What is NEO? Comprehensive Beginner’s Guide 2019
Introduction to NEO (Antshares)
NEO, formerly known as Antshares, is one of the most significant projects in the industry. Given the moniker ‘China’s Ethereum killer’ at the height of its popularity, NEO is a community-driven project with the aim to create a distributed network for the smart economy. By utilizing blockchain technology and combining it with digital identities, NEO manages to create digital assets that are transparent, decentralized, and most of all, free of control by 3rd-parties.
According to data from CoinMarketCap, NEO hit an all-time low of $0.07 in October 2016 and reached an all-time high of $196 in January 2018.
Buying NEO on Binance – Step-by-step
Purchasing NEO is as easy as acquiring any other cryptocurrency. However, as NEO lacks a fiat pair, you will require a custom amount of bitcoin on your Binance account.
Before registering on Binance, make sure that the platform supports the country in which you are located. Registering on Binance is as easy as registering on a social media platform. After creating your account, you will need to verify it by accessing the link sent to your email.
When logging in for the first time, you will be greeted by a pop-up window advising you to set up either a 2FA or SMS authentication system. Both are optional but are generally recommended for additional protection.
After that, you can raise your deposit and withdrawal limit by going through the usual KYC (Know-Your-Customer) process. The KYC process involves sending pictures of your selected identification documents, after which your account will be verified.
Immediately after you have fully set up your account, and successfully deposited your bitcoin holdings, access the Binance exchange, which is located in the top left corner.
Note that there are two options: ‘Basic’ and ‘Advanced.’ They only differ in design, offering two kinds of user interfaces.
Once you have accessed the exchange, type NEO in the search bar located on the right and select the NEO/BTC pair. After selecting it, you will gain a full view of the price, volume, and buying options.
Located directly under the graph, you have the options for buying and selling NEO. Depending on what kind of order you want to make, you can make a: Limit order, Market order, Stop-limit, and OCO.
For starters, you will either want to make a limit or a market order.
Limit orders are made for situations where you want to choose for what price (in BTC) you wish to buy one token. After typing the desired number, you can select how many NEO tokens you want to purchase after which you click the ‘Buy NEO’ button.
The same is done with market orders, with the exception that the order will get instantly filled at the newest price. Keep in mind that it takes time for the transactions to complete; you may not immediately see your newly acquired NEO.
NEO’s History
Launched in 2014 under the name Antshares (ANS) and developed by Da Hongfei and Erik Zhang, NEO is China’s first open-source blockchain project. After a mass influx of interest by domestic companies, Da Hongfei and Erik Zhang went on to create ‘Onchain’ in the same year.
NEO’s parent company, Onchain, is a blockchain technology company that developed the Decentralized Network Architecture (DNA). The technology in question paved the way for creating both private and public blockchain networks.
While Onchain is a private company that works closely with the Chinese government and other international companies, NEO is a community-driven platform that focuses on creating an innovative and functional smart economy on which decentralized applications (dApps) can thrive.
NEO’s open-source code was officially published in June 2015 on GitHub, allowing developers to actively contribute to the project. In April 2016, the project released a new whitepaper that introduced an entirely new consensus algorithm, the ‘delegated Byzantine Fault Tolerance’ (dBFT).
The new system was a novelty at the time, considering that most projects relied on Proof-of-Work (PoW) and Proof-of-Stake (PoS). dBFT introduced a far more efficient way to keep undependable contributors off the blockchain network, in contrast to PoW and PoS.
Participants and NEO holders have the option to support a group of so-called ‘bookkeepers.’ After a group is elected, they can use the dBFT algorithm to generate blocks and reach consensus. One of dBFT’s main features is that all decisions are final.
Neither hardforks nor softforks can be created after a decision is made, meaning that alternations to NEO’s previous blockchain changes aren’t possible.
While the ingenuity was profoundly commended, a part of the crypto community criticized the new algorithm due to its finality. A key argument was that the new algorithm hurt the decentralization aspect of NEO. For the consensus model to be a success, the network needed a more significant number of nodes to remain genuinely decentralized. However, at the time, there were only seven active nodes (bookkeepers).
On October 2016, Erik Zhang and Da Hongfei announced the release of NEO’s main net. NEO’s genesis block, the first block created in a network, released 100 million NEO coins. Although the GAS tokens were already implemented, they weren’t pre-mined but generated later on instead.
Since there are 100 million NEO coins, the same amount of GAS tokens will be generated through a decay algorithm in a 22-year timeframe. The tokens are generated by making transactions or creating smart contracts, which use the tokens as fuel (similar to Ethereum’s system).
In an effort to improve their brand and become more appealing to companies outside China, Antshares was officially rebranded into NEO in June 2017. The change occurred within a conference at Microsoft’s HQ in Beijing. Based on the Greek prefix, the company attempted to provide a new modern look.
Later on, Onchain declared that they are going to organize a distribution event. In March 2018, one ONT (ontology) token was given for every 5 NEO coins that users held. The additional tokens are used for further governance issues, such as voting on system changes, verifying identities and other related problems.
Ontology is another product created by developers Erik Zhang and Da HongFe in 2017. The project differentiated itself by holding no ICO (initial coin offering), instead, all tokens were airdropped to a variety of cryptocurrency enthusiasts, including NEO holders.
In a blog post published on the 10th of July 2018, NEO 3.0 was announced. According to the post, the upgrade’s development began in the second quarter of 2018. Main developer Erik Zhang revealed that the upcoming changes will bring an ‘entirely new version’ of NEO.
The update will deliver greater performance for the use of large-scale enterprises.
Their ambition is in return supported by better pricing models, an optimized economy, and higher TPS rates. Most notably, the greatest difference could be seen in the project’s new tokenomics. In the version, NEO coins would be divisible, and the amount of supplied GAS tokens per year would be increased. Additionally, decimal parts of the GAS token could be used for paying transaction fees.
On 4th of April 2019, the project released a new blog post concerning the future of NEO 3.0. The post provided users with an updated roadmap. While a sizeable part of new technologies will be integrated into NEO 2.0 till the end of the year, only bug fixes are applied later on. However, NEO 3.0 will enjoy a wide set of new technologies both in 2019 and later on, including NeoVM, NeoFS, NeoID, and NeoContract.
NEO’s Technology
NEO is a project known for its wide variety of technologies and features. Most of the features that we are going to list are part of NEO 3.0, and will eventually be integrated into the project throughout 2019.
Consensus mechanism
The project’s most unique feature is their original consensus mechanism named ‘Delegated Byzantine Fault Tolerance’ algorithm. Serving as an upgrade from PoS, the new mechanism allows participants to vote for bookkeepers (nodes) and create new blocks by reaching consensus. The notable part about this mechanism is that voting is done constantly, in contrast to voting on fixed dates.
Creating blocks takes between 15 and 20 seconds, with a TPS rate of up to 1,000. Although not too high, NEO has a major advantage in terms of transaction throughput when compared to first-generation blockchains like bitcoin, which is only capable of doing seven transactions per second.
Additionally, all bookkeepers on the NEO blockchain have a digital identity which can be tracked. One of the main concerns behind the decision to implement digital identities was the need for regulatory compliance. Bookkeepers who are facing judiciary issues can have their node stopped, or have the ownership of the node transferred to a different individual or entity.
Smart contracts
Smart contracts are a vital part of the NEO platform. The system for creating, running, and managing smart contracts is divided into three parts:
Interoperable Services
Interoperable services are used for loading digital assets, blockchain ledgers, digital identities, and other critical services. Interoperable services act as virtual machines, serving as a link between smart contracts and services at a fast speed.
NeoVM
NeoVM is a virtual machine, acting as a virtual CPU that reads and executes information and instructions found in smart contracts. The VM software can be ported to both blockchain and non-blockchain system, increasing the overall flexibility for smart contracts.
The efficiency of NeoVM can further be increased by introducing a real-time compiler. Furthermore, the software is specially designed for low-intensity operations such as running smart contracts.
DevPack
DevPack is the programming compiler and IDE (integrated development environment) plugin used to maintain smart contracts. With this tool, developers who create applications on the NEO platform have an easier time creating smart contracts, as NeoVM has an architecture similar to .NET Runtime and JVM. In return, the DevPack compiler can convert .NET MSIL and Java byte code in NeoVM’s instruction set.
With the mentioned feature, developers don’t have to learn an entirely new programming code but can rely on their knowledge of Java, Kotlin, C#, and other languages.
NeoFS
To be implemented in Q1 2020, NeoFS is a storage platform for keeping decentralized objects. In a general sense, the feature is used for storing Dapp data, and can additionally be used as a CDN (Content Delivery Network). Furthermore, NeoFS has applications in storing significant quantities of undefined IoT data, with the possibility to create storage systems for small and medium-sized enterprises.
NeoFS can furthermore be used to optimize the reward system for smart contracts, by hosting data on nodes instead of the blockchain network itself. Creating and running smart contracts can also be optimized in terms of costs.
NeoID
Expected to be implemented around Q1 2020, NeoID will serve as a protocol for storing digital identities of individuals, organizations, and entities within NEO’s blockchain network. By ensuring that each participant’s identity can be verified, NeoID increases the project’s trust and security, a defining aspect of the future smart economy.
NeoID is divided into three parts:
- Privacy model (outlines the privacy protection system for users)
- Trust model (outlines ‘rules of trust’ within the network)
- Game model (outlines the benefits for participants and possible penalties on unwarranted actions)
NEO Economy
According to the project’s whitepaper, the economic model consists out of two parts:
- NEO (a coin based on its own native blockchain)
- NeoGAS (a token abbreviated as GAS).
NEO coin
The NEO coin allows participants to manage the blockchain network. NEO allows voting, consensus agreements, and other mechanisms for managing the blockchain. In April 2016, the project released an original new consensus algorithm named ‘delegated Byzantine Fault Tolerance’ (dBFT)
The dBFT model introduced a new system for managing blockchain networks. At the time, most projects used Proof-of-Stake (PoS) or Proof-of-Work (PoW) models for consensus. However, dBFT established a system where unreliable participants can be removed from the network.
With NEO coins, holders can vote for specific groups of ‘bookkeepers,’ generally called nodes in other projects. By electing a bookkeeper group, participants can use the consensus-reaching algorithm to create blocks and make changes. Another notable feature of dBFT is that all decisions are immutable.
NEO’s innovative piece of technology was praised in the industry. However, a part of the crypto community was discouraged by the algorithm because of the finality of decisions. At the time of introducing dBFT, the network only had seven working nodes (bookkeepers).
For NEO to remain a truly decentralized project, it would require far more nodes to maintain that aspect.
The minimum amount of NEO coins that can be sent to another wallet is one NEO. Although the coin was historically indivisible, the coin can be divided into smaller parts starting from the release of NEO 3.0. The maximum amount of NEO coins on the network is 100 million coins. At the moment, 70 million coins are circulating in the market.
GAS token
Similar to Ethereum’s fueling mechanism, NEO also has a fueling token used for resource control. The maximum number of GAS tokens is 100 million tokens. Users pay transactions and create contracts with the help of the token. In return, the network can automatically allocate resources and set priorities for transactions. The minimum unit of the token is 0.00000001.
GAS tokens are not pre-mined. The original genesis block, the founding block of blockchain networks, contained 100 million NEO coins. Corresponding to the set amount of NEO coins, GAS tokens are generated over the years using a decay algorithm.
Distribution mechanism
From the total supply of 100 million NEO coins, 50 million of them are already distributed to holders who have supported the project in its early phase, before running their initial coin offering. The other 50 million coins serve for maintaining the platform. Held by the NEO council, they were locked out by the developers until 16th October 2017.
On the other hand, GAS tokens are distributed with the creation of new blocks. Blocks are on average created after every 20 seconds, generating up to two million blocks annually. By the team’s estimation, all 100 million tokens will be generated in 22 years. However, the team will reduce the production of GAS tokens every year and after every token has been generated, no additional tokens will be created.
The original whitepaper states that only 16% of GAS tokens are to be generated during NEO’s initial year. Afterward, 52% of tokens will be released during the next four years. After the project’s first 12 years, 80% of the token supply will be released.
NEO’s Future Plans/Developments
With a strong development team behind it, NEO is one of the few older projects that receive regular updates. Announcing a complete overhaul, lead developer Erik Zhang released a roadmap update concerning NEO 3.0.
According to the post, the new platform version was created with the objective to increase the project’s scalability for large-scale commercial applications. Aside from scalability, other aspects such as stability, security, TPS rate, and a new optimized system for smart contracts was also announced.
Zhang stated that governance is a major part of the update, recognizing its importance concerning blockchain adoption in the long-term. Partnering with individuals from the industry, academia and the crypto community, Zhang explored different ideas that could potentially be implemented, including liquid democracy.
A major part of the 3.0 update is planned to be implemented throughout different quarters of 2019 and will continue in 2020, with the 3.0 mainnet launched during Q2 2020.
The new version will implement a new consensus mechanism as well, upgrading the ‘Delegated Byzantine Fault Tolerance’ system. dBFT 2.0 includes a recovery system that would, according to the developers, greatly improve upon the stability of the network. If a node failure were to occur, the entire network could be swiftly recovered.
The pricing model (token economy) will also be improved upon. As of now, the use of smart contracts on NEO’s blockchain is limited in nature due to the high cost of creating and maintaining them. Because of the high cost, which is mainly contributed to GAS fees, Zhang noted that developers are reluctant to develop dApps on the NEO ecosystem.
In the future version, the pricing model for setting up and running smart contracts will be improved to increase the number of dApps and dApp developers on the NEO platform.
In the same post, Zhang announced the implementation and updating of several new technologies, including:
- NeoVM (Virtual machine for running smart contracts)
- NeoFS (Decentralized object storage system, mainly for dApp data)
- NeoID (For creating digital identities of individuals and entities within the blockchain)
Overall, the process of updating the platform is planned to be finished by the second quarter of 2020. However, Zhang warns that the final release may be delayed up to several months as the development team seeks to focus on NEO’s security and stability.
NEO Community
Although NEO started small, the community of this cryptocurrency increased in size over the years. Similar to Ethereum, NEO is a community consisting out of builders, developers who focus on improving the project and searching for new possibilities, instead of making the price the center of their attention.
During DevCon 2019, the project held its most popular convention for developers. The focal point of the convention, held in Seattle, was the 3.0 update. Additionally, core developer Zhang announced the release of a new second layer solution, similar to bitcoin’s lightning network.
NEO has several communities all across the world. Some of the most popular ones include the ‘City of Zion,’ known for being the oldest developer community of the project. Their importance became known early on. By the time NEO’s whitepaper was released, the project was searching for translators who could translate the highly-technical document. However, the City of Zion has already fully translated the document, which became the first step for cooperation.
Coming from Latin America, NeoResearch is the most significant NEO development community in the region. The team, who was searching for a compiler which they could use for an Ethereum project, became deeply interested in NEO after coming across their C# compiler. Further on, they continued working on NEO to the point of creating NeoCompiler, an online compiler for Neo as the name implies.
As for their home region, NEL is the oldest dev community in China. Led by Li Jiangying and Liu Yongxin, the developers worked closely on NEO’s ecosystem before even founding NEL. The dev team became one of the most influential contributors, establishing a vibrant community in China.
Although the contributors listed above are not the only NEO communities, they are one of the most significant groups that helped with developing NEO early on.
NEO FAQ
What is the difference between NEO and GAS?
The main distinction between the two is that GAS serves for paying transaction fees and creating smart contracts. NEO, on the other hand, serves for governance issues and reaching network consensus. GAS tokens are generated with the creation of new blocks and had an initial supply of zero. NEO coins were pre-mined, with 50 million coins out of 100 released to early contributors and investors.
Can I earn GAS tokens?
GAS tokens can be earned if the user holds his NEO assets on a personal wallet. Unlike Binance, most exchanges keep the tokens instead of sending them to wallet holders. The most popular wallet that rewards users with GAS is NEON.
Is NEO mineable?
Since all of the coins are pre-mined by the development team, mining NEO is impossible. NEO’s consensus algorithm is similar to Proof-of-Stake (PoS), with holders being rewarded in GAS tokens for owning NEO and verifying transactions.
Are NEO coins divisible?
In NEO 2.0, the economic model doesn’t allow you to divide NEO coins into smaller parts. However, the project announced that the new token model in version 3.0 would allow users to send portions of coins, in an attempt to improve scaling issues.
Is NEO a coin or a token?
There is a major difference between coins and tokens. While coins are cryptocurrencies which have a native blockchain, tokens are digital currencies who rely on the network of another crypto project. Just like Ethereum, NEO has its own blockchain on which other dApps and currencies can be built., making it a coin.
NEO Links & Materials
Our NEO news archive can be found here: https://cryptoritter.com/category/neo-news/
A short intro to NEO as a video can be found below:
Official Neo Website: https://neo.org/
Official NEO Twitter Account: https://twitter.com/NEO_Blockchain
NEO Reddit: https://www.reddit.com/r/NEO/