What Is NEO?

NEO is a smart contract blockchain platform designed to build a smart economy that uses smart contracts to automate digital asset management. The goal is to fully digitize assets and identities to improve the quality of life for everyone. NEO has two native tokens, NEO and NEO Gas. NEO is used to establish ownership and management roles in the blockchain, while NEO Gas is used to pay for transactions on the blockchain.

Key Takeaways

• NEO is designed to automate digital asset management through smart contracts.
• NEO has two native tokens, NEO and NEO Gas.
• NEO defines a smart economy as one that uses smart contracts to manage and secure digital identities and assets.

What Is The History of NEO?

In 2014, Da Hongfei and Erik Zhang founded NEO (originally known as AntShares) as a decentralized platform for digital assets and smart contracts¹. The project aimed to address the limitations of Bitcoin and the leading smart contract blockchain, “Ethereum,” by combining the security and stability of a public blockchain with the flexibility and programmability of a smart contract platform.

In 2016, NEO underwent a significant upgrade, introducing the dBFT (Delegated Byzantine Fault Tolerance) consensus mechanism, which significantly improved its scalability and transaction processing speed. The rebrand to NEO in 2017 further solidified the project’s focus on smart contracts and digital asset development.

In 2022, NEO continued to expand its reach globally, establishing partnerships with major cryptocurrency exchanges and financial institutions. The project also launched several initiatives to promote blockchain adoption in various industries, including supply chain management and healthcare.

In 2023, NEO further enhanced its capabilities with the introduction of a new smart contract platform, NeoVM², and a decentralized governance mechanism, NeoConsensus. These upgrades aim to streamline the development and deployment of DApps on the NEO blockchain while also ensuring greater decentralization and autonomy for the NEO community.

How Does NEO work?

NEO is a blockchain platform that utilizes a hybrid consensus mechanism known as dBFT (Delegated Byzantine Fault Tolerance). This mechanism combines the efficiency of Proof-of-Stake (PoS) with the security of a Byzantine Fault Tolerance (BFT) consensus algorithm³.

dBFT Consensus Mechanism

In dBFT, a group of elected validators, known as consensus nodes, work together to reach consensus on the state of the blockchain. Each consensus node stakes a certain amount of NEO, which acts as collateral to ensure their commitment to the network’s security. To form a block, a consensus node must propose a block header containing transaction data and cryptographically prove its validity. The proposed block is then sent to the other consensus nodes for verification. If a majority of the consensus nodes approve the block, it is added to the blockchain.

Key Features of dBFT Consensus

• Scalability: dBFT can handle a significantly higher transaction volume than PoW consensus mechanisms due to its consensus nodes only needing to communicate with each other rather than the entire network.
• Security: By combining PoS with BFT, dBFT ensures the security and stability of the NEO blockchain, making it resistant to Sybil attacks and other potential threats.
• Efficiency: dBFT consensus is relatively energy efficient compared to PoW consensus, as it does not require miners to compete for block rewards.

What Are The Use Cases Of NEO?

Digital Assets

NEO supports digital assets that are not only digital property but also physical assets tokenized by transferring their value to the blockchain and having it issue a token for each asset. Tokenization creates a decentralized, trustworthy, traceable, and transparent manner for asset management, free of intermediaries and associated costs. Users can record, buy, sell, exchange, or circulate various assets. NEO also supports asset protection because they are registered on its platform, giving them a validated digital identity and security.

Digital Identity

NEO uses the Public Key Infrastructure standard as a guide for managing identities by creating encrypted private and public keys used to verify identities. Digital identities can be verified using facial recognition, fingerprints, voice, SMS, and multi-factor identification methods.

Digital identity enables verifiable key information about participating individuals, organizations, and other entities that exist in the digital context. Securing individual information through blockchain, consensus mechanisms, and encryption methods is essential as our lives become more digital.

Smart Contracts

NEO supports smart contracts, which are codes that automatically execute transactions and agreements between different parties. Smart contracts remove the requirement for third-party involvement because transfers are automatically completed. Using these contracts, developers build dApps on NEO with various value propositions.

NEO and NEO Gas are not minable cryptocurrencies. There will only be 100 million NEO, 50 million of which went to fundraising supporters, and the remaining 50 million are for developers, cross investments, and contingencies⁴. NEO Gas is awarded for blockchain work and transaction fees.

What Are The Tokenomics Of NEO?

NEO has a maximum supply of 100 million and a circulating supply of 70 million as of January 2024, according to data from CoinGecko⁵. It currently trades for $13.83, which is a 93% discount on its all-time high price of $198. Its primary use cases are the following:

1. NEO holders can participate in network decisions.
2. NEO holders can earn GAS rewards by staking their NEO.
3. NEO supports the creation of digital assets.
4. NEO’s NeoVM enables the development and execution of smart contracts.
5. The NeoX sidechain technology allows NEO to interact with other blockchains.

How Has NEO (NEO) Traded In 2023, And What Is The NEO Price Prediction?

NEO has performed relatively well in the past year, with 115% in gains, according to TradingView⁶. Early in 2023, NEO rallied above $10 for the first time in several months before crashing back down below $8 in October. Despite the volatility, NEO managed to end 2023 on a positive note, with a massive rally from $7 to $13.

Coincodex⁷ has issued a very mixed forecast for NEO, which doesn’t provide much clarity. Their lower price targets for the next three years are around $11, while some of their high targets are above $15.

Changelly⁸ is bullish on NEO, with an average price target between $17-20 for 2024. They see NEO trading above $20 in 2025 and possibly reaching $35 by the end of 2026.

Remember that crypto prices are extremely volatile, and you should always do your own research before risking your capital. Nothing in this post should be considered as financial advice.

Final Thoughts on NEO

NEO is a promising blockchain platform with a number of strengths that make it a potential contender in the broader blockchain ecosystem. Its dBFT consensus mechanism provides scalability, security, and efficiency, while its dual-token design separates governance from utility, offering a transparent and well-defined incentive structure.

The NEO ecosystem is further bolstered by the NeoVM for smart contract execution, NeoX for cross-chain communication, and a growing community of developers and users. NEO has proven itself as a functional blockchain, and its token has enjoyed some success, but the ecosystem is still very small compared to competitors like Ethereum, Solana, and Cardano.

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