Industry leader, Ethereum (ETH) and their associated Ether cryptocurrency, brought the idea of the smart contract to life. Smart contracts use blockchain technology to execute commands at a predetermined time and date. This allows for the creation of an entire ecosystem of decentralized applications or dApps. Much as web applications operate on central servers rather than client side, dApps run on the blockchain itself. Ethereum and their ERC20 token standard were the first to market with this functionality.
However, recent newcomer NEO (Previously Antshares) aims to upgrade the decentralized application ecosystem. Ethereum follows in Bitcoin’s steps as a decentralized coin, uncontrolled by any true central authority. NEO (NEO), however, is inherently centralized. Consensus nodes, or ‘bookkeepers’ in NEO terminology, must hold a large amount of NEO in order to validate their status. In this way, consensus is kept to a smaller, more elite block of users. As the investment to achieve bookkeeper status is high, it theoretically prevents malefactors and bad actors from hijacking the blockchain.
The Benefits of GAS Dividends
Every unit of NEO is indivisible and generates a specific amount of the GAS sub-token. Where many of the legacy blockchains like Ethereum use their native currency for transaction fees, NEO chooses to use GAS instead. NEO is in finite supply – the NEO Council pre-mined 100 million and do not intend to create more. As GAS is created indefinitely, and traded separately from the main NEO currency, it makes the perfect fuel for user transactions.
GAS creates an incentive for bookkeepers to hold NEO – their investment acts as a Proof of Stake. Transactions are processed at these nodes, and a percentage of the fee is kept by the bookkeeper. This creates an environment where bookkeepers benefit from their status in two ways. First, their own NEO produces GAS at the fixed rate. Second, their work in validating transfers pays them even more GAS over time.
Recent Projects on the NEO Platform
While Ethereum ERC-20 standard projects are announced frequently, NEO’s NEP-5 token standard is rapidly gaining ground in the smart contract space. Coins like DeepBrain Chain and Red Pulse adopted this standard early and avoided the pitfalls of direct connection to Ethereum. Guardium, an ambitious decentralized emergency response application, recently announced their adoption of the NEP-5 standard.
Perhaps the most important aspect of NEO is the tacit approval of the Chinese government. Notoriously mercurial on the subject of cryptocurrency, China has still viewed the NEO project favorably. They have been present at state sponsored blockchain conferences, and seem perfectly willing to sacrifice some level of decentralization for the ability to operate within China.
Article By: Adam Stone