dBFT works on a relatively simple basis. There are a bunch of consensus nodes that run the network. One of them is elected to propose a block, formed from gathered transaction data. This speaker node broadcasts the new block, and the other nodes check the block’s validity and either sign their agreement or reject it. If 2/3 of the total nodes agree, the block is considered valid and added to the chain. If they don’t agree, another node is elected to act as speaker and broadcast a new block proposal. Consensus repeats. The consensus nodes themselves are private individuals or businesses that decide to run them, and they are voted in/out by the NEO token holders. It is truly decentralized, it’s just not as distributed as we’re used to, and it can confidently move from a private network to a decentralized one.

Turns out the ‘centralization’ aspect of NEO was rather comparable to IOTA’s central coordinator; they both exist only as training wheels. A network where anyone can run a node with no barrier to entry sure makes distribution easy. But that approach with NEO would end quite badly; the consensus mechanism needs a network that agrees with itself, so you can’t risk starting it off with potential bad actors. Instead, NEO needed to distribute one piece at a time. First of all, you need a network that is proven to work. All seven nodes owned by NEO would obviously reach consensus; they are operated by the same people and they would only propose valid blocks. You get a 100% validation rate, but also 100% control of the network by NEO.

The next step was to expand the network by allowing nodes to be operated by the first few strategic partners to NEO, such as the City of Zion developer community. Since the consensus mechanism wants to see a 2/3 majority on a new block proposal, that means to be decentralized, OnChain could not be permitted to run 2/3 or more of the nodes (and not have sufficient voting power to influence others). Adding strategic partner nodes meant that 7 nodes was no longer enough to decide on blocks alone, but you still guarantee the network won’t struggle to reach consensus (everyone wants the same thing.)

From this point, the NEO governance model can take over. With the training wheels off, NEO holders can vote in new nodes (which can be run by those who pay the 1000 GAS registration fee and ideally have digital identity in place so they can be held accountable) and vote out nodes they don’t want. With the system’s arbiters managing nodes, the network can expand without fear of bad actors. In addition, since you need 2/3 majority to force a block, the network is almost impossible to disrupt and therefore incredibly fault tolerant, while still maintaining the rapid, decentralized consensus needed to keep the network fast and stabe. You’ve also got both financial and legal incentive to not run a malicious node. The end result is the most secure public ledger platform ever created.

Unlike PoW or PoS, there has to be a consensus for a block to be created in the first place . That means somehow, someway, 2/3 of the active nodes need to agree on a block proposal. This means a few very important things. Firstly, true finality. There are no orphan blocks or forks with NEO. You can’t say one block is true and another isn’t. There are only valid blocks added, and that means there are only valid transactions. No double spends (otherwise, the block proposal wouldn’t pass validation), and no confirmations required. If it’s on the blockchain, it’s there forever. True immutability, true finality. You can’t really ever trust a network that doesn’t have these traits. That’s why confirmations exist. To build your confidence enough to let your doubt slide, and to make reversal trickier. They need not exist on a truly immutable network.

Most consensus mechanisms make it very simple to join the process. You can start mining to get involved with the decentralization of Bitcoin, or you can set up a node or stake a wallet with Proof of Stake. These networks, despite mining pools & whales, will still remain more distributed than NEO will ever be. That’s a sacrifice that the NEO team chose to make to allow the network to be so far beyond its competitors in every other regard. Fortunately, the governance is still in the hands of NEO holders — mostly businesses that run on the network and early investors. Sure, it’s a little prohibitive, but those two groups of people not only have a vested interest in the security and stability of the network, but they are also the ones that welcome the compliant nature of NEO since it protects their assets. NEO isn’t controlled by any entity like a company or government. It’s controlled by the holders, big and small. It’s nice to be a part of it, and I’m not just talking about the dividends!