NEO network - Technical Analysis
The NEO users are able to register, trade, and move their assets on the network with the help of a digital identity.
A digital identity is the collection of information about a human being created from whatever personal information they share online. It also consists traces of information created by your everyday activities such sending an email or using your credit card.
Now there are two kinds of digital assets on NEO, the global and the contract assets.
Global assets are saved in the system space and can be identified by all smart contracts and clients. Contract assets on the other hand, can be saved in the private storage area of the smart contract and require a compatible client to recognize them. Users in the system are able to designate certain nodes called consensus nodes, or bookepers, which write the blocks on the blockchain.
What is the consensus mechanism in the network?
A user can become a bookkeeper only if they hold 10K Neo tokens and they can only be elected as bookkeeper, by the rest of the NEO holders. In order to put themselves forward for the election they have to pay a fee of 1K Gas tokens. In addition they need to set up a full Neo node.
Bookkeepers get paid a transaction fee in NeoGas for transactions confirmed on the blockchain. NEO holders are also getting paid in NeoGAS for every 1 NEO they hold.
If 66% of the nodes on the network agree with a bookkeeper’s decision on the blockchain, consensus is achieved and the proposed block of transactions is written on the blockchain. If the majority doesn’t agree with the bookkeeper’s decision another bookkeeper is called and the process is repeated. This is how consensus is achieved in the blockchain network and is considered by man an advance to the Blockchains of several other cryptocurrencies.
If there are suddenly consensus nodes proposing higher transaction fees, this will prevent new users from registering their assets on the network and so there will be less dividends for the NEO holders. So the NEO holders will then want to vote out the bookkeepers trying to introduce higher transaction fees. In that way, the interests of NEO holders and those of the bookkeepers are aligned.
So low transaction fees are important in order to have more users registering in the network.