Neo Coin: The "Chinese Ethereum" Explained!
What is NEO Coin?
NEO coin is the cryptocurrency that powers NEO, a decentralized applications (Dapps) platform. It's similar to Ethereum and has been called "The Chinese Ethereum" due to its Chinese origin.
Both platforms aim to take blockchain technology beyond just payments. Through the use of smart contracts, or self-executing contracts made of computer code, both envision a future where blockchain powers use cases like DeFi (decentralized finance), ICOs (initial coin offerings), decentralized prediction markets, and secure identity management.
Aside from its origins in China, there are other things about NEO that make it distinct from Ethereum.
Familiar programming languages
A famous example is The DAO hack, when an Ethereum-based venture capital fund called The DAO got hacked and investors lost $50 million of Ether.
The hacker was able to exploit a vulnerability in The DAO's smart contract code. While the ETH community pointed out this vulnerability to The DAO's developers, who could have fixed the vulnerability instead of losing investor money, the unfamiliar nature of building on Solidity likely played a role in this mishap.
While investors were able to retrieve their money when the Ethereum community decided to reverse the hack's transactions, the hack still demonstrated that building complex financial applications using unfamiliar tools could be dangerous.
dBFT2.0 consensus algorithm
One of the main criticisms of Bitcoin, the original cryptocurrency, is its slow transaction speed. For something that's trying to become a widely used currency, Bitcoin is often criticized since transactions take an average of 10 minutes to confirm.
NEO uses a different consensus mechanism (how computers or servers in the NEO network agree on and validate transactions). Known as dBFT2.0, NEO's consensus algorithm enables faster transactions, which is necessary for any blockchain that wants to become a backbone of the digital economy.
Imagine a network like Visa that does 1,700 transactions per second. If a smart contract platform like NEO wants to enable not only payments but things like decentralized prediction markets and secure identity management, too, transactions have to be fast the same way you expect a credit card transaction to be fast.
For now, NEO has been shown to handle several hundred transactions per second, which beats Bitcoin's ~5 transactions per second by a wide margin.
NeoID: self-sovereign identities
As mentioned earlier, one of the use cases that blockchain platforms like NEO aim to enable is secure identity management, also called self-sovereign identity.
Instead of having to submit sensitive identification documents like passports online, with secure identity management, users can verify their identities by merely presenting identity proofs that prove that users have already verified their identity with official organizations like governments and universities.
This is a big improvement over the current system, where you don't always want to hand over things like your passport information or national ID number just to use a product or service.
For example, organizations can lose your personal information to hacks, which happened in the Equifax data breach in 2017. Equifax, a major consumer credit reporting company (keeps track of credit scores), lost the data of hundreds of millions of people.
According to the US Federal Trade Commission, 147 million people, or about 45 percent of the US population, had sensitive information like names, addresses, dates of birth, Social Security numbers, and drivers' licenses numbers exposed. 200,000 people also had their credit card numbers stolen.
Managing data and identity is a huge challenge and will continue to be so in the increasingly digital world that we live in. Therefore, if NEO, through NeoID, is able to figure out security identity management, it could be a huge boon for NEO.
Another benefit of NEO is that it uses something called on-chain governance to do things like make changes to NEO's underlying technology.
On-chain governance means that the rules for making changes to NEO are encoded into the blockchain. Users can propose changes to NEO, which are then voted on by NEO coin holders.
This kind of governance can result in more participation from NEO community members.
In the case of Bitcoin and Ethereum, there is no formal on-chain governance procedure. Instead, the community has to figure out a way to organize themselves when it comes to making network changes.
Critics of off-chain governance point out that off-chain decision making often becomes centralized in the hands of network developers and miners, who validate transactions in crypto mining-based networks like Bitcoin and Ethereum.
In the case of Ethereum, when The DAO hack happened, critics claim that many community members were against hard forking, or splitting Ethereum, to create a new Ethereum blockchain that gave hacked funds back to victims of the hack.
Many users were instead in favor of a "soft fork", which would have just lead to any transactions involving the hacked funds being invalidated by the network.
Critics claim that hard forking Ethereum to reverse The DAO hack went against the blockchain principle of "code is law", or blockchains having immutable transactions.
Built-in oracle component: connecting smart contracts to the outside world
Something else that NEO is working on that will be huge if accomplished is a built-in oracle component.
As it stands, blockchains cannot interact with off-blockchain data, which severely limits their utility. Therefore, blockchain Dapps have been mainly limited to things like gambling, such as rolling dice with randomly generated numbers on the blockchain.
Oracles can connect blockchains to the outside world, and NEO wants to build one into the NEO protocol, instead of relying on outside sources.
Once blockchains can connect to external data is when the blockchain "revolution" might happen and use cases we cannot even currently imagine might emerge.
An analogy here might be the introduction of broadband internet. During the days of dial-up internet, when it took forever just to load a single web page, the Internet wasn't nearly as useful as it is today. Now the Internet is part of... pretty much everything.
NEO Coin China
Of course, no discussion of the "Chinese Ethereum" is complete without mentioning NEO's ties to China, the world's most populous country with ~1.4 billion people, or nearly 1/5 people on this planet.
NEO Coin Team
The parent company behind the NEO project, Onchain, is from China. Onchain has done a lot of important blockchain work in China aside from creating NEO.
For example, in 2016, they partnered with Microsoft China to improve the legal legitimacy of digital signatures. Another company they've worked with is Alibaba, where they worked with its cloud computing arm (Ali Cloud) on blockchain-based email solutions.
Onchain was also voted a top 50 Fintech (financial technology) company in China by Big Four accounting firm KPMG. It's even rumored that Da Hongfei, the Founder and CEO of Onchain, was contacted by Chinese government officials for guidance before China decided to ban ICOs and cryptocurrency exchanges in 2017.
Onchain has also created another popular blockchain project called Ontology that is impressive in its own right.
While none of these things necessarily imply that NEO will become a major smart contract platform in the coming years, it's evident that Onchain has worked on some important blockchain projects throughout its history and enjoys a prominent place in the Chinese blockchain community.
NEO Coin ICO
Many blockchain projects initially get off the ground by raising funding in what's known as an initial coin offering (ICO). Projects sell tokens to the public in return for development funding, usually in the form of Bitcoin or Ether.
Onchain CEO Da Hongfei and Co-Founder and CTO Erik Zhang founded NEO in 2014 under the name Antshares (changed to NEO in 2017). Antshares had two ICOs - one in 2015 and the other in 2016. Together, these fundraising events resulted in $4 million being raised for Antshares' future development.
The NEO coin supply is 100 million NEO. For NEO's current market capitalization, check our easy to read crypto charts!
NEO Gas Coin
NEO operates using two crypto assets: NEO and GAS.
NEO grants NEO holders governance rights, such as voting on network proposals (onchain governance as previously discussed).
On the other hand, GAS is used to pay for network actions like using smart contracts. In this sense, GAS is similar to gas in Ethereum, which also charges fees for using the network.
However, instead of paying gas fees using bits of Ethereum, NEO network users pay gas fees using a cryptocurrency literally called "GAS".
Mine NEO Coin (NEO Staking)
Holding NEO not only gives you governance rights but a form of crypto "passive income", in the sense that just by holding NEO, you receive GAS. This is similar to how ONT and ONG work in the Ontology ecosystem.
According to the site NEO to GAS, NEO pays an annual GAS "interest" of 1.62% for holding 100 NEO. Not bad considering that the average US bank savings account pays annual interest of 0.06%. In other words, 27x more interest than the bank!
To take advantage of this very easy earning opportunity, you can download a wallet that supports GAS claiming, such as the Exodus NEO wallet.
Where to Buy NEO Coin
Want to buy some NEO?
Given NEO's innovative features, great team, and income earning opportunity via staking, NEO is one of the most popular cryptocurrencies. Here are the easiest ways to buy it!
If you already have crypto
If you already have crypto assets like Bitcoin, Ethereum, and so on, you can use the Exodus NEO wallet to exchange crypto for NEO right from your wallet, without having to create an account!
If you don't have crypto
If you don't have crypto, you can use services like Cash App or Coinbase to buy Bitcoin before exchanging BTC for NEO in your Exodus wallet.
While there are many NEO wallets out there, one of the most popular ones is Neon Wallet, developed by City of Zion, a group of developers, designers, and translators working within the NEO ecosystem. Neon Wallet supports NEO, GAS, and NEP5 tokens (NEO-based crypto tokens).
If you'd like a wallet that supports NEO, GAS, and 100+ other cryptos and also has the following features:
- Focus on premium design and ease of use
- Allows you to exchange your cryptos right from your wallet - without creating an account!
- Gives you the ability to sync your wallet between desktop and mobile
- And has 24/7, fast human support if you ever need help
Exodus might be a good fit.
NEO Coin Future (NEO Roadmap)
Though NEO has come a long way since its humble beginnings as Antshares in 2014, the team is still striving to make many improvements.
For one, they've opened an office in Seattle, USA (home to companies like Microsoft) and hired former Microsoft Managing Director John deVadoss to run it. For the record, deVadoss helped build Microsoft Digital from 0 to half a billion dollars of business worldwide.
His main role will be to make NEO extremely developer-friendly in order to help NEO get ahead in the race for the limited pool of excellent blockchain developers in the world. His experience and NEO's new office in Seattle should help.
Another thing NEO is working on is further decentralization. One of the main criticisms of NEO is that it is highly centralized. Of the seven consensus nodes that validate network transactions, 5 are run by the NEO Foundation while the other 2 are run by City of Zion and Netherlands telecommunications company KPN.
To fight this, NEO now allows candidates to apply to become a consensus node on their site.
Aside from NEO itself, many interesting projects are being built on NEO, such as Travala, a crypto-based travel booking site, Nash, a decentralized crypto exchange (DEX) that will focus on usability (current pain point for DEXes), and 100+ more Dapps.
Moreover, NEO has developer communities based all around the world in 20 cities across 7 countries that all contribute to building the NEO ecosystem.
Connect with the NEO Project
Looking to connect with NEO? Here are the places where you can get the latest info on the NEO ecosystem.
Check our NEO wallet page towards the bottom for the latest NEO news.
NEO blockchain explorer (track your NEO transactions)
Will NEO coin really live up to its nickname "Chinese Ethereum?" Or will we be calling Ethereum the "Western NEO" in a few years' time?
If we consider the following:
- NEO's emphasis on China (a huge market in itself)
- It's emphasis on ease of development for Dapp developers
- Formalized governance structure
- Plan to integrate real world and blockchain using oracles
- Incentive for users to participate in the ecosystem with GAS "interest payments"
- New office in Seattle, USA led by a former Microsoft Managing Director
- Burgeoning ecosystem of Dapps and communities around the world
- 100+ NEO Dapps and more coming
- 300+ people have contributed to NEO's open-source technology
- 500,000+ NEO community members across various social platforms
- Worldwide NEO community presence, with developers stationed in 20 cities across 7 countries around the world
NEO's chances seem bright.
Information provided is for informational purposes only and should not be considered financial advice. Investing in crypto assets is speculative and carries a high degree of risk; you may lose some or all of the money that is invested. Past performance is not indicative of future results.