A Primer on NEO Network Fee Generation and its Importance in the Veris Blockchain
When discussing NEO I find a surprising number of people are not certain what the purpose of GAS is, how GAS is created, and why GAS has value. As Veris is built on NEO, I’d like to answer these questions and illustrate how this design facilitates the our claims process for the US healthcare system.
In the simplest description NEO is a digital asset that provides governance and generates a certain amount of GAS. GAS is a digital asset used to pay for network transactions. For example, creating a smart contract requires 500 GAS. If a user would like to create a smart contract on the NEO blockchain they must spend 500 GAS. To acquire this GAS they must either purchase the GAS, or hold enough NEO to generate 500 GAS. GAS is created over time as blocks are added to the blockchain with 16 GAS generated with every new block added to the NEO blockchain. That 16 GAS is then evenly distributed among all 100,000,000 NEO in existence. A more detailed explanation of the process can be found on the NEOTOGAS website.
For example, if you held 100,000 NEO and required 500 GAS to create a smart contract on the blockchain you would need to wait until 31,250 blocks are have been created and added to the blockchain. The NEO blockchain theoretically adds roughly 1 blocks to the chain every 15 seconds which means you would need to wait 15,610 minutes (or 10.84 days) for enough GAS to be generated.
x = blocks required
y = GAS required
y = [(amount of NEO held/total amount of NEO in existence)(GAS block reward)] * (x)
Another way to think of this is to think of NEO as an oil field and GAS as the oil produced by the field. In your oil field, regulation states you can only build one well to extract oil every square kilometer. A person with a car needing to travel 500 kilometers a day will need more oil than a car travelling 100 kilometers a day — in order to obtain enough oil for a 500 kilometer trip you will need to have more wells, and thus a larger oil field
An important takeaway from this is that this design requires users of the platform to hold roughly the amount of NEO to generate the GAS needed to pay the users network fees. This ties the volume of network usage to the amount of NEO necessary. The concept is critical because NEO is not a proof of work (PoW) blockchain — and thus requires a different mechanism to fight network spam. Spam is one of the true enemies of a blockchain. One of the key reasons PoW blockchains are successful is that they can not be easily spammed. A technology like email requires no cost to send spam, but if you want to spam the Bitcoin network (which is a PoW blockchain) you must not only dedicate computing resources, you must spend Bitcoin to do so.
The Veris blockchain is a copy of NEO and has inherited this design. Veristakes (VRS) are the equivalent of NEO, and Vericoins (VRC) are the equivalent of GAS. On our blockchain all transactions will be related to the processing of healthcare claims in the United States. This is estimated to be 9 trillion claims a year in 2013. The only expense for a payer or provider to utilize our platform is the ownership of VRS and VRC. Thus this design is perfectly aligned with assuring that the volume of transactions processed on our network is commensurate with requiring a user to own a large enough number of VRS.