What is NEO Smart Economy?
The problem with explaining new blockchain technologies to the general public is that it’s very difficult to grasp what it is and what you can do with it unless you have previous experience in similar technologies. In this article, I hope to make it easier for the general public to understand the revolutionary concept behind NEO Smart Economy.
Human economy started out in the dawn of civilization by exchanging items within small tribes. It conformed to basic trading rules and physical punishment for those that did not adhere to these rules. It expanded to trade between different tribes and villages, which then required more complex trading rules and ways to enforce these rules. Conflicts in trade was resolved diplomatically or escalated into physical violence on a larger scale.
In time, the management of trade and economic rules grew to be handled by institutions, such as banks and governments. It allowed for more trust; if someone broke the trading rules, then the institution or government would support the victim and punish the individual or organization that broke the rules. This is the economy we have today, an economy where people who break the trading rules will be punished with fines or imprisonment, given that they can be identified.
With the development of computers and internet, online commerce has boomed. The trading rules online are mostly governed on domestic level, and those who break the rules will be punished by each country’s applicable law. The problem is when trade happens on a global level between individual parties who don’t know each other. How can we trust the other party if we don’t know who that person is, nor which country’s law that should be followed if an agreement is broken? How do we find the person who broke the agreement?
NEO Smart Economy is the next generation of economy and trade where trade agreements are written in programming code using a Smart Contract. The Smart Contract is stored in a decentralized immutable blockchain and will be executed exactly according to the trading agreement, and exactly at the time agreed upon. This allows for an economy where two or even thousands of parties can agree on a contract without the need to trust each other. The Smart Contract will always execute according to the defined rules in the contract.
To enable Smart Economy, NEO’s technology allows digitizing any real asset. In practice, it means that any physical asset can be represented as a digital asset in the NEO blockchain, and ownership of that asset can be split and distributed among any number of owners. It’s comparable to a clearing house, but with insignificant fees and with accessibility to the general public. This also means that trading of assets can be done almost instantaneously and without the need to trust any other party, since all trades will always execute according to the defined rules in the Smart Contract.
Even with the knowledge that all trades will always follow the trading rules, we as humans most often want to know who we are trading with. NEO recognizes this requirement, and have technology to support digital identity. Individuals and institutions can all get their own digital identity, and participants in the market can choose to only trade with parties who have a confirmed digital identity. With digital identity, it also allows our institutions and governments to support the trading rules and ensure that the trade is fair to all parties involved. Moreover, any schemes to abuse trading deals can still be punished according to applicable law, since the participants can be identified.
This is NEO Smart Economy, where all real assets can be digitized, traded with certainty using defined trading rules in Smart Contracts, and knowing who you are trading with using Digital Identity.
Visit NEO at www.neo.org