Guides to Cryptocurrencies
NEO Cryptocurrency & Blockchain Guide
What is NEO?
NEO is a community driven, open-source operating system that uses blockchain technology and dBFT consensus protocol to operate as a smart contract platform that allows users to build, host and use decentralized applications. NEO token is its native cryptocurrency and it generates GAS tokens as network fuel for its owners.
Two Tokens of the NEO Ecosystem:
Former name: Antshares (ANS)
Maximum supply: 100,000,000.
100 million NEO cryptocurrency tokens were created together with the birth of the Genesis block. 50 million NEO tokens were then sold to early investors and the remaining 50 million tokens were locked down into a smart contract. 15 million NEO tokens will be unlocked every year for NEO development team to fund the following long term developments, operation and maintenance:
10 million tokens: For motivating developers and council members of the NEO ecosystem.
15 million tokens: To cross-invest in other block-chain projects which are related to NEO projects and are owned by the Council.
15 million tokens: For contingency
Use of NEO tokens shall not in principle exceed 15 million tokens each year.
Former name: Antcoins (ANC)
Maximum supply: 100,000,000.
While NEO tokens supply users with decision making and voting rights, GAS operates as fuel for the ecosystem, getting things done on the ecosystem by powering smart contracts. GAS tokens are generated in a slow deflationary rate from NEO cryptocurrency tokens and can be used by its owners to pay transaction fees on the NEO network. A decaying inflation rate with a half-life algorithm is implemented for GAS tokens and experts estimated that 100 million GAS will be distributed over approximately 22 years.
Similar to NEO tokens, GAS is capped at a maximum supply of 100 million tokens. The difference is that GAS can be divided into decimals with its minimum unit set at 0.00000001. If a user transfers his NEO tokens to a new address, the GAS generated proportionally in accordance to the NEO holding ratio will be credited to the new address and the owner can claim them as and when he/she wants.
Every year, 2 million of estimated GAS blocks will be generated with around 15-20 seconds of down-time between consecutive blocks. 8 GAS tokens will be generated in every block initially and the generation rate will be reduced by 1 GAS per year or per 2 million blocks until only 1 GAS is created per block. When 44 million blocks are created, the GAS will reach its maximum supply of 100 million, no new GAS will be created from then on. Based on estimations, 16% of the GAS will be created in the first year, 52% in the first 4 years and 80% in the first 12 years.
NEO was formerly known as Antshares and was founded and headed by Da HongFei (CEO) and Erik Zhang (CTO) in around year 2014. HongFei and Erik are the co-founders of “OnChain” R&D company as well that was ranked among the Top 50 Fintech Company in China by KPMG. It became open-source on GitHub and released its whitepaper in 2015. The ecosystem officially rebranded to NEO in 2017 along with the motto to develop a smart economy. The word “neo” originates from an ancient prefix, “νέος “, which means young, fresh and new.
The NEO team launched two crowdsales and managed to sell 17.5 million NEO tokens for $550,000 from the first crowdsale in October 2015. The second crowdsale did better and the team acquired $4.5 million from sale of 22.5 million NEO tokens.
The NEO Foundation is the ecosystem’s council, chaired by Da HongFei and Erik Zhang. The foundation funded prominent operational units such as NEO Global Capital (NGC) and NEO Global Development (NGD). NDG follows the strategies outlined by NEO Foundation and does development, research, marketing and community operations. NGD set up its first Shanghai office in April 2018 and a second office in Seattle a year later.
NEO’s competitors, Bitcoin and Ethereum, use proof-of-work (PoW) consesnsus protocol to record transactions on the blockchain and create new cryptocurrency coins. The NEO team argued that the PoW protocol is wasteful and energy inefficient. They instead use a different consensus mechanism for the NEO blockchain called Delegated Byzantine Fault Tolerance (dBFT). You can learn more about dBFT protocol with the following link.
NEO’s smart contract system consisted of the following functions:
The NEO whitepaper stated that the NEO Virtual Machine (NeoVM) is a general-purpose and lightweight VM which is similar to JVM and .NET Runtime architecture. It closely resembles a virtual CPU that interprets and implements contract’s instructions in order, as well as executing process control in accordance with the functionality of the logic operations, instruction operations etc.
The InteropService provides smart contracts the ability to access data outside of the NeoVM without undermining the overall system effectiveness and reliability. Smart contract storage space and some APIs are currently available from the interoperable service layer for its users to access chain-chain smart contract data as listed below:
The NEO ecosystem uses the X.509 digital identity standard for its developers and users to link cryptocurrency tokens to real world identities, which is useful to abide by regulations such as KYC/AML or simply to have a system to verify its users. It is reportedly the most widely accepted digital certificate issuance model, based on Public Key Infrastructure.
The NEO ecosystem performs the following identity verifications: