Neo is one of the leading cryptocurrencies on the market cap, being the first Chinese cryptocurrency to gain global recognition. In fact, most of the cryptocurrency enthusiasts refer to it as Chinese Ethereum, regarding it as China’s response to Ethereum. However, it is much more than that. So, let’s discuss what Neo is all about, how it differs from Ethereum and what change it aims to bring in the crypto market with its distinctive features.
NEO and the History Behind It
To put it into the company’s words, ‘NEO is a non-profit community-based blockchain project that utilizes blockchain technology and digital identity to digitize assets, to automate the management of digital assets using smart contracts, and to realize a “smart economy” with a distributed network.’
Formerly known as AntShares, it was founded by Da HongFei and a core developer, Erik Zhang back in 2013 and was officially launched as a company in 2014. In its ICO, the China-based company managed to raise over $4.5 billion and also developed the ‘OnChain’ universal blockchain network. This garnered the company a lot of attention in the Chinese cryptocurrency market as they started taking it as their own version of Ethereum.
Much to their dismay, the company couldn’t create a significant impact on the global market. The founders decided to up the game by rebranding the company and naming it as ‘NEO,’ which is derived from a Greek word meaning novelty, new, and youth.
Soon, NEO became the first decentralized, open-source blockchain platform and cryptocurrency to be launched in China.
The decision of rebranding worked wonders as some of the leading Bitcoin exchanges such as Bittrex started integrating support for NEO traders. Apart from that, in 2017, NEO entered the list of top ten cryptocurrencies on the market cap. At the time of writing, NEO stands on the 13th position on the coin market cap, with a price set at $27.78. This means NEO holds the opportunity of witnessing a significant growth in the cryptocurrency market in the coming future.
How Different is NEO from Ethereum?
One cannot dismiss the obvious similarities between Ethereum and NEO. Both are decentralized, open-source blockchain networks, facilitating the creation of digital assets, smart contracts, and applications on their blockchains. Just like Ethereum, NEO also allows more than one currency to be traded within its network.
Initially, what differs NEO from Ethereum is their use of ‘smart economy’, which means they aim to enable businesses to manage smart contracts effectively, safely as well as legally. With branding themselves as the smart economy, they also intend to enable the easy transfer of digital and traditional assets between users without the involvement of any third party. NEO also sets out to provide digital identity and digital assets to its users for easy integration into the real world.
Another remarkable difference between NEO and Ethereum is that the former allows the developers to write smart contract protocols using a common programming language such as C# and Java. On the flip side, Ethereum has developed its own programming language which is mandatory for the developers to learn first before they can start creating smart contracts on the platform.
NEO uses a compiler to support the common programming languages whereas Ether only supports one language – Solidity. This gives a competitive edge to NEO over Ethereum and it also proves why NEO is appealing for both investors and developers.
Aiming to tackle the risk of quantum computers, NEO also comes with a quantum computer proof features. With technology advancements being made every other second, quantum computers could soon become operational and pose a threat to cryptocurrency’s vulnerability. Therefore, many blockchain platforms are trying to become quantum resilient. The good part is, NEO already comes with the quantum resistant cryptography.
One more notable factor which distinguishes the two cryptocurrencies is their use of consensus mechanism. Ethereum works on PoW consensus mechanism while NEO works on Delegated Byzantine Fault Tolerance (dBFT) consensus mechanism, which removes the folk and added finality. Also, the dBFT consensus mechanism offers speedy verification of the transactions. It is capable of handling 10,000 transactions per second compared to the 15 transactions per second capacity handled by Ethereum.
Can NEO be Mined? How Do NEO Coins Work?
Unlike many leading cryptocurrencies, Neo is non-mineable. But that doesn’t mean you can earn nothing from the NEO network. The more NEO you own, the more GAS you earn. GAS is basically the token required to run the NEO network.
It is worthy of note that in the genesis block, a total of 100 million NEO was created. Of the 100 million, 50 percent were taken by the early investors and the remaining were locked into a smart contract, with 15 million tokens being released every year.
However, GAS wasn’t made in the block. Instead, GAS is slowly generated over the courses of 22 years, with the amount of GAS a user gets per NEO slowly decreasing. This means GAS is going by a decreasing rate of the generation so it will take many years for its amount to grow to its full capacity of 100 million.
Since NEO is fully pre-mined, NEO holders will only get a cut of the transaction fees. They will be paid GAS tokens in dividends, with 1 NEO giving you 1 GAS over the course of 22 years. The more NEO they have, the more GAS they will get (per day). As GAS is spent, it gets recycled into the system. The more the GAS is consumed, the more it will be recycled and given to all NEO holders.
It is worthy to add that NEO is not divisible, as it acts as a security, a share in a company, but on the other hand, GAS is divisible, which is generally used as a form of a payment or a dividend.
NEO distributes GAS tokens to their users for proving their ownership of an asset rather than the asset itself. This is done to make the transfer of shares, equity, and assets easy and more straightforward.
While NEO coins represent the primary source of value and ownership over NEO blockchains and can be used when it comes to voting within the NEO blockchain network, GAS primarily represents a value allowing you to participate in the system.
Is NEO Worth Investing?
Undoubtedly, with its distinct and remarkable competitive edge over Ethereum, NEO seems to have a promising future but still, it has to achieve lots of potential growth in order to stand next to Ethereum. Ethereum has been constantly ranked as the top three cryptocurrencies on the market cap so it is worth noticing as to why it has been getting more support from the community.
Having said that, NEO does have a strong foundation and sufficient capital to sustain for a few more years. Also, it does offer incredible staking rewards and has a huge potential market, which means NEO should definitely be considered for investing. We can only hope the best for NEO.