What is Neo?
Neo, previously known as Antshares, is a non-profit Chinese Blockchain project based in Shanghai. It is known as the Chinese Ethereum, as it, too, allows the transmission and storage of data across the blockchain using Smart Contracts. It operates through the Delegated Byzantine Fault Tolerance consensus protocol. It has seen over 150x gains, and can continue to see massive growth as the project progresses.
What are Smart Contracts?
Neo calls their smart contracts NeoContracts, and are ways of automating payment and transactions on a blockchain. Neo Contracts are fueled by Neo Gas, which is something we will talk about later in the post.
What is NEO Gas?
Neo Gas is the other coin that runs on the Neo platform. Neo is not divisible, so it is difficult for it to be used to pay fees. Neo Gas, is divisible and is used as payment for the use of smart contracts and transactions. The gas fees are then awarded to the delegates, who are users that validate transactions on the blockchain. Neo holders receive Gas as a sort of dividend for holding and staking their Neo.
Neo wallets will be discussed in a section below, but it is vital to use a wallet that rewards users its Gas dividends.
What is the Delegated Byzantine Fault Tolerance Protocol?
Consensus protocols were created to solve the Byzantine Generals problem, a hypothetical issue where nine generals are trying to decide how to execute an attack on a city, by following the majority vote. In this scenario, it is inefficient for a messenger to go around to every general and confirm their choice of attacking or retreating.
This issue has been modeled and solved in computer science by Proof of Work and Proof of Stake consensus mechanisms. Neo has their own take on the issue, and use dBFT. This system uses community voted delegates, who speak up for a group of Neo users. These delegates work together to come to a 66%+ agreement on the state of the ledger.
Neo as an ICO Platform
Neo, as stated earlier, is a project based in China, a country with extremely strict regulations. They have blocked things like Facebook and Twitter to the point where a VPN(Virtual Private Network) was needed to access them, and then went on to ban VPNs. China has followed a similar path on ICO (initial coin offering) regulations. There was a temporary ban on ICO participation in China, and many people see Neo as a solution to conduct ICO’s in China.
There is no official stance from China about Neo and ICO’s, but the fact that the Chinese government has not taken any action against Neo is a fantastic sign that it is in compliance with all of its rules. Neo has had and is having several ICO’s launch on their platform such as Medchain and Red Pulse. Here’s a spreadsheet that shows some of the planned ICO’s.
How do I Buy Neo?
Neo is a top 10 cryptocurrency in terms of market capitalization, so it is available on several exchanges. These exchanges include Bittrex, Binance, Bitfinex. All of these exchanges are very reliable choices and are leaders in Neo trading volume. For more information on how to purchase Neo, check out this guide.
How do I Store Neo?
Ledger Nano S
The Ledger Nano S is a hardware wallet, that stores several cryptocurrencies. These include Bitcoin, Ethereum, Neo and ZCash. A complete list of supported currencies will be shown below! The Ledger Nano S is the most secure option listed above, but also comes at a cost of 79€ or $96.
The Neon Wallet is a desktop wallet that supports Neo and Neo Gas, and allows the automatic claiming of your Neo Gas. To access your wallet, your private key must be entered. Please note that this private key is not kept or stored by the creators of the Neon Wallet, so it is completely safe. The project is open source as well, so if any malicious files were included, they would have been revealed by now. Desktop wallets are convenient to use, but are not something I would store large amounts of Neo on. It is also listed on the official Neo website as a UI upgrade, which definitely makes it more trustworthy.
Official Neo Wallet
The official Neo wallet can be downloaded off the official Neo website. It’s user interface is not as friendly as the Neon Wallet but is also an option for storing Neo.
Why is Neo so Focused on Creating Digital Identities?
Neo aims to be used by large corporations and businesses, and in order for these industries to operate, they must cooperate with government rules and regulations. This isn’t really possible if users are 100% anonymous on the blockchain. As stated earlier, China is very strict on what they allow, and Neo does not want to risk offending China.
Why do we need BOTH Neo and Ethereum?
There is a lot of competition in the cryptocurrency world. Competition is necessary in order for companies and products to be the best that they can be. While there is space for several projects, I think that eventually there needs to be one clear winner in each sector.
For example, Bitcoin and Bitcoin Cash are competing to be digital gold. Monaco and TenX Pay Token are both similar projects that aim to be cryptocurrency payment cards. A big part of the cryptocurrency market is speculation at this point, as it is a growing technology.
Instead of saying what is better, lets just compare Ethereum and Neo.
Ethereum is currently written in Solidity, which is not a user friendly language. Neo allows smart contracts to be coded in popular languages such as C# and Java.
The advantage of having user friendly programming languages is that it will allow more users to interact with Neo’s blockchain.
Proof of Stake/Work vs Delegated Byzantine Fault Tolerance Protocol
Ethereum currently uses Proof of Work. Proof of Work is a way of securing public blockchains by letting miners, (users who solve cryptographic problems using computer power), confirm transactions and be rewarded for their work. Ethereum aims to address scalability issues this year by switching to a Proof of Stake system. Proof of Stake solves scalability issues by lowering power consumption (no mining), and vulnerability to centralization.
PoS is closer to Neo’s dBFT and will allow Ethereum and Neo to scale to similar levels.
In order to see how all of this competition plays out, we just need to wait. At this time, Ethereum seems to be ahead as its market cap is over 10x of Neos. This could completely change in the future, and I can’t wait to see how all of cryptocurrency plays out.
What’s Next for Neo?
This is a guest post wrote by Austin, the owner of CryptoKing. Austin is an avid cryptocurrency investor studying computer science and software engineering at Towson University. His hobbies include researching cryptocurrencies, travel, and rock climbing. His goal is to help the average person understand and get into into cryptocurrency.