What is NEO Cryptocurrency?
Last Updated: 1st November 2018
Founded by Da Hongfei, NEO is China’s first open source blockchain that uses blockchain technology to produce a smart contracts ecosystem. Like Ethereum, the NEO cryptocurrency enables developers to build decentralized applications (DApps) on its platform. However, innovations such as:
- The NeoContract
- Digital Identity
- Digital Certificates
- Superconducting Transactions
- Delegated Byzantine Fault Tolerance (dBFT) Consensus Mechanism
- Quantum-Computer-Proof Technology – NeoQS
- Cross-chain Interoperability Protocol – NeoX
are all designed to improve upon the Ethereum model to produce a smart economy.
NEO smart contracts, known as NeoContracts allows developers to build decentralized applications on the NEO blockchain. Smart contracts are stored on the blockchain, and are automatically executed according to the obligations laid out in the contract. Smart contracts written on the Ethereum blockchain currently only support the Solidity programming language, whereas NeoContracts are more intuitive and can be written in programming languages such as: C#, Java, and Go.
Digital Identity, Digital Certificates & Superconducting Transactions
As well as facilitating the production of decentralized applications through the use of NeoContracts, the NEO cryptocurrency also allows for the digitization of real assets. This means that physical assets can be represented as a digital asset on the blockchain. Thus, ownership of a physical asset can be transferred between several different owners on the NEO blockchain. This process is driven by NEO’s use of digital identity, digital certificates and superconducting transactions. Digital identity refers to the identity information of individuals, organizations, and other entities that exist in electronic form. Users are able to digitize and trade their physical assets, because digital identity technology provides a manner with which a digital asset can be linked back to an actual entity and their physical asset. Digital identities also have rights on the NEO blockchain, however, this is only possible if a digital identity has been legally accredited on the Public Key Infrastructure (PKI), which is the most widely accepted digital identity system. The NEO team also intends that digital assets that are registered by a validated digital identity are protected by the relevant domestic law.
NEO’s use of digital certificates also encourages the exchange of digital assets because it tackles the issue of untrustworthy users on the network. Through the use of digital certificates, anyone can register and trade assets on the NEO blockchain and have it regulated and protected according to domestic legal rules.
The NEO cryptocurrency also utilizes superconducting transactions that makes trustless digital exchange a possibility. With the use of this mechanism, buyers and sellers of digital assets are matched off-chain, on a centralized exchange. However, actual transactions involving digital assets are settled on the NEO blockchain itself. It is intended that this mechanism will make transacting on the NEO blockchain an efficient one.
Delegated Byzantine Fault Tolerance (dBFT) Consensus Mechanism
NEO’s dBFT consensus mechanism enables widespread user participation on the NEO network through the use of proxy voting. Users that hold the NEO cryptocurrency are able to vote for a bookkeeper (or node) that they support. The role of bookkeepers is to validate blocks that are written into the NEO blockchain. A consensus requirement of two-thirds amongst bookkeepers must be met before a block can be validated and added to the blockchain. The dBFT consensus mechanism makes use of digital identity technology, thus, bookkeepers on the NEO network can be individuals or institutions.
Quantum-Computer-Proof Technology (NeoQS) & Cross-chain Interoperability Protocol (NeoX)
NeoQS (Quantum Safe) is a lattice-based cryptographic mechanism that is intended to stop the NEO blockchain from being compromised by quantum computers.
NeoX is a protocol that implements cross-chain interoperability, this means that the NEO network provides a means for digital assets to be exchanged across different blockchains. NeoX can be divided into two parts: cross-chain assets exchange protocol and cross-chain distributed transaction protocol. The cross-chain assets exchange protocol ensures that parties engaging in a transaction can do so across different blockchains. Whilst the cross-chain distributed transaction protocol makes cross-chain smart contracts a possibility, this would mean that differing functions of a smart contract could be executed on across multiple blockchains.
The NEO Cryptocurrency & NeoGas (GAS)
Supply of the NEO cryptocurrency is in circulation and can be used in the exchanging of digital assets on the NEO blockchain. The NEO cryptocurrency is limited to a total of 100 million units, and gives NEO holders the right to vote for bookkeepers. NEO holders are also entitled to dividend payments in the form of GAS tokens.
GAS tokens are responsible for driving the NEO network; the network charges users for the operation and storage of tokens and smart contracts. This fee is used as an incentive measure, to encourage bookkeepers to maintain and prevent abuse of the NEO network
NEO’s governance mechanism can be divided into two parts: on chain governance and off chain governance. For on chain governance, NEO cryptocurrency holders are network owners that manage the NEO network through the proxy voting of bookkeepers. NEO’s off chain governance mechanism is known as the NEO Council, and is comprised of the founding members of the NEO project. The NEO Council is accountable to the NEO community and is responsible for promoting and developing the NEO ecosystem.