NEO - The Chinese clone of the Matrix (Ethereum)

The exchange rate of NEO (in the past Antshares ) for the past two months has experienced a dizzying takeoff: from $ 1 it rose almost to $ 50, and now trades at $ 40. The project, developed in China, is often called the Chinese Ethereum, and after a recent rebranding, he received a new name, unambiguously referring to the Matrix. The main trading volumes of NEO are in China - and the demand is undoubtedly large, since the capitalization has already exceeded two billion dollars.

Image Credit:  Bitcoin Center NYC  & Content Published by: Qandros

Despite brisk trade, the crypto currency looks a bit strange for a public blockbuster: as a consensus it uses a simple BFT algorithm, used, as a rule, in private lockers.

In an attempt to understand such a solution, the portal Trustnodes repeatedly tried to contact the NEO team with the question: how such an algorithm can work on a public blockbuster, because it requires trusted nodes; This is entirely permissible in a private block, where the nodes are known, assigned from the outside and do not have the motivation to cheat the system, but in public lockouts, by default, it is considered that any node can turn out to be an unfair player. However, all attempts to get an explanation were unsuccessful.

The White Book of the project resembles a Wikipedia draft, filled with basic definitions of the blockage and descriptions of the concepts of smart contracts. This is by no means a technical document describing the mechanisms of work of the NEO.

The post, published in NEO subordinate and subsequently deleted by branch moderators, contains the statement that NEO has a high degree of centralization. Commentators, basically, agree with this statement, however, suggest that in the future the blockade will nevertheless be decentralized. 

Quote from a remote post:

NEO, in its current format does not exist as a public blockbuster; This is a private block, owned and operated by OnChain.

This is due to the fact that it is still impossible to engage in the "mining" of NeoGas (in the White Paper this is called "validation" or "keeping the registry"). All nodes of validators belong to OnChain, because the function of assigning validators in NEO purses is not registered.

Moreover, the dBFT algorithm used in the NEO is not completed and no public audit was conducted. According to the documentation, coin holders should have the right to vote for conscientious Nodes of Validators. However, as in the previous case, this function is not registered in purses.

In any public detachment, users can become part of the consensus mechanism. That's why NEO is not a public block: despite the fact that the block is open to anyone, all its sites are owned by Onchain.

However, in the case of a weak consensus mechanism, which is the BFT algorithm, it is easy to create a double waste for an unscrupulous node, so that the centralization of the network even benefits the system.

Of course, you can add trusted sites to the network that have passed the KYC procedure (identification - Know Your Customer), and be sure of their good faith, but this is not something that users expect from a crypto currency.

Also, the NEO token distribution model is of interest:

According to the White Paper of the project, 100% of shares (shares - so in the document) NEO are created together with the block of genesis ( First block of the chain . In the crypto-currency world this is usually called "premine" - Ed.) 

10% of tokens are distributed among early project investors (since 2014). 17% were distributed during the first ICO, and a little less than half of this amount was received by one institutional investor. 23% of tokens were sold during the second ICO, in August 2016. The remaining 50% of the tokens are at the disposal of the NEO development team, they will be frozen for a period of 1 year, after which they will be used for further development of the protocol.

It is not quite clear what stocks are. Assuming that these are the NEO tokens themselves (difficulties in translating from Chinese), it turns out that out of the total number of created tokens, only 50% are distributed to users.

Thus, any project that wants to use the NEO block system will have to fully trust the centralized structure that holds more than 50% of the tokens.

Conclusion

As a result of the above, the blocking NEO loses even to private blockers based on the forefathers of the Hyperledger, if only because the nodes belong to different organizations with a high reputation.

Thus, the reference to the Matrix turns out to be correct, in the sense that NEO is an illusory, superficial project without a solid foundation.