Beginner’s Guide to the NEO Blockchain Network

The cryptocurrencies’ extreme fluctuations make it a risky investment

Long-term investment options in the highly volatile crypto market are hard to come by. The cryptocurrencies’ extreme fluctuations make it a risky investment; however, there are cryptocurrencies that are predicted to go on a stable growth despite the volatility of the crypto market. One of these cryptos is NEO, a cryptocurrency platform created in China that is known for being a heavily crypto restricted country. For this reason, many experts believe the ability of NEO to emerge as the chosen crypto of China is an indication of its potential to be an altcoin preferred by investors even in crypto-restricted countries.  

Suppose you want to know more about NEO. In that case, this article will explain why NEO emerged as a cryptocurrency backed by the Chinese government despite being heavily opposed and doubtful of the cryptocurrency market, as well as the reasons why you should invest in NEO. 

What Is NEO?

NEO was launched in China in 2014 under the name AntShares by Da Hongfei and Erik Zhan but was later named NEO in 2017. Neo is dubbed as the “Chinese Ethereum” for it has features similar to the Ethereum network, although it has its distinctions too. NEO started gaining popularity when the Chinese government that is very much concerned about the financial regulations of cryptocurrencies expressed its favour to the NEO platform. 

NEO is a blockchain-based platform and supports its own crypto of the same name, which aims to automate the management of digital assets through developing digital assets and utilising smart contracts. It is further aimed at building a distributed network-based smart economy system. 

NEO and Ethereum platforms have been compared due to their similar features of having their own native currencies, developing decentralised applications (DApps) in the platform, and executing complex smart contracts as well as the use of Initial Coin Offering (ICO), is a form of project financing through raising funds for the project through unregulated crowdfunding. 

As mentioned, the two cryptocurrencies have a lot of similarities, but there are also definite distinctions. Let’s put focus on the NEO platform’s unique features. NEO has its oracle system feature, which is used to feed and link external information into its own decentralised file storage system. This feature serves as the bridge of the data in the NEO platform’s blockchain to the outside world data, which are then used to develop more DApps in the NEO platform. These data analysed through combining the NEO blockchain-based data and external data can be interpreted and come in many forms such as price information, payment transaction of a company, and even measure of temperature or even rain or flood. Thus the extent of the potential DApps to be developed is huge.  

One of the one-of-a-kind features of NEO which makes it stand out is its energy-efficient governance system called Delegated Byzantine Fault Tolerant (dBFT). The dBFT system allows NEO users who are holders of the NEO tokers to vote and participate in large-scale consensus voting. This feature determines whether the project in the NEO network system will be approved and be granted funding or investment by the other users. 

The dBFT is the basis of other consensus mechanisms like proof of work and proof of stake, which is used by other cryptocurrency platforms. However, the dBFT is a more effective algorithm in counterfeiting unreliable and untrustworthy participants on the blockchain than the aforementioned algorithm. In addition, it is a faster algorithm that can handle up to 10,000 transactions. 

NEO and Ethereum are both popular, although Ethereum is the second-largest cryptocurrency which says a lot about its stability and consistent hold in its market price and cap position. NEO is considered as crypto of the future as well as it has the same potential as Ethereum, maybe even more. 

Digital Equivalents on the NEO Platform

The NEO platform describes its Smart Economy System as the combination of digital assets, digital identity, and smart contracts.

The NEO network can easily digitise assets in a publicly opened, traceable, and trustworthy decentralised system, which is also free of intermediary authorities as well as the cost of the third party authority.  The platform allows its users to record, trade — buy and sell, and circulate various assets on the network. 

Also, the NEO network ensures the provision of a secure link or conversion of your physical assets with its equivalent value. The strict regulations of the network include the validation of the digital identity of these physical assets and are protected by law. 

The use of the digital identity on the NEO network enables the verifiable key information of the individuals and companies participating in the network, which ensures the validity of the transactions and the assets on the network. 

Lastly, smart contracts allow the parties on the network to do transactions and agree on terms of the transactions without any legal system or any central authority. Thus all transactions happening on the network are all through peer-to-peer transactions.  

NEO’s Regulatory Compliance

NEO has strict regulatory compliance despite being decentralised, which sets it apart from all other crypto blockchains. The digital identity of everyone on the network is a crucial part of the user’s compliance with the regulations. It is a requirement for everyone on the network to have a unique digital identity that is protected by the network. It means that if someone wants to do transactions on the network but does not have a digital identity, it will be impossible to do the wanted transactions since your digital identity will be verified in order to complete or even begin a transaction on the NEO network. 

The digital identity verification is not limited to the users, either individual or company; it is extended to the NEO network’s nodes. Before the nodes can participate on the blockchain in activities such as accounting and bookkeeping, they will undergo the required digital identity verification as well. 

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Now that you know the basics of the NEO platform as well as how it works, the decision to invest in the NEO token is all up to you. Keep in mind that before you invest in anything crypto or not, you would have to do the needed research in order to defend yourself from the expected risks you would experience on the ever-fluctuating crypto market, for in the end, the success of investment all lies within your capability to read the market and your knowledge of the right strategic response to the crypto trends.

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