NEO (NEO) 101 - Everything You Need To Know
Neo is a blockchain-based platform with its own native cryptocurrency that enables the development of decentralised applications (dApps). The NEO network aims to automate digital assets management by using smart contracts, building a distributed network-based smart economy system.
Our aim with this article is to cover the important stuff you need to know about NEO and its digital currency, the NEO token, and whether it has a future in the global economy and trading markets. After reading this article, we want readers to understand better what people are labelling the Chinese Ethereum and how they can invest in this cryptocurrency.
What Is NEO and Why Was It Created?
The non-profit organisation NEO describes its community-based blockchain system as comprising of three key elements. Namely, smart contracts, digital assets, and digital identity. It aims to achieve a smart economy with a distributed network.
This cryptocurrency was formally known as AntShares, and founded in 2014 by Da Hongfei and Erik Zhang but later rebranded to NEO in June 2017. The decentralised open-source blockchain application platform has a supply limit of 100 million coins. It primarily entered the market to provide dApp developers with an easy to use cryptosystem.
Notably, NEO was the first-ever cryptocurrency blockchain project to receive support from the Chinese government. This is interesting as the Chinese government chose to shutter exchanges in the country. This government backing is what has led many to call this cryptocurrency the Chinese Ethereum.
Ambitiously, Neo seeks to tackle an array of issues currently facing the market. Touching on what we have previously stated, it is primarily meant to be a more flexible alternative to the Ethereum ecosystem.
The company believes in the philosophy of evaluating design choices on a multifaceted spectrum. By doing this, NEO can adjust their market approaches accordingly.
As an example of this, NEO developers can easily decide based on individual use cases what level of centralisation or decentralisation they want to use for specific projects. They can also make similar judgments when deciding to use either on-chain, or off-chain governance. Therefore, it has more use cases when compared to other cryptocurrencies for both governmental and commercial sectors.
How Does NEO Work?
Although complicated, it is possible to understand how this cryptocurrency works. When we look at the NEO blockchain, the first noticeable factor is that it can accommodate a wide variety of digital assets, and it can also digitise assets. Due to NEO’s blockchain technology solutions, users can digitise, buy, sell, record, circulate, and exchange all sorts of assets.
Additionally, the platform also supports initial coin offerings (ICOs), decentralised applications of all types, and the tokenisation of real-world assets. Concerning tokens, NEO utilises two different types on its platform.
The NEO token is the native cryptocurrency for the NEO blockchain; then, GAS is the utility token for the NEO network. In the ecosystem for this digital currency, GAS functions similarly to how Ether functions in the Ethereum network. Additionally, you can also convert your GAS directly to NEO tokens.
One of the most attractive aspects that the platform offers is to provide developers access to a virtual machine that simplifies the vital components and functions of smart contract programming. Developers don’t need to learn an entirely new programming language to utilise the NEO platform.
The NEO network uses a Delegated Byzantine Fault Tolerance consensus mechanism (dBFT). The mechanism works by having nodes act as bookkeepers, very similar to the role of accountants.
Now the digital accountant does the block verifications, and the data is then broadcast on the blockchain. A consensus is only ever achieved when two-thirds of the network nodes agree with a bookkeeper’s version of the blockchain.
An added advantage of the dBFT mechanism is that it is fast; being capable of handling more than 1000 transactions a second. Impressively, there is also a planned upgrade to 10,000 transactions a second in the near future.
Key 3 Selling Points of NEO
It currently has many influential partnerships with prominent companies such as Alibaba, Microsoft, and HyperLedger. These partnerships are inspiring confidence in the NEO cryptocurrency and network. Neo is steadily growing in user esteem. Additionally, the platform is set to establish close cooperation with the Chinese government, which will allow them a large share of the Chinese market once cryptocurrencies are entirely legalised in the country.
Its Smart Economy
Possibly the most significant selling point is their smart economy. This feature is wholly different from what other cryptocurrencies offer. When utilising the smart economy, it’s possible to digitise physical assets onto the NEO blockchain. Incredibly, anyone can register an asset and benefit from the smart economy aspects that include traceability and transparency. However, this is only possible through digital identities, powered by a system known as Public Key Infrastructure.
NEO GAS Rewards
One of the key benefits that the cryptocurrency offers is in the form of GAS rewards. Every time a new block is made, users are rewarded GAS, and this will continue occurring until GAS reaches its market cap of 100 million coins. When this happens, holders of NEO will be rewarded with a portion of the transaction fees.
Is NEO Worth the Investment?
The uniqueness of NEO is drawing a lot of attention to it, and as a result of this attention, the digital currency is gaining momentum on crypto markets. The platform is attracting investors and traders alike due to its capability of creating a smart economy. As with most cryptocurrencies, NEO has experienced many market highs and lows over the last few years.
The year 2020 has been an exceptional year for cryptocurrencies, and NEO isn’t an exception to this. Market volatility is typical amongst crypto asset trading, and as such, NEO is projected to be more stable in the long term, offering some great potential for investment.
Due to this, more and more people are beginning to wonder if they should invest in NEO. Digital currencies are expected to continue growing into the foreseeable future, but they are risky endeavours to invest in. This is why it’s very important for those wishing to begin investing in cryptocurrencies to do their market research first.
Frequently Asked Questions
Cryptocurrencies are known to be volatile, and as such, no cryptocurrency is 100% safe. However, NEO is relatively safe in that it doesn’t have any third party involvement.
The NEO cryptocurrency tokens are used to stake and produce the GAS tokens, which are utilised on the NEO network.
Due to NEO linking with the Onchain network, they can create an optimal governance scenario. This makes interoperability that allows the networks to extend the NEO platform to new heights and leverage development across the network.
It’s goal is to provide a framework for the digitalisation of real-world assets and to make this accessible to everyone.
The token is a digital currency and is not real money in the same sense that fiscal currency is.
Simply stated, think of the NEO token as the company’s stocks and the GAS as the dividend.
You can buy the NEO cryptocurrency on a number of different exchanges. You can find a list of those we personally recommend on our exchanges hub.