All About Neo

NEO is not named after the hero in the movie Matrix but simply means New or Revived per the dictionary. NEO however is a currency based on a blockchain and designed to build a scalable network of decentralised applications, not just digital currency. The basic asset is the NEO, indivisible (unlike Bitcoin which can be divided into fractions) and generates gas (see article on ‘What is Gas’) tokens used to pay for transaction fees.

Da Hongfei and Erik Zhang through their company Onchain based in Shanghai, developed the currency as Antshares in 2014 and later rebranded it as NEO in 2017.

100 million was created in the original block with 50 million sold to investors and 50 held in reserve with 15 million released each year to further development. NEO tokens generate gas tokens over a period of time which are used to pay for transactions on the network and, over the next 22 years, 100 million gas will be released thereby. NEO uses a delegated Byzantine Fault Tolerance (dBFT) system. Firstly Byzantine refers to the Byzantine Generals’ Problem which is illustrated by four generals surrounding a city. If just one or two attack the city may win. In order for the generals to win the attack must be done on all sides simultaneously. So this is an agreement problem. According to Wikipedia, “the dependability of a fault-tolerant computer system, particularly distributed computing systems, where components may fail and there is imperfect information on whether a component is failed. In a “Byzantine failure”, a component such as a server can inconsistently appear both failed and functioning to failure-detection systems, presenting different symptoms to different observers.” So this is used as a consensus mechanism and it has been found to support up to 10,000 transactions per second. As long as a majority of the nodes or miners agree then the system remains stable with no hard forks.

According to their 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. The technology supports multiple types of digital assets and users can register, transfer and trade at will on NEO. Digital certificates are supported, placing trust into the public chain. This provides full legal protection for all assets digitized through the NEO platform. In addition by facilitating P2P exchange of digital assets. Buyers and sellers of digital assets and currencies are handled peer-to-peer without the need for third party exchanges.’

The market capitalisation is in the range of $4,371,000,000 with the price range of 60 to 70 dollars.

NEO is indivisible – or is it?

Technically NEO is indivisible unlike Bitcoin say. But exchanges have worked a way around that. You can trade fractions of a NEO coin provided they are kept inside your exchange wallet. To move them out you can only whole NEO and any fraction thereof will remain in the wallet. So if you have 6.45 on an exchange you will only be able to move out 6 NEO. The .45 will remain in the exchange and the only way you can move that out is by making it up to a whole number.

NEO has two actual native tokens. NEO and Gas. Each serves a different purpose. A NEO token is used to create blocks and manage the network. If you have any NEO in your wallet you get rewarded with gas. Gas gives you the right to Use the NEO blockchain. Gas is the fuel that powers NEO transactions. In actual fact you can buy and sell gas on various exchanges or platforms but for the most part users invariably use NEO and that represents a share or stake in the platform. It is also useful in generating gas. If you hold NEO and as more blocks are generated 8 gas are distributed to all 100 million NEO in existence. So you would be a share of that. A tiny fraction perhaps but it does build up. Gas is also used to pay the transaction fees on the NEO network.

Some special features of NEO include Superconducting Transactions where the placement of order is matched across a consensus network in which the actual order matching is accomplished offline by a central exchange. This provides the best of both worlds in the security of both a centralised and decentralised network.

NeoX, on the other hand, allows transactions to cross or transverse blockchains. This is still in development at this stage.

NeoFS concerns large file and enables them to be divided and distributed across a network. The level of reliability required for these can be established depending on the price one is willing to pay.

Of some concern regarding security is Quantum computers. The general idea is that a quantum computer (still in the development stage) would be able to crack the current algorithms used to secure assets in wallets. Neo uses a Lattice-based cryptographic system called NeoQS which ity is claimed Quantum computers would have considerable difficulty in breaking. We arer talking some time down the track as quantum computers are still very much in the theoretical stage at this time.

This article is for information purposes only and is not to be construed as financial information for any purpose such as investment or speculation and it is the responsibility of the reader to perform proper due diligence before acting upon any of the information provided. We recommend that you consult with a licensed, qualified investment advisor before making any investment decisions.

Leave a Comment

Your email address will not be published. Required fields are marked *