What Is NEO?
NEO is a blockchain platform often called China’s answer to Ethereum. It provides a dual-layered blockchain developed by Onchain DNA which is suitable for creating distributed applications and token sales. Originally called Antshares, NEO’s dual-token, smart-contract ecosystem and Delegated Byzantine Fault Tolerance protocol fix issues with Ethereum’s scalability, leading many to dub it an Ethereum Killer.
Destruction isn’t a goal of the Onchain Foundation, though. It’s just trying to build a Smart Economy, providing developers of decentralized and tokenized applications an alternative to Ethereum. And it’s doing it in the face of China’s blockchain regulation, which is among the toughest in the world.
Is NEO the flower that grew from the concrete and took the world over?
To understand that fully, we’ll need to review both NEO and GAS, the two proprietary tokens used on the NEO platform. After that, we’ll explore the technical implementations and partnership acquisitions that make NEO a strong player on the blockchain.
Let’s get started.
How NEO and GAS Perform on the Crypto Market
NEO has a total supply of 100,000,000. Its peak price so far was $187.97 on January 15, 2018.
NEO cannot be mined, and it’s not divisible. It represents a share of the NEO market and is therefore a security. NEO holders get voting rights and GAS dividends from miners.
The NEO ICO occurred from July 1-9, 2016. At this time, 50,000,000 NEO was sold at a rate of $0.036 per 1 NEO, while the other half was withheld by the NEO Council, essentially the founding team, which includes Hongfei Da, CTO Erik Zhang, Chief Architect Jun Li, Tony Tao, and Wentao Yang.
Of the 50 million withheld, 10 million was allocated to core developers, 10 million was allocated to spark further development, 15 million are retained as a contingency, and 15 million are being cross invested in NEO’s blockchain ecosystem.
GAS has a market cap of $59,442,329 as of October 8, 2018. This is based on a circulating supply of 10,128,375 GAS (out of a total supply of 100,000,000) and an exchange rate of $5.87. Its peak price so far was $77.98 on January 15, 2018.
GAS is produced at a rate of 8 GAS per block processed. Every 2 million blocks, this rate decrease by 1 GAS token. When the full supply of 100 million GAS is mined, production will stop. This is predicted to occur sometime around 2039.
Unlike NEO, GAS is divisible, and its used for tokenizing microtransactions on the NEO network. Any time a smart contract is processed, GAS is paid.
A variety of wallets support both NEO and GAS (which is considered a NEO asset), including the Ledger Nano S Hardware wallet, NEON desktop wallet, and NEO Tracker web wallet. It’s always best to convert your GAS to NEO whenever possible to exchange.
With that said, an impressive number of exchanges accept GAS, including Binance, Poloniex, OKEx, Kucoin, and Huobi. These exchanges also support NEO, as do ZB.com, Bibox, and BitForex. Trading pairs for NEO/GAS (aside from each other) include BTC, USDT, ETH, and even fiat currencies like USD.
NEO Is China’s Ethereum Competitor
The word Neo is Greek and essentially means new and revived. It’s no accident this smart contract network chose this moniker for its rebranding effort. Ethereum had first-mover advantage in blockchain, but NEO was able to learn from Ethereum’s missteps. And it’s not Onchain’s only blockchain – it also created Ontology.
At the root of NEO is the smart contract. These mutual agreements are the data processed on blockchain 2.0 projects. NEO does this processing with a Delegated Byzantine Fault Tolerance (DBFT) algorithm. This consensus algorithm resists Byzantine Generals and other issues that can cause problems.
But that’s not all NEO has in its arsenal; NeoX (a cross-blockchain solution), NeoFX (decentralized blockchain storage), and NeoQ (a blockchain-based cryptographic solution that’s resistant to quantum computing) create a powerful suite that has enterprises and governments both inside China and out looking at this ambitious project.
Like Ethereum, NEO hosts a dApp community, and each individual dApp can create its own proprietary crypto token on the platform. Also like Ethereum, liquidating NEO assets can have obstacles, and it’s already experimenting with NEP-5 tokens to fix this issue. NEP are NEO protocols similar to Ethereum’s ERC protocols.
NEO may often be called an Ethereum killer, but it’s more interested in connecting with other blockchains. In fact, NEO’s off-chain scaling solution, Trinity, allows NEP-5 to ERC-20 conversions.
These tweaks happened because Onchain is more than just a vanilla blockchain company. It’s also a seasoned financial technology company. This is how it secured meetings with organizations like Alibaba and Japan’s Ministry of Economics, Trade, and Industry.
Also improving on Ethereum, NEO supports a wide variety of coding languages, including C#, VB.Net, F#, and Java). Ethereum does somewhat support other platforms, but you’ll ultimately need to develop in Solidity.
In addition, NEO is based in Southeast Asia, which is a hotbed for technology development. The value of a cross-chain, smart-contract blockchain isn’t lost on industry and government here.
Overall, NEO is a solid technical project with rapidly growing business opportunities. But are all these extra bells and whistles necessary?
Are Two-Token Blockchains Better Than One?
One of the biggest concerns around NEO/GAS is the sustained value of the dual tokens. In fact, the issuance of these two tokens makes it a difficult project to regulate, too. China may get flack for impeding the growth of blockchain projects like NEO, but the U.S. wouldn’t have any easier of a time with this particular project.
Regulators like the SEC are grouping individual blockchain projects into three broad categories: utility tokens, currencies, and securities. GAS (and most NEP-5 tokens) is a utility token, but NEO is harder to categorize. Its value is essentially tied to Onchain’s value, but it’s not an investment in Onchain itself. It’s an investment in the stability of the NEO project.
Regardless of how NEO is categorized, it could find itself regulated by two entities in the U.S. alone. And the U.S. and China are only two countries NEO needs to penetrate for long-term success.
But legal hurdles are only one part of the puzzle. NEO’s design architecture gives it a huge leg up on processing speed. It has a theoretical limit of 10,000 transactions per second, but even operating at its current real-world speed of around 1000 TPS, it still leaves Ethereum in the dust.
Using a dual-token system ensures NEO doesn’t get congested or bottlenecked speeds when transaction volume increases. Scalability is a huge factor in any business, and blockchain is no exception.
On top of this, NEO has a strong development community, and it already launched dozens of ICOs.
NEO Introduction Summary
NEO is a strong competitor to Ethereum on its own… but it’s not on its own. As part of Onchain’s blockchain-based DNA, it’s just one piece of a larger team looking to conquer the world using blockchain. This Chinese blockchain project may succeed, too, based on these key strengths.
- NEO uses two tokens: NEO and GAS. GAS is used to fund transactions and convert currencies, while NEO has no ties.
- NEO’s DBFT consensus algorithm is faster than PoW used by Ethereum and Bitcoin.
- Onchain has a strong background in fintech and NEO is faster, more efficient, and more scalable than Ethereum.
With these pieces forming a strong foundation, NEO is poised to continue growing as a project. NEO can be a sleeper hit if it navigates murky regional legislation and secures the right partnerships.