This guide focuses on Ethereum’s main technological rival — NEO, and explains how NEO’s blockchain is designed and why it’s is still considered a technological contender alongside other cryptocurrencies.
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Read on to find out how NEO utilizes smart contracts and digital identities, and how it compares to Bitcoin as a cryptocurrency.
What Is NEO?
NEO is widely considered to be China’s answer to Ethereum.
Both cryptocurrencies use smart contracts but NEO takes advantage of its unique blockchain in order to improve on Ethereum’s network.
NEO has defined itself as the distributed network for the smart economy. By smart economy, we mean digital assets with a digital identity, supported by smart contracts.
Interesting Facts About NEO
- NEO made its first appearance in the West in 2016 under the name Antshares.
- NEO uses the delegated Byzantine Fault Tolerant (bDFT) for blockchain consensus — it is a modified proof-of-stake protocol.
- 6119 BTC was raised during NEO’s 2016 ICO, creating 100 million NEO tokens.
- 50% of the NEO tokens were sold in the ICO, and the other 50% were distributed to the NEO Council.
- NEO climbed its way into the top 20 cryptocurrencies by achieving a $5 billion market capitalization by the end of 2017.
In short, NEO is a cryptocurrency that, uses easily programmable smart contracts in order to facilitate trust-less trades of real-world assets through the Blockchain.
How Is NEO’s Network Designed?
NEO’s network is built on two tokens. NEO and neoGAS (GAS).
NEO tokens were all pre-mined during the genesis event. They have a hard cap of 100 million tokens which are used for block creation, network management, and any consensus requirements.
The GAS token is designed to act as fuel for the NEO blockchain and act as a form of security.
GAS was not pre-mined and it is designed to be used to allocate resources and maintain the day to day running of the blockchain. It will also be used to reward users maintaining the blockchain.
Smart Contracts: Building On Ethereum’s Design
NEO builds on Ethereum’s design to create the economy of the future. In the modern economy, one of the key problems is trust. After all, how can you do business with someone you don’t trust?
Both NEO and Ethereum have attempted to solve this problem through smart contracts. If users wish to make an exchange, the first digitize their assets, turning them into NEO.
Then they create a smart contract that is stored on the decentralized blockchain. Then, the trade is executed to the exact specifications of the contract.
This means that the entire trade is done without either party being directly involved. You don’t have to rely on someone else to hold up their end of the bargain because the blockchain will force them to do so.
What Is NEO’s Programming Advantage?
Both NEO and Ethereum smart contracts are built using programming languages. The difference is that Ethereum uses its own native language called Solidity.
NEO smart contracts can be written and compiled in C# and Java. In the future the developers also want users to be able to write smart contracts in Python and Go.
This allows NEO users to hire a developer for other projects and he will also be able to produce smart contracts. An Ethereum user needs to hire someone just to build smart contracts.
How Does NEO Use Digital Identities?
NEO also uses a digital identity to help protect its users.
Individuals and institutions can acquire their own digital identity and NEO users can choose only to trade with parties who have a verified digital identity.
This helps to protect users from scams and will make it easier for NEO to comply with international law.
NEO vs Bitcoin: How Do The Coins Compare?
How does NEO compare to Bitcoin? What are the key differences?
See below for our head-to-head comparison:
|NEO (NEO)||Bitcoin (BTC)|
|Purpose||Chinese smart contract system||Decentralized digital currency|
|Founder||Da Hong Fei||Satoshi Nakamoto (alias)|
|Market Cap||Over $1 billion||Over $300 billion|
|All time High||$177.47 (January 2018)||$19,850 (November 2020)|
|All Time Low||$0.08 (October 2016)||$0.06 (July 2010)|
|How long did it take to hit $100?||NEO has yet to reach $100||51 months|
|Notable Supporters||Jeff Currie (Goldman Sachs)
Peter Theil (Venture capitalist)
Christine Lagarde (IMF)
Marc Andreessen (Early internet Pioneer)
|Initial Distribution||ICO (initial coin offering)||Mining|
|Mining Method||NEO is not mined||ASIC|
|Consensus Method||Delegated Byzantine Fault Tolerance (dBFT)||Proof of work|
|Network Hash Rate||N/a||Up to 100 Qh/s|
|Difficulty increase||N/a||Every 2,016 Blocks|
As you can see, there is no available network hash rate or mining mechanism for NEO, because NEO doesn’t come to exist through mining. There are a pre-set amount of NEO coins based on the raised ICO amount in 2016.
How Is NEO Made?
Like most cryptocurrencies, NEO is created by its community. Unlike most other cryptocurrencies NEO is based on the delegated Byzantine Proof-Of-Stake concept, as opposed to traditional proof-of-stake or proof-of-work.
When bitcoins are created it is because “miners” ASICs to solve complex transactions that add more blocks to the blockchain. They are then rewarded with Bitcoin.
To learn more about where you can buy NEO and how you can trade it as an asset, see our NEO Trading Guide.
Unlike Bitcoin, NEO users are rewarded based on the number of coins they possess rather than by using their computers to solve transactions.
Instead, each NEO token acts as a sort of share on the blockchain.
What Is neoGAS And How Is It Used As A Reward?
Each time a new block is created, users are rewarded with neoGAS. This will continue happening until GAS reaches its market cap of 100 million coins.
Then holders of NEO will be rewarded with a portion of the transaction fees.
How Quickly Are New Blocks Generated On The NEO Blockchain?
A new block is generated every 15-20 seconds and 2 million blocks are generated in around a year. At this speed, the total limit of 100 million GAS will be reached in around 22 years.
It should be noted that in order for traders to receive GAS their NEO has to be held in a personal wallet and not in an exchange.
What Drives The Price Of NEO?
Like all cryptocurrencies, NEO will tend to follow the rest of the market.
If you see a fall in the price of Bitcoin then you should expect to see NEO and other altcoins take a hit as traders panic and attempt to sell off their assets before they make a loss.
Like most cryptocurrencies, NEO is fairly volatile. You should expect to see some dramatic ups and downs.
Media Attention On NEO Prices
NEO is also heavily driven by media attention. When NEO (then known as Antshares) first hit Western headlines there was only a single broker, Bittrex, to purchase the altcoin from.
This led to a rush to buy it and the price was driven through the roof. Any price rise driven by headlines tend to go through a period of correction as traders engage in profit-taking and the value of the token slips.
Where Is NEO’s Primary User Base?
NEO’s primary user base is in China. This means that the currency is more strongly influenced by news from that region.
If you are interested in trading in NEO you will need to keep an eye on developments in China and any incoming regulations from the Chinese government.
If NEO does ever partner with the Chinese authorities you should expect to see a large spike in value. That said, the rapidly developing Chinese Bank Digital Currency (CBDC) is more likely to rival NEO.
Is NEO Likely To Be Regulated?
Like Monero and Dash, NEO will likely prove to be fairly resistant to any regulations. In Monero and Dash’s cases, this is because the currencies themselves encourage anonymity, which theoretically protects users.
In the case of NEO, it is because they have openly stated their willingness to work with the authorities. This may make the Chinese government look more sympathetically at their cause.
The key drivers for NEO will be the state of the market in China and any regulations in that region. Particularly whether Chinese businesses start adopting NEO as their standard blockchain solution.
What Is The Price Outlook For NEO?
The price outlook for NEO is a little uncertain.
In the short-term, you should expect to see volatility as speculators take advantage of the uncertainty surrounding the cryptocurrency’s future.
In the medium to long-term, there is the unlikely outcome, that the Chinese government will begin a full crackdown on cryptocurrencies, in which case you should expect to see NEO’s value collapse.
What Do Experts Say About NEO?
Generally, experts take a positive view of the currency’s future, although there are some concerns about its vulnerability to regulation from the Chinese authorities.
An Angel Investor’s Verdict On NEO’s Future
“The big move for NEO is creating an entire smart economy. It has incorporated digital assets, smart contracts, and a digital identity that can be used for real-world applications and become integrated into the real economy. China could (and may) be a candidate for that first real-world application and integration.”Brian Evans, Angel Investor, Adviser, & Blockchain Evangelist
Other experts have been concerned by China’s ban of ICOs. Brian Evans has suggested that NEO’s future relies on takeup by Chinese ICOs.
The recent ban has been considered by many to be a huge problem going forward for NEO and other cryptocurrencies.
That being said NEO has openly taken steps to state that it wants to work with the Chinese government and in the long term their interest is in the creation of a smart economy.
What Does The CEO Of NEO Say?
The CEO of Neo, Da Hongfei also unsurprisingly sees a bright future for the cryptocurrency.
In a recent interview with Sarah Tran of Blockchain.News, Da Hongfei said:
“The most anticipated milestone is definitely Neo3. We are launching the Neo3 testnet before the end of this year, and target to release the mainnet in the first quarter of 2021. As a total revamp of the current Neo blockchain, Neo3 is a robust implementation towards a digital asset platform that will provide high throughput, enhanced stability and security, an optimized smart contract system, and a feature-packed infrastructure set to empower developer adoption and to accelerate enterprise-grade blockchain innovations.”Da Hongfei, CEO Of NEO
Where Can I Trade NEO?
See our full guide to trading NEO, or start your research with reviews of these regulated crypto brokers available in .
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. <b>Between 74%-89% of retail investor accounts lose money when trading CFDs.</b> You should consider whether you can afford to take the high risk of losing your money.
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
Learn about why Ethereum is considered one of NEO’s greatest technological rivals by reading out Ethereum Cryptocurrency Guide.
If you’re interested in purchasing in trading or owning NEO, you can find regulated brokers and exchanges to do so in our NEO Trading Guide.