concurrent operation, sharding and unlimited scalability when running the NeoVM. NEO use smart contracts to register trade and circulate the digital assets. It was programmed to automatically to fulfil agreements once the terms are reached between all parties. The Smart Contract is stored in a decentralized immutable blockchain and will be executed exactly according to the trading agreement, and exactly at the time agreed upon. This allows for an economy where two or even thousands of parties can agree on a contract without the need to trust each other. The Smart Contract will always execute according to the defined rules in the contract.

Founder

Dang Hong Fei, Founder of NEO
Dang Hong Fei, Founder of NEO.
Erik Zhang, Founder of NEO
Erik Zhang, Founder of NEO

NEO was started by the duo who founded Shanghai-based blockchain R&D company “OnChain”, – 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.

How it was made?

Like most cryptocurrencies, NEO is created by its community. Unlike most other cryptocurrencies it is based on a proof of service concept rather than proof of work. When bitcoins are created it is because “miners” ASICs to solve complex transactions that add more blocks to the blockchain. They are then rewarded with Bitcoin. Unlike Bitcoin, NEO users are rewarded based on the number of coins they possess rather than by using their computers to solve transactions.

NEO’s network is built on two tokens which are NEO and neoGAS (GAS). This tokens were all pre-mined during the genesis event. They have a hard cap of 100 million tokens which are used for block creation, network management, and any consensus requirements. The GAS token is designed to act as fuel for the NEO blockchain and act as a form of security. GAS was not premined and it is designed to be used to allocate resources and maintain the day to day running of the blockchain. It will also be used to reward users maintaining the blockchain.

Compared to Bitcoins, each NEO token acts as a sort of share on the blockchain instead. Each time a new block is created, users are rewarded with neoGAS. This will continue happening until GAS reaches its market cap of 100 million coins. Then holders of NEO will be rewarded with a portion of the transaction fees. A new block is generated every 15-20 seconds and 2 million blocks are generated in around a year. At this speed, the total limit of 100 million GAS will be reached in around 22 years. It should be noted that in order for traders to receive GAS their NEO has to be held in a personal wallet and not in an exchange.

NEO vs. GAS.

The two native tokens serve different purposes:

  1. NEO tokens represent the ownership of the NEO blockchainThey are used to create blocks and manage the network, and when you hold NEO in your wallet you’ll be rewarded with GAS tokens.
  2. GAS tokens give you the right to use the NEO blockchain. Much like Ether to the Ethereum network, GAS is the fuel that powers transactions in the NEO system.

How to buy it?

  • 1. Buy Bitcoin or Ethereum at an exchange that uses your fiat currency on Coinbase.
  • 2. Transfer your BTC or ETH to an exchange that supports NEO. Currently, Binance is the best choice.
  • 3. Buy NEO by trading your BTC/ ETH for their coin, and you’re done!

Related article : What is Litecoin

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