Have you heard of Neo? This fast-rising cryptocurrency has been dubbed the “Ethereum of the East.” The two altcoins share many similarities in being more than just a digital currency – but a way to leverage blockchain technology to monetize assets.
NEO was China’s first cryptocurrency and was introduced to the West in 2017 as “Antshares.” This non-profit uses “smart contracts” to digitize real-world assets through its unique blockchain. Neo’s mission is: To make any asset, digital or physical, accessible by human beings and programs with minimized trust and permission.” So what lies ahead for the Chinese Ethereum, and is trading NEO worth a punt?
In 2014, Da Hongfei and Erik Zhan co-founded “Antshares,” which they then rebranded as “Neo” in 2017. Today, the non-profit has a $1 billion market cap and is one of the top 20 cryptocurrencies in the world. Most cryptocurrencies are a fork from central authorities, but Neo is not entirely decentralized. Their more regulator-friendly approach has made them less of a threat to the Chinese authorities, and they occupy a unique position in the crypto community.
To distinguish between company and coin, Neo uses small letters when talking about their platform versus their NEO token. A pioneering altcoin, NEO scooped up a lot of the “firsts” in the cryptocurrency community. It was the first public smart contract platform in China. Second, Neo was the first altcoin to use a dual token model (NEO and GAS.) There is a maximum of 100 million NEO tokens, early supporters got 50 million, and the other half was for development. Finally, the token sale remains unique in that Neo is the only altcoin to return all the original funds raised back to the community once the project was self-sufficient.
By taking the more centralized approach to a smart economy, Neo aims to bridge the ideal with the pragmatic. To quote its founder Da Hongfei:
Pure pragmatism can’t imagine a bold future. Pure idealism can’t get anything done. It is the delicate blend of both that drives innovation.
How does Neo achieve this “delicate blend?” Like most cryptocurrencies, NEO is built on blockchain technology and maintained by its community. Where most digital currencies use “Proof-of-Work” or “Proof-of-Concept” to expand: essentially other users or “miners” solving complex computer problems to create new coins. Neo has its own “Governance System,” or the more technical name, the Delegated Byzantine Fault Tolerance (dBFT) protocol. In simple terms, Neo uses a “Proof-of-Stake” (PoS) concept whereby users can validate new blocks depending on how many coins they hold – not how many equations they have solved. As a result, PoS mining is much less energy-intensive and is lauded by many as the green future of cryptocurrency.
NEO vs. Gas
The dual token system of Neo is slightly different from those of other digital currencies. You may hear about NEO tokens, but are these the same as GAS tokens? Not quite:
The Neo blockchain is made up of NEO tokens used to run the network. When you have NEO in your wallet, you will be rewarded with GAS.
Think of GAS as the petrol that powers each transaction. The Neo network charges GAS for storing and using tokens.
Neo launched Neo 3.0 in 2021 with some new shiny features:
A way for multiple blockchains to communicate. For example, Neo can now send information to Ethereum and Bitcoin.
Before, these smart contracts (a set of commitments in digital form) had to be written in one programming language. Neo N3 supports multiple languages, and developers can write in Python, TypeScript, Java, and C#.
A decentralized storage model whereby users are rewarded for freeing up space on the blockchain by using their hard drives.
NEO vs. Ethereum
Both Ethereum and Neo use “smart contracts” and can run decentralized applications (dApps) on their blockchains. However, the upgraded N3 version of Neo could be putting the squeeze on Ethereum’s dominance in the coin tables. Here is how Neo is building better:
Remember the Proof-of-Stake system? Neo makes more blocks using less energy.
Neo’s dual token system is more resistant to the threat of quantum computers hacking blockchains.
By supporting smart contracts in multiple languages instead of just one.
Neo has recently rolled out version 3 of its blockchain, which will increase its transaction speeds by five times, from 1000 TPS (transactions per second) to 5000 TPS. Its GAS fees have also been reduced by 100 times. They are now using oracle and decentralized file storage. Neo is continually adapting and changing to meet current demands and pressure their biggest competitor, Ethereum. When trying to forecast the future of Neo, naturally, Ethereum’s success is an essential factor to consider, a little like Litecoin and Bitcoin.
The “Chinese Ethereum” is closely linked to its western counterpart as they share such similar models. Fortunately, Ethereum has been extremely popular, and many believe it will succeed Bitcoin in the number one spot. On the other hand, some believe Neo will surpass Ethereum. Although it may not be a question of “last man standing,” there could be space for both coins to flourish in the future. There are positives and negatives about being so similar but, for the time being, at least, it seems Neo has chosen a winning strategy. Looking at their past performance is one way to form a reasonable projection for the future.
Both Ethereum and Neo have been near the top of the leaderboards for the past few years. Ethereum is currently in second place, ahead of Tether and Binance Coin, and Neo is hovering around the 30th spot, looking to break out. In 2018 and 2019, Neo incurred significant losses, but it made a comeback after the news of the Chinese government’s plans to invest in blockchain technology broke. The pandemic then put the entire cryptocurrency market in decline until mid-2020, when a bull run began (including Neo).
Neo’s future outlook is currently strong (assuming Ethereum deposes it). Price prediction websites place Neo’s price anywhere from $90 to $900 by 2025 and 100 times more by 2030. In reality, however, no one knows for sure which coins will survive in the coming years. They will need to fight hard even to maintain their position, and luck is undoubtedly a factor in government policy.
There are many different ways to trade NEO. If you wish to purchase NEO, there is a relatively straightforward operation to do on trading platforms. It has become more accessible and easier to buy NEO as it has gained in popularity. However, trading platforms will not have every cryptocurrency on offer, and it is worth checking that it does sell NEO before signing up. The other thing to remember with NEO is that it does not sell fractions of its coin, e.g., you cannot buy 1.5 NEO, only 1 or 2.
Buying NEO: Where?
Some of the better brokerages, including our very own TradeOr, allow you to not only purchase NEO but implement different types of trades too, including derivative bets such as CFDs (“contract for differences”). CFDs allow you to leverage more money on your trades without actually buying the underlying asset. You can apply these techniques when trading stocks, commodities, and forex on TraderOr. In addition, you can access a wide range of market analysis tools to help make accurate price predictions.
Neo closely follows Ethereum’s model and, like Ethereum, it has enjoyed successes in the cryptocurrency market. NEO’s price has recently made a comeback, and its long-term prospects look good. That being said, Neo cannot simply sit back. They will need to continue releasing updates and, ideally, implement some significant changes to differentiate itself and give it an edge over Ethereum. If you are interested in trading NEO, we highly recommend using our online trading platform, TradeOr. You can set up many different derivative contracts, including CFDs, to leverage more money, and garner more significant profits.