NEO?! Uhm.. It is a next generation smart economy platform (formerly Antshares) and means new and young in Greek. NEO has had a monumental rise to fame and most know NEO for its explosive growth. However, when you look under the hood there is a lot to discuss. Called the “Chinese Ethereum” NEO has a lot of hype but, does it live up to it?
Law as codeFirst, let’s discuss smart contracts. According to Black’s law dictionary, a contract is: “An agreement, upon sufficient consideration, to do or not to do a particular thing.” Sounds simple right? Contract law is a deep rabbit hole that spans a myriad of offshoots which many dedicate their lives to but there is one key shift in this digital age, the law is now programmed code. In the US, the ESIGN act passed federally in 2000 which legalized the use of digital signatures as a legally binding construct. In China, a similar contract law and legal use of digital signatures were put on the books in 2007. This means the legal system now has a bridge with the digital realm and opens a plethora of new opportunities for digital contracts.
Meet Smart Contracts – a digital, borderless and trust-less new way for two or more parties to interface.Contracts govern an agreement between two (or more) individuals and/or parties. If X occurs then Y is provided. If X does not occur, here is Z recourse. This ties in quite nicely with the conditional programming structure in computer science where “if-then-else” expressions can easily be built around traditional contract law in effect making law into code. If-Then-Else Diagram Digital keys and signatures are the new pens inking their presence on digital (used to be paper) contracts. Contracts that have now been coded and re-imagined in a new way for the digital age through platforms like NEO.
The NEO system includes:
- Delegated Byzantine Fault Tolerance (DBFT) algorithm – This is a consensus mechanism (instead of the traditional proof of work/stake) that allows the system to resist the Byzantine Generals problem and maintains consensus even if some nodes bare malicious intentions
- NeoX – This system will create the ability to execute and operate across various Blockchains
- NEO Contract – Is the mechanism for creating smart contracts seamlessly in scalable, high performance environments that integrates pre-existing codebases (e.g. C#, VB.Net, F#, Java, Kotlin)
- NeoFS – This is a service which allows decentralized storage (like a peer to peer Dropbox)
- NeoQ – A lattice-based cryptographic mechanism which creates problems that cannot be solved by quantum computers and ensuring being quantum-proof
How is NEO different than Ethereum?NEO supports many additional code bases (e.g. C#, VB.Net, F#, Java, Kotlin) while Ethereum has it’s own proprietary language called Solidity, which requires developers to learn that before any development can take place. This means a longer learning curve and barrier to entry which could hinder the number of developers that can enter the ecosystem.
Critiques concerns and weaknessesNEO essentially has a 100% pre-mine as well as proof of stake model which allows users to derive additional coins (in the form of GAS) by holding them in a wallet. NEO “distributed” coins through a crowdfunding event which allowed people to invest but, NEO still made money from the sale. Since there was no mining and only issuance of tokens this greatly centralizes the distribution. As mentioned in our previous article, NEO was divided into two batches: 50 million which were sold via crowdfunding (and given to early contributors) while 50 were reserved to be “managed” by the NEO Council. The “lock out” period ended on October 16, 2017 releasing funds for use for development and other purposes:
- 10 million NEO go to NEO developers and NEO Council members
- 10 million NEO as incentives for developers in the NEO ecosystem
- 15 million NEO invested in other auxiliary Blockchain projects used by NEO
- 15 million NEO earmarked for “contingencies”