Introduction to Neo | Blockchain Central

Hey everybody and welcome to another episode of BLOCKCHAIN CENTRAL! Today, we’ll take a closer look at NEO You might have already heard about it, because it's also known as Ethereum’s biggest rival! Neo was developed by a company called ONCHAIN in 2014

At the time of development, it started as AntShares and gained much attention after being renamed into NEO in 2017 What is special about NEO is that it's the first and largest blockchain network developed entirely in China According to their website, NEO is a non-profit, community-based blockchain aiming to utilize DLT and digital identity to digitize assets, automate asset management, and realize a "smart economy" in a distributed network Now, what is “smart economy”? Smart Economy refers to a productivity gain through the automated interconnection of various economic actors, as well as local, regional and global economic layers According to Neo, this can be achieved through a distributed network which connects digital assets, digital identity, and smart contracts

Let me walk you through the three components: Digital Assets: A digital asset is anything that uses electronic data and can be programmed into smart contracts This could, for example, be a certain amount of money or your social media profile, which you can rent out for advertising purposes The connection between digital and physicals world happens through digital identity In the Neo network, two kinds of digital assets can be used: Global Assets and Contract Assets Global Assets, are ones which are recognized by the entire system and can be identified by all smart contracts and clients

Contract assets can only be recognized by specific smart contracts and, therefore, narrowed down to specific use cases Digital Identity: Digital identity bridges the physical world with digital assets Each person, organization, application or a device needs to be identifiable in the network To achieve this, the Neo blockchain uses the most commonly accepted digital certificate issuance model, X509, which uses a public key infrastructure for unique identification

This includes the use of facial features, fingerprints, voice, SMS and other multi-factor authentication methods All your transactions, and belongings are signed with your digital identity in the network, creating an accurate and fraud-proof record of your actions Now let me come to the last component of Neo’s “smart economy": Smart Contracts Smart contracts, as you might already know, were first proposed in 1994 by Nick Szabo In his definition, a smart contract is defined as a pre-programmed condition which will execute the corresponding contract terms, as soon as the condition is met

Neo’s smart Contract system is called Neo Contract Compared to Ethereum's smart contracts, which have to be programed in Solidity, Neo supports C#, Java and other mainstream programming languages This allows the Neo Contract system to seamlessly integrate with the existing developer ecosystem It's a huge advantage compared to other blockchain projects, and can increase the potential for mass adoption of smart contracts and dapps Having understood that Neo tries to develop the “smart economy” through digital assets, digital identity and smart contracts, we can dive into the technical implementation of the network

The Neo management model is based on two native tokens called NEO and NeoGas At the genesis of the NEO blockchain, 100 million Neo Tokens were created These tokens hold certain rights which include voting for bookkeeping, NEO network parameter changes and transactions What's unique is that the smallest amount of Neo is always 1, with no further subdivision possible In addition to the NEO token, the developers invented NeoGas, or just Gas

While the Neo token gives the user voting and decision-making rights, Gas is the fuel of the network and serves as dividend to network users This is similar to the gas transaction fees in the Ethereum network All operating charges for transactions, storage of tokens as well as smart contracts in the network, occur in the form of Gas This is to incentivize the bookkeepers and prevent the abuse of resources The total amount of Gas is also limited to 100 million, however, compared to the Neo token, Gas is not pre-mined

All Gas tokens will be generated via a decay algorithm in about 22 years’ time and will be allocated to the addresses holding NEO If NEO’s are transferred to a new address, the GAS generated will be automatically credited to the validating node Additionally, Gas can be divided into decimals, with 000000001 being the smallest amount of Gas To enhance the user experience, the network decided on a threshold of transactions which do not require any gas

But there is another question left How is consensus established in the Neo network? Neo uses a consensus algorithm called “Delegated Byzantine Fault Tolerance” In summary, this mechanism allows users to vote on trusted nodes (delegate nodes) based on their amount of NEO holdings These delegate nodes, collect all transactions into blocks, and share them among each other As soon as a new block receives the consensus of 66% of the other network nodes, the block is attached to the blockchain

This mechanism is far less computationally expensive than the Proof-of-Work mechanism of Bitcoin and allows a faster transaction time In the Neo consensus mechanism, every 15 to 20 seconds, a new block is created This allows a transaction throughput of up to 1000 Transactions per second (TPS) However, it is estimated that through appropriate optimization, a transaction throughput of 10,000 TPS can be reached This could enable a mass utilization of the Neo Blockchain without the scalability issues seen with Ethereum or Bitcoin

In summary, one can say that the Neo projects looks very promising, especially with the implementation of mainstream programming languages and the upscale possibility of transactions per second But only the future will show, whether developers accept Neo as a valid Ethereum alternative That’s it for this episode of Blockchain Central Before you go, please not that this video does neither represent financial, legal, or tax advice, nor is it supposed to be understood or interpreted as solicitation to buy or sell any securities, coins or tokens Thank you so much for watching

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