NEO

What is Neo (NEO)?

Neo, formerly known as Antshares, is often considered to be China’s answer to Ethereum. Aiming to be the distributed network for the “Smart Economy,” Neo attempts to join the trinity of digital assets, digital identity, and smart contracts.

Neo is considered a second-generation cryptocurrency, if the first generation, led by Bitcoin, was meant to stand for a digital form of money that could be sent across the world from person to person with a minimum of oversight. Second-generation cryptos like Neo aim to create value through products and services.

Often compared to EOS and Ethereum, NEO allows developers to take advantage of smart contracts to deploy decentralized applications (dApps) on the blockchain. Neo takes this a step further by focusing on digital identities as well as digital assets and smart contract tech.

Most second-generation blockchain projects are disruptive by intent and design toward industries like finance. In contrast, Neo aims more toward transitioning its parent country of China into blockchain technology rather than disrupting any existing infrastructure.

When Was Neo Launched?

Neo was launched in February 2014 as Antshares, China’s first ever public, open-source blockchain project. However, the platform was rebranded to Neo in 2017, with the team making the announcement at Microsoft’s Beijing headquarters.

The name Neo harks back to the Greek meaning of the word—newness, novelty, and youth. Following the rebrand, Antshares’ Antcoins (ANC) were initially planned to be converted to NEO tokens, but a dual-token ecosystem was deployed comprising NEO and GAS tokens.

NEO was one of the first assets to be traded on the Binance cryptocurrency exchange, now a titan of the space, but in 2017, still in its founding stages. BTC and ETH were the other two assets that were initially traded on Binance.

Following the 2014 launch of the Antshares project, code for the platform was open-sourced on GitHub in June 2015, before the testnet was launched in October. The Antshares mainnet was launched a full year later. Following the June 2017 rebrand to NEO, October of the same year saw Neo’s NEP-5 token standard released.

Who are the Founders of Neo?

Neo was founded by Da Hongfei and Erik Zhang, who serve as co-chairmen of the Neo Foundation, which aims to promote adoption of the platform.

Zhang is the creator of the Delegated Byzantine Fault Tolerance algorithm, which was adopted by the Neo blockchain as it continued to evolve over the years. Serving as a core developer of the network, Zhang is an integral part of Neo’s push towards its latest “N3” iteration.

Prior to his work on NEO, Zhang was engaged in Shanda Games and Huobi.com, where he specialized in information security and R&D in digital currency.

Neo CEO Da Hongfei and CTO Zhang, who met at a Bitcoin conference in 2014, have also collaborated on another blockchain project, Onchain. Unlike Neo, Onchain is a commercial blockchain firm that provides services to private companies.

Onchain is well-known for working with Hyperledger to create a Distributed Networks Architecture, or DNA, to integrate business processes and provide cross-chain and cross-platform compatibility.

How Does Neo Work?

NEO, the network’s governance token, grants holders a vote within its delegated Byzantine Fault Tolerant consensus protocol. With this vote, NEO holders elect Consensus Nodes responsible for managing the blockchain. These Consensus Nodes have to hold a certain number of GAS tokens.

Transactions on the blockchain and changes to account balances are sent from NEO holders to Consensus Nodes, which bundle these transactions into blocks that make up the blockchain.

A Consensus Node is then chosen at random to verify the current block, and this Consensus Node sends the ledger for the block to all other Consensus Nodes on the network. If a minimum of 66% of the Consensus Nodes agree, the block is confirmed.

If, however, less than 66% of the Consensus Nodes agree on the block, a different Consensus Node is chosen and asked to submit its block for verification.

What are Smart Contracts?

Smart contracts make a blockchain platform programmable, allowing for the automatic execution of a predefined action when conditions are met.

The introduction of smart contract functionality has led many to describe chains like Ethereum and Neo as an evolution of the “OG” cryptocurrency, Bitcoin, or a second-generation cryptocurrency.

Smart contracts are transparent and visible to all parties on-chain. They function similarly to a vending machine that, when supplied with the correct amount of funds and the right selection, will give the customer the desired item.

Smart contracts can define rules and automatically enforce them. That said, interactions with them are not reversible. However, the deployment of smart contracts onto a platform is normally not reversible either. This means that users can be sure that the developers can’t change the code once it’s live and their funds are locked in.

These smart contracts are controlled by programming logic rather than an individual or company, eliminating the need (and cost) for third-party intermediaries to facilitate a complex transaction.

What Makes Neo Unique?

Neo is focused on the “Smart Economy,” the trinity of digital assets, digital identity, and smart contracts.

Smart contracts certainly aren’t unique among blockchain projects. Still, it should be noted that Neo dates all the way back to 2014, making it one of the oldest blockchains to incorporate smart contract technology.

Neo’s smart contracts are also extremely developer-friendly because the NeoVM compiler supports more mainstream programming languages such as C#, Kotlin, Go, Python, and Java.

Neo also puts a strong emphasis on digital assets, letting users create, register, trade, and share anything that exists in electronic form. The true scope of what digital assets can be isn’t yet known, but common examples include pieces of music, property, and real-world objects.

Finally, the Neo blockchain can also store digital identities, or information on individuals, organizations, and other entities that exist in electronic form.

How is the Neo Network Secured?

Neo is secured by delegated byzantine fault tolerance (dBFT), which was authored by co-founder Erik Zhang in 2019.

The key innovation in Zhang’s dBFT paper was to distinguish Consensus Nodes, which participate in the consensus algorithm to propose new state changes and vote, from Ordinary Nodes that can execute transactions but don’t take part in consensus.

This innovation allowed practical Byzantine Fault Tolerance at scale, creating a single-block data finality speed of about 15 seconds. This makes Neo an extremely fast blockchain to transact on.

Neo’s dBFT algorithm comprises three distinct phases called Pre-Prepare, Prepare, and Persist.

As detailed above, these three phases comprise the “Prepare-Request” message for initiating a new block, followed by a “Prepare-Response” message if the block is verified, and finally the publishing of a new block.

Zhang also proposed an iteration of this model, dBFT 2.0, adding a new commit phase and a recovery mechanism that improves block times when slowdowns occur due to the network being compromised.

What is the Use of NEO?

NEO is part of the dual-token ecosystem that sees it serve as a governance token, while the GAS token is used to power smart contracts. Uniquely, the minimum unit of NEO is actually 1 NEO, and the token is indivisible.

This is different from the large majority of cryptocurrencies, most of which can be divisible, some to extreme degrees. NEO, as such, has to be transacted in whole numbers.

GAS tokens are generated after every block on the blockchain is verified, with the exact number of GAS tokens produced declining until the total supply of 100 million GAS is reached. NEO, meanwhile, was issued at the genesis of the network.

The Neo network charges GAS for the operation and storage of tokens and smart contracts, ensuring that node resources aren’t abused. System fees are burned, while network fees are redistributed to Consensus Nodes, creating an economic incentive for their services.

The GAS generated for every block is split into three parts. 10% goes to all NEO holders, another 10% is divided evenly between the 21 members of the Neo Council, and the remaining 80% is split between voters as a reward for active participation in network governance.

Unlike NEO tokens, GAS tokens are divisible down to a minimum unit of 0.00000001 GAS.

Who Controls Neo?

Neo aims to be a decentralized, open network for the “Smart Economy,” and to this end, the Neo Foundation was established to be a strategic guide for the platform.

The Neo Foundation sets the overall goals for the project and provides funding to other self-governed groups to pursue these goals as they see fit.

This structure, where the aim of decentralization is guided by the foundation, was termed “pragmatic idealism” by Neo co-founder Da Hongfei. He said: “Pure pragmatism can’t imagine a bold future. Pure idealism can’t get anything done. It is the delicate blend of both that drives innovation.”

Along with the Neo Foundation, core developers including Erik Zhang are responsible for the project, and Neo Global Development, headed by Da Hongfei, also plays a part.

However, with the launch of N3, NEO holders can vote in a Neo Council responsible for governing the blockchain, running Consensus Nodes, and setting blockchain parameters such as transaction fees.

How Much NEO Is In Circulation?

At the genesis of the blockchain, 100 million NEO tokens were created, with half of the NEO tokens being issued to participants of the token sale.

The other 50 million were held by developers and the NEO Council, with the latter remaining in charge of when and why the tokens would be issued onto the market. Currently, the circulating supply of NEO sits at just over 70 million NEO tokens.

GAS, meanwhile, is generated with every block on a schedule that reduces gradually. GAS will hit its own maximum supply of 100 million GAS in an estimated two decades.

How Do You Buy NEO?

NEO is a popular cryptocurrency and is considered one of the most established projects in the blockchain industry. You can buy it on many major exchanges, with the most liquidity being seen when paired with USDT.

Besides that, you can also use cryptocurrencies like BTC and BNB to buy NEO.

Is It Possible to Buy NEO Instantly?

Neo is a fast blockchain, with blocks being produced every fifteen to twenty seconds due to its utilization of a dBFT consensus mechanism. Thanks to this speed, purchasing NEO on the Neo blockchain itself is quick and easy.

Buying NEO on an exchange is even faster, but that’s true of all cryptocurrencies. However, exchanges tend to be anything but fast when it comes to actually withdrawing your NEO tokens into your own wallets.

Beyond taking a while to give the green light to transactions and possibly batching them, many exchanges also have to complete KYC (Know Your Customer) and AML (Anti-Money Laundering) checks before releasing the funds onto the blockchain.

How Do You Store NEO?

Since GAS tokens are distributed to NEO token holders that take part in network governance, choosing the right wallet for your NEO holdings is important so as not to lose out on these rewards.

Some of the best NEO wallets, including those that support the upcoming N3 migration, can be found on the Neo website. They include the NeoLine Mobile Wallet, the ONTO Wallet, and the Neon Wallet.

As such, the main consideration when choosing a NEO wallet is to ensure that it supports voting. It must be noted that many exchange platforms also reward NEO holders with GAS on a regular basis.

This makes an exchange account a viable place to hold NEO tokens as long as you’ve done your due diligence, given the many high-profile collapses of these centralized platforms over the years.

However, storing NEO on an exchange means that the exchange will be using your NEO tokens, which you paid for, to make their own votes on network governance.

Neo Energy Consumption

Neo uses a delegated Byzantine Fault Tolerant consensus mechanism. This consensus algorithm is far less dependent on processing power for validation than the likes of Bitcoin and Ethereum. As a result, the energy cost of the Neo blockchain network is far lower.

Neo’s delegated BFT is a modified form of proof-of-stake (PoS) which relies far more upon game-theoretic concepts as well as economic rewards and punishment for behavior that respectively follows or goes against the protocol.

Is NEO a Good Investment?

Neo is a blockchain project with a proven record, a crack development team, and plenty of community support behind it.

Founder Erik Zhang is a star of the blockchain industry, and his work has allowed Neo to settle upon a consensus mechanism that is both resilient and highly efficient. The transition of the network into N3, or Neo 3.0, also has extremely exciting potential from a technological standpoint.

The N3 boasts more powerful features and a modular architecture. Not to mention, it is due to ramp up governance and its economy into even more attractive versions of themselves. According to the Neo website, N3 “offers everything the hobbyist developer needs to build their first dApp, through to the power and scalability demanded by enterprise applications.”

If Neo is able to carry out this upgrade to successful completion, then the future for Neo could well be bright indeed.