Dive deep into the structure, function, and principles that drive the New Economic Order (NEO) blockchain.
NEO’s blockchain is built on a foundation of Proof of Trust (PoT). This ensures integrity and trust through a decentralized ledger where each transaction creates its own Root of Trust.
NEO transactions follow a Twin Block model, where every transaction results in two interlinked blocks—one from each participant. These 'Twin Blocks' validate each other through cryptographic signatures, ensuring transaction integrity. This model prevents forgery by requiring each participant to sign their block using their own private key, which can then be verified with their public key.
Every participant in the network has a cryptographic key pair:
The transaction process begins when one party (the Initiator) creates a block and the counterparty (the Responder) generates its twin. Each block is uniquely signed using the creator’s private key, ensuring authenticity.
Once both twin blocks are created, they undergo mutual verification. Each participant checks that the other's block was signed with the correct private key by using the associated public key. If verification fails, the transaction is rejected.
After validation, the twin blocks are broadcast to the network. Other nodes can verify the signatures independently, ensuring transparency and preventing tampering. Because each block is cryptographically linked, any modification to one twin would immediately invalidate the transaction.
Transactions can occur offline. In such cases, the twin blocks are stored locally on both nodes. When reconnected to the network, these blocks synchronize and are validated. If discrepancies arise, the transaction remains unverified until reviewed by independent auditors or validated through further interactions in the network.
When a block is created by any user, it is immutable and forms a new branch on the ledger. The only verification that a transaction occurred is the presence of its twin cryptogenetic block, signed by both parties. If two conflicting versions of a transaction exist, third-party auditors—independent nodes in the network—can review the twin blocks and determine which, if any, are valid. If verified, they can stamp the transaction as trusted, increasing the credibility of both parties involved. Over time, nodes that accumulate verified transactions with diverse participants build a stronger reputation in the network.
Fraud cannot be entirely eliminated, but it can be mitigated through decentralized verification. Since each transaction consists of cryptogenetic twin blocks signed by both parties, fraud is only possible if both parties collude. However, the credibility of nodes is built over time based on transaction history. If a transaction is ever disputed, independent third-party auditors can review the signatures and confirm authenticity.
If Alice and Bob engage in fraudulent behavior, their transaction history will signal suspicious activity. Nodes evaluating trust consider a participant’s **broader transaction network**—nodes that interact with many different parties and maintain a record of verified transactions naturally gain higher trust. Fraudulent actors, isolated in a closed loop of self-validating transactions, will find it difficult to gain trust in the broader network.
To further strengthen trust, a third-party Audit Block may be introduced. This allows an independent node to review the transaction and verify its authenticity, reinforcing the credibility of both participants.
Fraud can still occur between two colluding parties, but their transaction history speaks for itself. If Alice and Bob engage in fraudulent behavior, their activity will appear suspicious to others. Nodes evaluating trust will consider a participant's broader transaction network—highly interconnected nodes with diverse, validated transactions signal stronger reliability.
The NEO blockchain is designed to scale and adapt. Its Proof of Trust model can power diverse applications:
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