(NEO) — Smart Economy— Beginners Guide | Cyber Lion Weekly
As stated in their whitepaper, (NEO) is a distributed network. NEO acts as a blockchain platform in much the same way Ethereum does. NEO leverages the use of blockchain technology and digital identities to digitize assets. This is accomplished through the use of their smart contracts which allow digital assets to be self-managed. Their overall goal, however, is to achieve a “smart economy” with distributed ledger technologies ran on the blockchain.
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What’s the difference between (NEO) & (GAS)?
(NEO) has two tokens that are native to its blockchain, (NEO) & (GAS) or, NeoGas. (NEO) Tokens will have a total sum of 100 million, and holders of (NEO) will have voting rights within the network.
(GAS) is the fuel in the NEO ecosystem working as a network resource control. (GAS) will also have a total sum of 100 million tokens. When a transaction happens on the network, users will pay for this transaction using (GAS). Users will be charged for specific operations, storage of tokens, and smart contracts. Thereby creating economic incentives directly built into the system itself. This should also assist in preventing any abuse of resources. (GAS) can be divided into smaller portions unlike (NEO) the minimum unit of (GAS) is 0.00000001.
Within the genesis block of NEO, 100 million (NEO) token were generated. However, (GAS) was not generated from the genesis block. So where does the (GAS) come from? A decay algorithm generates (GAS) and the total amount that can be generated from the algorithm will be 100 million. It has been designed so that it will take 22 years before all (GAS) has been generated.
How will (NEO) tokens be distributed?
(NEO) Tokens will be divided into two portions of 50 million tokens each. The first portion of 50 million tokens was sold to investors during the crowdfunding phase. Whereas the second portion of 50 million (NEO) was stored away with a lockout period that expired 10/16/17. These tokens were set aside to be managed by the companies council and will be used to support the long-term growth and development of the project. Once the lockout phase ended these tokens were accessible and used by the team for long-term support and they will not be sold on exchanges.
10 million tokens (10% total) will be used to motivate NEO developers and members of the NEO Council
10 million tokens (10% total) will be used to motivate developers in the NEO ecosystem
15 million tokens (15% total) will be used to cross-invest in other block-chain projects, which are owned by the NEO Council and are used only for NEO projects
15 million (15% total) will be retained as a contingency
The annual use of NEO in principle shall not exceed 15 million tokens
How will (GAS) be distributed?
(GAS) will be generated in a similar fashion to the way rewards are introduced to miners. Each new transaction block will generate (GAS) where the initial amount of (GAS) is 0. As the NEO blockchain grows the amount of (GAS) in the system does too. The time interval between each new block being generated is ~15–20 seconds with roughly 2 million blocks being generated per year.
Because 2 million blocks will be generated each year and the initial (GAS) generated per transaction on the blockchain will be 8 an annual reduction of 1 (GAS) per block, per year, will coincide with the generation of every 2 million blocks. In a simpler sense, the first 2 million blocks will generate 8 (GAS), after another 2 million it will be 7 (GAS) per block, so on and so forth until only 1 (GAS) is generated per block. A total of 44 million blocks will need to be generated before all of the (GAS) will be in the system.
(GAS) is distributed proportionally in accordance to the amount of (NEO) that is being staked or held in a users wallet. Users who hold (NEO) can initiate a claim transaction at any time to acquire their (GAS) tokens at their wallet address.
What is dBFT? (Delegated Byzantine Fault Tolerant)
NEO doesn’t use a Proof-Of-Work or a Proof-Of-Stake consensus mechanism. Instead they use dBFT a Delegated Byzantine Fault Tolerant consensus that enables large-scale participation in consensus through the act of proxy voting. This consensus provides a fault tolerance of:
F = ⌊ (n-1) / 3 ⌋ for a system consisting of N consensus nodes. This level of fault tolerance means the (NEO) has a very high resistance to general and Byzantine failures.
Once a block confirmation is made they are final. dBFT consensus makes it so that a block cannot be forked, revoked, or rolled back. The team at NEO believes there is the potential to scale TPS (Transactions-per-second) from its current level 1,000 up to 10,000 TPS. This should, in theory, help support any future large-scale commercial application. Lastly, due to the dBFT protocol, NEO has the ability for bookkeepers in the system to a public name or institution. Therefore it would be possible to freeze, revoke, inherit, retrieve, and transfer the ownership of (NEO) if there are future judicial decisions on them. This feature will create a legitimate registry for any complaints by users.
What is NeoX?
NEO also has a feature called, NeoX which is a protocol that allows for cross-chain interoperability. NeoX is split into two parts: “cross-chain assets exchange protocol” & “cross-chain distributed transaction protocol”.
– Cross-Chain asset exchange protocol
NeoX has the ability to let users exchange assets across different chains such as sending ARK on NEO instead of Ethereum. This has been achieved through NEOs smart contracts: NeoContract. Even if another blockchain isn’t compatible with NeoContract, they can be made compatible if they have even the simplest of smart contract functionalities built into them.
– Cross-Chain transaction protocol
When transactions take place through the NeoX feature each of the block steps are scattered amongst different blockchains helping to ensure consistency during the entire transaction. The way this function was programmed means that a transaction will either succeed or fail as a whole, and opens up avenues for cross-chain collaboration with other blockchains.
What is NeoFS: Distributed Storage Protocol
NeoFS is a distributed storage protocol which is a fancy way of saying that it a network of computers in which information or blocks are stored in more than one node. Anyway, NeoFS uses something called a Distributed Hash Table (DHT) Technology. The purpose is to index data through file content such as hashing rather than through the more tradition file path (URI). Although DHT technology has the inherent problem of balance redundancy and reliability. NEO plans to act as one of the interoperability services. Furthermore, they will establish backbone nodes through means of token incentivization.
How will NEO protect against quantum computing? NeoQS
Quantum computers are already in stages of their primitive operation and while there is a very large ceiling for growth in this area it is only a matter of time before they become a potential threat to blockchain systems. This is due to the fact that a quantum computers process functions so quickly they could outstep the poisson control mechanism that defends against hacks in a blockchain network. NeoQS (Quantum Safe) is a lattice-based cryptographic mechanism. Such as DAG (direct-acyclic graph).
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This Research Report was originally published by Cyber Lion Weekly