NEO - An Open Network For Smart Economy

28 Feb 2018

What is NEO?

NEO is a cryptocurrency that has greatly gained in both popularity and value over the past year. Like most cryptocurrencies, this one runs on a blockchain, but has some key differences from the masses. One of these differences, the use of GAS in the blockchain, has caused a bit of confusion. So today, we’ll discuss what NEO, what GAS is, and how they combine to make what we know as the NEO blockchain.

Getting A Better Understanding Of NEO

Unlike other cryptocurrencies, NEO works on a share-based system. So, when thinking about what NEO, it’s better to think of it as a security than a cryptocurrency. In fact, each NEO is considered by the “NEO Smart Economy” to be one share of the NEO blockchain. So, essentially, NEO is a portion of ownership!

NEO issued 100 million NEO, or 100 million shares, in the NEO blockchain. NEO works quite a bit like shares. In fact, NEO even gives owners voting rights, which according to its whitepaper, is where the value in the cryptocurrency is derived.

Another important similarity that NEO portrays to the securities market is the use of a dividend. Very few, if any, other cryptocurrencies work on a dividend system. Each NEO, or share owned, is paid a dividend. This dividend is paid in GAS (we’ll explain what GAS is later). These dividend payments are taken from the fees that users generate when they operate within the NEO Smart Economy.

In the true spirit of cryptocurrencies, GAS generated from the ownership of NEO will slowly decrease on an annual basis. This decrease in GAS generated will continue until the year 2038. At this point, 100 million GAS will have been produced through the NEO Smart Economy.

What Is GAS

GAS is a very important part of the NEO system. Essentially, GAS is considered to be the fuel that keeps the NEO Smart Economy in motion. Ultimately, users undertake various tasks within the NEO platform. For each one of these tasks, fees are created in order to input the data into the blockchain.

The systemic fees that are generated by users when using the NEO platform must be paid in what is known as GAS, ultimately giving GAS its value. The fees generated through actions are essentially there in order to pay bookkeepers for accounting fees as well as an extra service charge that is divided among NEO holders, known as NEO shareholders. Finally, GAS is used as collateral for bookkeeper nominee deposits.

Putting This All Together Creates NEO, “The Chinese Ethereum”

NEO is often called the Chinese Ethereum, and for a good reason. Ethereum was the first blockchain that used smart contracts to allow users to access the blockchain and build apps upon it. NEOs GAS structure within the NEO blockchain allows for much of the same functionality.

In fact, Ethereum has a GAS like payment structure. However, the currency within the Ethereum blockchain is known as Ether, rather than gas. Nonetheless, for each action taken within the Ethereum blockchain, Ether is paid.

However, there are a few key differences between the two. First and foremost, NEO has some pretty big backers, the Chinese government being one of them. As a result, NEO became the first open source, public blockchain project in China! At the moment, Ethereum isn’t being backed by any government or regulatory body.

Another major difference between the two has to do with energy efficiency. The Ethereum blockchain runs on a proof of work model. NEO currently runs on what is known as a delegated Byzantine Fault Tolerant, or dBFT. It is believed that dBFT is more energy efficient than proof of work, while the difference may not be massive, it could prove to be a plus for NEO miners.

Nonetheless, the biggest difference between the two has to do with the languages they run on. Ethereum runs on a complex language known as Solidity. Unfortunately, few programmers know the language. However, NEO was built so that smart contracts can be written in C# and Java, much more common programming languages. It is believed that this will help to speed up the uptake of NEO when compared to Ethereum and others. In fact, it’s because of key factors like these that NEO has made its way to become a top 10 cryptocurrency.

Final Thoughts

The best answer to the question “What is NEO?” is simple, it’s a cryptocurrency like no other. While many have compared the idea of cryptocurrencies to securities, NEO is the first cryptocurrency that seemingly acts as a security. At the same time, it brings a revolutionary open-source blockchain model to China. With its unique capabilities, securities-like structure, and ability to host apps and smart contracts made by users, much like Ethereum, it’s no surprise that NEO has made its way to the top 10 cryptocurrency leaderboard.

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