What is Neo?

NEO is a popular blockchain and cryptocurrency, that has a lot of potential according to experts. Even the Chinese government is supporting the use of NEO. But what is NEO, and how does it work? We will explain you what NEO is, why it has a lot of potential and how you can start using NEO.

So, NEO is based on smart contracts. By this way, they want to improve the transfer from traditional assets to digital assets. The assets would be decentralized, and the transfer will be done by the smart contracts. Because it can digitalize traditional assets, it will offer a lot of security for businesses that are using it. This will lead into, as the developers of NEO call it, a smart economy. The smart economy of NEO will enable businesses and consumers to transfer digital assets on a secure way by using smart contracts. The blockchain has also two tokens, called NEO and GAS. There are only 100 million NEO tokens and there won‘t be produced any more. These tokens are for sale. GAS tokens are used to perform transactions and support dApps.

A block in the blockchain can contain a so-called smart contract. A smart contract is in fact a contract, stored in the blockchain. This contract is a computer code, which can execute the code by itself, regarding the agreements that has been set between 2 or more parties. The biggest advantage of smart contracts is the safety; it‘s immutable because it‘s on the blockchain. The code cannot be changed because all computers in the blockchain network would notice. It will create a lot of trust between parties. Because of smart contracts, there is also no need of third parties anymore, because nobody has to check if people are honoring existing commitments; the code will execute if the agreed input has been set. The contract is also incorruptible, and that would be the perfect solution for corrupt governments.

Every blockchain is using a consensus algorithm. NEO is using the Delegated Byzantine Fault Tolerance (DBFT) algorithm. This algorithm is almost similar to the Proof of Stake algorithm. It is not possible to mine NEO. There are only 100 million NEO tokens, and so it would not be possible to mine any more. But as it is using a similar variant of the Proof of Stake algorithm, participants are able to ‘stake‘ NEO and earn GAS. By staking your tokens, you can validate transactions of others.

NEO is sometimes called as the Ethereum of China. This is because of the strong connection between NEO and the Chinese government. The Chinese government wants to be the leader in the blockchain industry using NEO. And because NEO has a lot of the same specifications as Ethereum, it is called the Chinese Ethereum. The difference between Ethereum and NEO is that NEO is supporting programming languages as Java, Kotlin and C#, while Ethereum is only supporting its own language called Solidity. NEO can be used by a lot of developers, what is exactly what the Chinese government wants them to do. Because of that, NEO has a lot of growing potential. Ethereum does, on the other hand, not have this potential, as developers first have to learn Solidity before they are able to use Ethereum as a tool.

There are several advantages of NEO. As already has been said, NEO is supporting the smart economy by improving the chance from traditional assets to digital assets. This will create more safety for businesses and consumers that want to use contracts without third parties. NEO can also support a lot of transactions; 10.000 per second. This is a big advantage in contrast to Ethereum, that only can process 15 transactions per second. For your interest, Bitcoin can process 4.6 transactions per seconds. This amount of transactions per second creates a lot of potential for NEO. Another advantage of NEO is that it is supported by the Chinese government and big companies as Alibaba. This support says a lot about the opportunities NEO is been given. Although this can also be a disadvantage, as it can decrease the sovereignty of NEO, as a lot of big companies and governments benefit when NEO is doing what they want. The last advantage of NEO is that is, in contrast to Ethereum, possible to use it with a lot of different programming languages. This makes NEO really attractive to lots of developers.