Dubbed as the Chinese Ethereum, NEO is a project based in China, which utilizes the blockchain technology to digitize and manage assets through the use of digital identities and smart contracts, in the hope to create a smarter economy.
This project began in 2014 by Da Hongfei and Erik Zhang initially by the name of Antshares, and recently rebranded itself as NEO. (Hongfei and Zhang also developed a sister company called OnChain, which provides blockchain based financial services in China.) NEO is headed by a large and active team of both in-house and third-party developers.
(FYI: Neo is a Greek work meaning ‘new’.)
Reiterating the first paragraph, the equation to a smart economy thereby needs three things:
A use of digital assets, which are electronic, programmable assets that users can register and trade. Secondly, a digital identity, which is the identity information in electronic form. NEO employs a set of digital identity standards to verify the data of individuals and other entities through the use of facial recognition, fingerprint, SMS, and other authentication methods. This maintains a trusted link between the physical and digital realm. And, lastly a smart contract system, which offers unlimited scalability, parallel operations, and high reliability- All features that a NEOContract provides.
NEO has similar functionality to Ethereum ecosystem in the sense that it, too, implements the designing and deployment of smart contracts. However, unlike Ethereum requiring Solidity to write contracts, NEOContracts are a bit more flexible, and support a number of programming languages such as C#, Python, and Java. (Thanks to the DevPack which houses language compilers and other plugins!)
The platform consists of two different native tokens- NEO and NEOGas (also termed as GAS). The NEO token represents shares in the company, and gives voting rights to token holders. On the other hand, GAS fuels the network, and it works as a fee for the computing resources required to run smart contracts on the network. Both NEO and GAS have a total supply of 100 million tokens. NEO is not divisible, although GAS is (by a factor of 1/10^8).
NEO’s 100 million tokens were divided into two portions- 50 million tokens were distributed during the crowdfunding, while the remaining half have been locked up for long-term development projects and project maintenance. GAS is generated with each block, with a block reward of 8 GAS per block. Every year, this amount will be reduced by one, and after the 44 millionth block no further GAS will be produced- A decay algorithm that will take around 22 years.
As opposed to other blockchain-based projects, NEO employs an interesting consensus mechanism called Delegated Byzantine Fault Tolerance (dBFT). Participants can vote certain nodes as ‘bookkeepers’ who keeps consensus across the network. If two-thirds of the nodes agree with the bookkeeper’s version of the blockchain, it is then validated. If consensus is not reached, a new bookkeeper is called in. As this consensus is only to be replicated across a subset of the network, it is more efficient that its predecessor algorithm.
The NEO network can handle around 1000 transactions due to such features (although, NEO has plans to optimize it 10,000 instead!), making it comparatively faster. But that’s just the tip of the iceberg- There’s a whole repertoire of special features on NEO. For instance, superconducting transactions handle order matching off the NEO network by a central exchange, making it more efficient and quick. NEOX implements cross-chain interoperability, NEOQS (NEO Quantum Safe) safeguards from quantum computing, and NEOFS is a storage protocol through which users can divide and distribute files across the network on levels of reliability. Low reliability files can therefore be stored and accessed for almost zero fee. In addition to this, NEO also has a lightweight, general-purpose Virtual Machine (VM), and offers their own wallet services.
Although, partnerships with Microsoft and Ontology, as well as the Chinese government, do strengthen NEO’s position, the platform does have a lot of competition. Coupled to this, a lack of a clear roadmap of future and a recent ban on ICOs in China does leave much to speculation.
Nevertheless, NEO has enormous potential- With a strong leadership, a well-rounded team of developers, rising popularity, and a definitive edge when it comes to the ease of creating smart contracts, NEO could just become the ‘Ethereum of the East.’