Malcolm Lerider, Senior R&D Manager, NEO Blockchain, wrote about how he believes that the NEO blockchain solves some smart contract issues that the original Bitcoin blockchain was not equipped to handle. Bitcoin is a peer-to-peer electronic cash system. It works as it was designed to, but when blockchain technology is integrated into the working of major financial and technological players, some issues crop up.
The Proof of Work [PoS] algorithm can also be employed to write Turing complete applications, however, this algorithm was designed with the use case of Bitcoin in mind. A new kind of algorithm, called Proof of Stake [PoS] was brought in as developers found it difficult to use the same protocols in their applications. This does not use hashing power but rather uses a token stake, thereby saving energy and preventing 51% hashing power attacks. As Lerider puts it,
“By mimicking PoW, it is in core a variant of a peer-to-peer electronic cash system, that can still be used for Smart Contracts, but is in essence not designed for that purpose.”
In the above figure, the green chain is the ‘validated’ blockchain. The offshotts, the blue ones, are confirmed transactions, but because Bitcoin and other blockchains follow the ‘longest chain’ rule, the blue blocks are discarded.
Which is catastrophic in a normal, everyday economic transaction scenario. Each block on average takes 10 minutes to be added. Consider an instance where user A believes their transaction is valid and waits for confirmation for 60 minutes, and then the chain their transaction was on gets invalidated [part of the blue block in above image]. So, the person transacting digital asset must wait in order to ensure their transaction gets stored on the ‘correct’ chain.
The PoS algorithm promises to add one ‘confirmation’, or one ‘block’, every five seconds, but minutes of waiting is required to ensure your transaction is stored on the green chain. From a business perspective, even a minor risk of rejection of transaction means the above method is impractical.
NEO blockchain, however, is architecture designed to support large-scale decentralized applications [dApps]. It uses the Byzantine Fault Tolerance [dBFT] algorithm.
The presence of NEO and GAS native tokens also ensures there is close to zero transaction fees. Transaction speed is 1000–10,000 transactions per second, with 100,000 TPS a target for NEO by 2020 using NEOx and NeoVM is in the works, says Lerider.
The fact that the NEO blockchain cannot fork, added with its very low transaction fee, native dApp support and high TPS is what makes NEO different from other blockchain platforms, asserts Lerider.
The post NEO blockchain is fundamentally different from Bitcoin [BTC] – Malcolm Lerider appeared first on AMBCrypto.