What is NEO?
According to the NEO website, NEO is a “non-profit community-based blockchain project that utilises blockchain technology and digital identity to digitise assets, to automate the management of digital assets using smart contracts, and to realise a “smart economy” with a distributed network.”
NEO’s main goal is to be the distributed network for “smart economy.” As stated on their website, the smart economy consists of 3 components: digital assets + digital identity + smart contract = smart economy.
NEO and Digital Assets
A digital asset can be loosely defined as anything that exists in binary format and with the right to use. The “right to use” is a critical quality for a digital entity to be considered as a digital asset.
With the emergence of the blockchain, it has become more secure to own digital assets. The blockchain technology makes the digitalisation of these assets decentralised, safe, trustworthy and free of middle men.
In NEO, there are two forms of digital assets. First, global assets are recognised by the whole system and can be identified by all smart contracts and clients on the NEO network.
The second form of digital assets in the NEO smart economy are contract assets. Contract assets are assets that are only recognised in their specific contracts and cannot be used in other contracts. Thus, they are limited to their own contractual agreements, similarly, Ethereum smart contracts can only use ERC20 tokens.
NEO Blockchain and Digital Identity
Identity verification in the NEO smart economy will be done via fingerprints, voice recognition, face recognition and other multi-factor methods. The trustworthiness of the digital identity is integral to the success of the digital assets on the NEO blockchain.
NEO Blockchain and Smart Contracts
Similarly to the Ethereum Network, NEO has implemented smart contracts. This means that the NEO smart economy will have self-executing contracts with specific instructions embedded in the code that execute only when the conditions are met.
How does the Neo smart economy work?
NEO is the fuel token for the control of resources of the NEO network, with a total maximum limit of 100 million. The tokens are divided in two parts. The first part is 50 million tokens distributed proportionally among NEO supporters during fund-raising. The second half is operated by the NEO Council to support long-term development of NEO, its operation and maintenance, and its ecosystem.
The holders of NEO tokens are the owners and managers of networks. The management of the network is done through voting on the network. NEO tokens can also be traded, however, it is important to note that the NEO tokens are indivisible.
Moreover, holding NEO generates GAS. GAS for NEO serves a similar purpose as Ether for Ethereum. The main difference between the two is that GAS was given its own special status as a Token. GAS is used to operate within the NEO network and suite of services.
In a nutshell, NEO is a smart contract ecosystem that allows users to automate the storage and exchange of digital assets. In order to compete with more established smart contracts implementations, NEO takes advantage of evolving technology and cooperation with Chinese authorities towards the stated goal of a “smart economy.”