We have been hearing about different cryptocurrencies in the last weeks and months. We have been writing about Tron, Stellar, Cardano, and IOTA. But we haven’t talked about one interesting cryptocurrency and blockchain named NEO. NEO calls itself ‘an open network for the smart economy. Let’s have a look at what this Cryptocurrency has to offer.
What is NEO?
First of all, NEO is a non-profit community-based blockchain project. The main intention is to realize a ‘smart economy’ with a distributed network. NEO utilizes blockchain technology and digital identity in order to digitize assets and automate the management of digital assets. In this way, a smart economy can be built.
NEO is not a short-term project, but it was created back in 2014 being a real-time open-source on GitHub in June 2015. As blockchain technology expanded in every single aspect since then, the interest in NEO has also been growing.
Digital Assets, Digital Identity, Smart Contracts
NEO’s vision of the future includes all the points that conform to a Smart Economy.
Digital Assets are programmable assets that exist as electronic data. This data can be decentralized due to the Blockchain’s nature, making it trustful, traceable, transparent, and free of intermediaries. The NEO platform allows users to register, trade, and circulate different types of assets. But it goes one step forward. Assets registered through a validated digital identity are protected by law. In this way, there can be a proven connection between physical and digital assets.
As the name by itself says, a digital identity refers to the ID information of individuals, organizations, and other entities that exist in electronic form. The digital identity system used by NEO is based on the PKI (PublicKey Infrastructure) X.509 standard.
According to NEO, the NeoContract smart contract system is the biggest feature of the seamless integration of the existing developer ecosystem. Smart Contracts can be programmed using C#, Java, and other programming languages. It is not necessary to learn a new programming language to operate in this network. Furthermore, NEO’s Universal Lightweight Virtual Machine, NeoVM, has advantages of high certainty, high concurrency, and high scalability.
NEO Decentralized Applications (dApps)
It has an important list of decentralized applications that work within the NEO blockchain. We can mention Red Pulse Tokens (RPX) issued by Red Pulse. Red Pulse is an event-driven research firm covering markets events impacting Chinese companies, sectors, and the economy.
Qlink, developed in Singapore by the Qlink Foundation, uses blockchain technology to create a decentralized mobile network. The intention is to allow P2Peer WiFi sharing, mobile data converted content distribution, enterprise telecom services, and crowd-sourcing base.
THEKEY is a Decentralized Ecosystem of Identity Verification Tool Using National Big-data and Blockchain. The team is developing an identification verification (IDV) tool.
There are many other Decentralized Applications working within the NEO Blockchain and the number is expected to grow.
NEO Algorithm – delegated Byzantine Fault Tolerance
NEO has been dubbed the ‘Ethereum of China’ due to the fact that offers smart contracts like Ethereum. It does not use either a Proof of Work (PoW) or Proof of Stake (PoS), but instead, it uses a consensus mechanism known as delegated Byzantine Fault Tolerance (dBFT).
With the dBFT, there is a different arrangement between the different blockchain nodes. The network becomes invulnerable to the Byzantine General Problem. It would be able to achieve consensus even if a malicious node would attempt to cause harm.
In order for the dBFT to work, it is important to acknowledge the different parts that participate in the ecosystem. Furthermore, there are professional node operators that gain an extra income and users that want to explore the different features of the ecosystem. In this way, acknowledging these groups would create a secure ecosystem.
The consensus occurs via a block verification among professional node operators. And all these nodes are appointed by ordinary notes through a voting process. If there is a 66% agreement among the nodes about the information broadcasted by the professional nodes, then consensus is achieved.
Gas in Ethereum’s network is used in order to run a transaction or contract in the blockchain. In the NEO platform, the gas works in a similar way. It is the fuel of the network in order for it to work. If one party decides to use the network and its resources, then it needs to pay with Gas for these resources used.
All the decentralized applications mentioned before need to pay for gas. And as it would work in a home or an enterprise, the more resources they use, the more gas they need to pay.
Users that have NEO coins in private wallets are rewarded with gas. The formula used in order to calculate the gas received in a wallet depends on the time, the NEO shares owned, and some other technical features. NEO gas can be sold in different exchanges or it can be beheld by the investor if it believes it can receive higher returns in the future.
NEO in the Cryptocurrency Market
At the moment of writing this article, NEO is the 57th cryptocurrency in importance by market capitalization. Each NEO can be bought at $42 dollars and its market capitalization arrives at $3.5 billion dollars. NEO’s all-time high was $187.
NEO price didn’t skyrocket as most of the other cryptocurrencies, but it was quite stable during the second half of the last year. For some weeks it has been increasing its price at important rates but not a hundred times as other alt-coins in the market.
As more dApps will be linked to NEOs blockchain the price of NEO will increase as well its market capitalization and the price of Gas.
NEO has shown to be a very interesting cryptocurrency, with an active community all over the world. Besides that, NEO is working very carefully in China due to the hostility that the Chinese government has shown against ICOs and Cryptocurrencies. But the developer team has been always acting according to the law.
As we move towards a more decentralized world, with more ICOs than ever before and with an increased interest in Blockchain technology, NEO could be benefited. Would it be a competitor of Ethereum? Personally, I do not think so. That other institution would use NEO instead of Ethereum, that’s for sure. But there are some differences that make the platforms special for some projects and not others.