Crucial information about blockchain: NEO and GAS

palog (42)in #cryptocurrency • 7 years ago

full story with commnets here https://www.reddit.com/r/NEO/comments/74jlzm/crucial_information_about_our_blockchain_dbft/

I would like to clarify some misconceptions about GAS, and how its function on the blockchain will affect and correlate with NEO valuation. The purpose of this post is to provide information, rather than speculate on price. However, I will add my personal opinion on how the valuation of both coins is strongly connected. Firstly, GAS is the equivalent of AntCoin, so it is the main "currency" on the NEO blockchain. By saying "currency", I mean it is more like fuel. The cost of registering new assets, issuing complex smart contracts, storage, and transaction fees will be covered in GAS. You probably knew about that, but the redistribution of GAS to NEO holders is vastly misunderstood. Before I add clarification, however, let us talk about how the GAS is mined in dBFP protocol, as it is not the same as PoS.

You already know that GAS is being mined automatically via set algorithm, and then redistributed for the next 22 years equally to all NEO holders. At the same time, most investors does not have a clue about nodekeepers, voting system and fee redistribution. I believe these concepts are crucial to understand fully the potential of both- NEO and GAS.
Nodekeepers are the validators of the blockchain transactions. I believe in the old Antshares times they were called bookkeepers, but they are the same, it is just a term describing one and the same thing. NK are elected in public voting by NEO holders. Chosen NK then set the fee on every transaction on the blockchain. The GAS used for fees on transferring coins is redistributed to NK, not all NEO holders. However, here comes the trick that I believe puts NEO at the Iron Throne of the CryptoLand.

The high transaction fees for using the blockchain will not be beneficial for the ecosystem itself. The higher the entry and maintenance cost, the fewer companies would want to register their assets on it. So the nodekeepers are forced to always, I repeat always, keep the transaction fees at minimal, or even 0 level. If they set too high prices, they will be "fired" by NEO holders in voting, as it would have detrimental effect on the blockchain development. Therefore, being a nodekeeper on NEO is of no use for ordinary person. It does not have any economic incentive. "Why the %ll would then anyone want to validate transactions for free??" -one may ask. Well, I will answer this question in a second. Let me first clarify one more thing. We now understand that the fees from transactions are distributed only to nodekeepers, not all NEO holders. We also understand that NK will keep them at non-existent level due to the sake of blockchain development and the fear of being controlled by NEO holders. So, where do our GAS dividends come from?
NEO holder receive GAS that is spent by companies and dApps on smart contracts registration and validation. Paraphrasing, our dividends come from digital assets registration. The more companies will be using the blockchain, the more GAS will be redistributed to all NEO holders per year. Why is this system so innovative and ingenious?
NEO holders will do everything to keep the blockchain attractive for new companies and assets as it will increase their dividends. Because of that they will only vote on nodekeepers that set the fees on the blockchain as low as possible, so it will attract new investors. Self regulated, cheap, and secure blockchain without miners (PoW), giving all a passive income?
Wait, there is the previously mentioned question: "Why would anyone, for pete's sake, want to be a nodekeeper for free?". Well, if you hadn't guessed already: the nodekeepers will only be people who already posses a huge amount of NEO. Because of passive income, they will be interested only in the blockchain development, and ecosystem safety and security. They will be losing some money on being a nodekeeper (0 or minimal fees redistributed to them), but when you hold dozens of millions in NEO you only care about the blockchain development so you can earn higher dividends from GAS from assets, smart contracts and registration fees.
Can you see now how innovative and different economics NEO presents in comparison to other blockchains? You will never see the miners pressure as in BTC, high transaction fees or financially incentivised nodekeepers. Everyone of us play for the same team.
Now, this is true as long as GAS will keep value of course. Nodekeepers will be earning money through their NEO possession, similar to all smaller investors on the blockchain. They will be doing their work as long as GAS keeps its value and the dividends are financially profitable. That is why right now all the nodes are kept by NEO Council and the first voting will happen only in Q12018. GAS and NEO price will depend on each other and always be connected. Actually the valuation of GAS will be the start level of valuation of NEO in future.

At the moment both coins possess only speculative value, as the blockchain has just started and the first companies and dApps are yet to come. I do not want to speculate about the ratio as it will establish itself in the following years, but I will say two conclusions that I, as a investor, draw from the above-mentioned facts. 1. The GAS is for now, only when it is actually used and blockchain develops can we talk about true valuation of NEO. NEO is for the future. 2. Looking at the recent speculative value I have a feeling that most people just buy NEO as "Ethereum of CHina", or "Wealth generation|, without fully understanding dBFT system. So either the price of NEO is heavily overvalued now, or the value of GAS is heavily undervalued in todays market caps (1.7bln$ to 250mln$). I believe the latter is more probable though.

also here