NEO ICO - A New Smart Economy
WHAT IS NEO?
Often referred to as the “Chinese Ethereum”, NEO is the next generation platform for smart economy. NEO is the first decentralized open-source cryptocurrency and blockchain platform established in China. So far, NEO has seen a colossal rise in popularity because of its rapid growth. NEO identifies itself as “distributed network for the smart economy”, its ambition speaks dimensions regarding their concept of a smart economy. Similar to Ethereum, NEO has its uniquely interesting features which call for a deep exploration of this new platform.
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THE NEO BLOCKCHAIN
According to NEO’s website, 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.”
OnChain is a Shanghai-based company specializing in the research and development of blockchain-related applications and technology. This company was established by CEO Da Hongfei and CTO Erik Zhang. The research and development of NEO began in 2014.
Like other ICOs, the NEO project had to find funding through crowd sales. The initial crowdfunding event happened on October 2015 which lasted for 10 days. The first event was able to sell 17.5 million NEO tokens amounting to a total of $550,000. Another 22.5 million NEO tokens, worth $4.5 million, were sold during the second crowdfunding event.
THE NEO SYSTEM INCLUDES:
Delegated Byzantine Fault Tolerance (DBFT) Algorithm – This is a consensus apparatus (alternate to the traditional proof of work/stake) that permits the platform to repel the Byzantine Generals Problem and preserves consensus even if some nodes contain malicious intentions.
NeoX – This platform will establish the ability to execute and act across different blockchains.
NEO Contract – It is the apparatus in generating smart contracts effortlessly in scalable, high performance environments that assimilates pre-existing codebases (e.g. C#, VB.Net, F#, Java, Kotlin)
NeoFS – This feature grants decentralized storage (similar to a peer to peer Dropbox)
NeoQ – A lattice-based cryptographic apparatus which generates problems that cannot be solved by quantum computers making it quantum-proof.
NEO USE CASES
Digital Assets: NEO’s goal is to transform traditional assets into digital ones with the assistance of smart contract technology. These digital assets will be decentralized and safeguarded by law utilizing digital certificates on the blockchain, which in turn, assures trust and security.
Digital Identity: NEO will facilitate the development of identity information of firms, institutions, individuals, and entities in an electronic medium. These identities will be accessible via multi-factor authentication mechanisms such as facial recognition, biometrics, voice recognition, and SMS.
Smart Contracts: The smart contract platform created by NEO is truly radical. In NEO, developers who are more familiar using C#, Java, or other mainstream programming languages are given the chance to code their own smart contracts. NeoVM more commonly known as NEO’s Universal Lightweight Virtual Machine has the advantage of high certainty, high scalability and high concurrency for smart contracts on the blockchain.
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NEO VS. ETHEREUM
Unlike Ethereum which has its own programming language known as solidity, NEO supports the more common programming languages such as C#, VB.Net F#, Java, and others. This is the key advantage of NEO when it comes to programming. Developers are not required to enter a steep learning curve to be familiar with solidity. As a result, developers will be empowered to join and participate the growing blockchain community.
Moreover, NEO in its totality is a project within the blockchain that uses digital identity through the blockchain to digitize, manage, and automate assets with the use of smart contracts to create a “smart economy” within a distributed network. Ethereum’s goal on the other hand is to establish a medium for developing DApps to create a globally-accessible, free, safe, and a better Internet as a whole, Internet 3.0.
WHAT IS A SMART ECONOMY?
Digitized physical assets will be at the forefront of a smart economy. These newly digitized assets will have their individual proofs of ownership embedded within the blockchain. Like any other asset in a conventional economy, these digitized assets can be sold and traded with the use of smart contracts. Validation of ownership can be secured and processed with the aid of the decentralized model of the blockchain. Various versions have already been seen: from proposed supply chain modernizations to decentralized autonomous organizations more commonly known as DAOs. Ethereum will most likely give backing to these same features NEO has to offer. The key difference between NEO and Ethereum will be the disparity in their objectives.
Unlike other blockchain and cryptocurrency platforms, whose key feature is a decentralized platform which avoids any form of government regulation, NEO’s smart economy model will still be operated under government regulations. This is a very important distinction between NEO and other blockchain platforms. Consequently, for a platform to operate under this “smart economy” paradigm, developers must build and design the system keeping in mind the strict government regulations. To sum it up, NEO is very similar to Ethereum except that NEO has given emphasis on building “smart economy” platforms under government regulation.
STRENGTHS OF NEO
NEO is more accessible because of its feature that allows developers to make smart contracts using the popular mainstream programming languages such as C#, F#, VB.Net, and Java. This feature may potentially outshine Ethereum because of the steep learning curve required to be familiar with Solidity, Ethereum’s own programming language.
NEO is a platform that aims at building a “smart economy” model that operates under government regulations. This could potentially change the perception of governments towards blockchain and cryptocurrency platforms which may lead to acceptance and a great reduction on bans and regulations.
Moreover OnChain, NEO’s sister company, is already popular among the financial service industry. OnChain is already working alongside the Chinese and Japanese governments and corporate titans like Alibaba.
Finally, NEO is also considered more of an open-source public cloud model which will operate separately from OnChain. However, NEO and OnChain can also be interconnected when it comes to cross chain performance as seen with NeoX.
Also, read our article on the history of blockchain!
CONCERNS ABOUT THE NEO ICO
Fundamentally, NEO has already mined 100% of its tokens. NEO will be operating under the proof of stake (POS) model which enables its users to collect additional coins in the form of GAS (Ethereum token) by storing them in a wallet. NEO dispersed its tokens through a crowd sale event which granted people the opportunity to invest. NEO still made a profit from the sale. Dispersal of tokens is greatly centralized because there is no mining but only issuance of tokens.
NEO was split into two batches. 50 million were sold through crowd sales while the other 50 million were left under the discretion of the NEO council.
A total of 50 million NEO tokens have been dispersed before the “lock out” period on October 16, 2017. The funds were utilized for the following purposes:
- 10 million NEO tokens were allotted to the NEO council members and developers;
- 10 million NEO tokens were earmarked as incentives for developers in the NEO ecosystem;
- 15 million NEO tokens were invested into other complementary blockchain projects being utilized by NEO; and
- 15 million NEO tokens were allocated for contingencies.
Others may feel uneasy knowing that millions of NEO are in the wallets of the developers. Dumping is the first risk that comes to mind. Dumping on the market can potentially destabilize the moral and most of all, the price of the economy.
Some of the fund’s allocation is quite vague to begin with. To be sure on what the definite parameters are on which the funds are being utilized is quite impossible. This ambiguity may end up surprising investors as the project evolves.
Further, like any other cryptocurrency initiative, a network effect of adoption must take place for a platform to be considered sustainable in the long run. In the case of NEO, on a developer’s use level, this has not taken place yet despite of all the potential NEO has to offer.
THE TOTAL SUPPLY OF NEO AND GAS TOKENS
- NEO - previously recognized as Antshares (ANS)
- GAS - previously recognized as Antcoins (ANC)
With a total hard cap of 100 million tokens, The NEO token performs as the investment token of the NEO blockchain. These tokens are used for block creation, network changes, management and requirements for consensus. Unlike other known tokens, NEO tokens were already pre-mined during the creation of the genesis block.
Unlike other cryptocurrency tokens, NEO tokens are not divisible. One (1) will always be the NEO token’s smallest value.
Like NEO tokens, GAS tokens also have a total hard cap of 100 million tokens. GAS tokens fuel the NEO blockchain. Unlike NEO tokens whose smallest value will perpetually be one (1), GAS tokens are divisible by a factor of 1/10^8. Moreover, these tokens are not pre-mined and will be produced through a decay algorithm in a span of 22 years.
GAS tokens will be utilized for resource appropriation and network fees for operations like running smart contracts, DApps, and rewarding incentives for blockchain maintenance.
POSSESSION OF NEO REWARDS YOU GAS
GAS in a Proof of Stake-like reward generated with every new NEO block. The turnout will bring about 8 GAS per block which will be reduced by 1 per year. This process will continue until 100 million GAS tokens are created. After the production of 100 million tokens, GAS will no longer be created.
NEO creates GAS tokens for holders. GAS is required to be able to use the NEO network and its services. In theory, this will create a demand in the economy because it will be used in the ecosystem which will greatly benefit the holders. The demand for GAS will be proportionate to the number of blockchain projects NEO is involved in. The more NEO projects, the merrier.
NEO AND THE FUTURE
NEO has great potential that could probably rival or even surpass Ethereum. NEO specifically designed a unique Proof of Stake consensus apparatus on which the system runs. As of now, it is arguably the finest Proof of Stake apparatus available. Another feature of NEO’s blockchain is its quantum computer proofer providing an advantage compared to other projects within the blockchain.
Moreover, NEO has made the development of DApps and smart contracts much easier for developers because the platform allows mainstream programming languages to be used which lowers the entry barrier. This is a major advantage because it greatly reduces the time-cost factor for learning new programming languages such as Ethereum’s solidity. This single feature may prove NEO as a great threat and competitor to Ethereum. The more acceptable programming languages accessible to developers may lead to a boom in deployment of DApps and smart contracts throughout the platform which will result in a price rally.
Just like Ethereum, NEO looks a lot better than other forms of blockchain and cryptocurrency platforms because it is also Turing Complete.
The greatest challenge for NEO right now is the massive regulation scene in China. The Chinese government has constantly been on a crackdown against ICOs and the cryptocurrency industry as a whole. NEO’s future hangs in the balance. It will all depend on whether or not the Chinese government sees NEO like any other cryptocurrency platform or a sustainable platform that has a specific purpose that fosters a smart economy platform built to comply with strict government regulations. Will China take notice? Only time will tell.