NEO cryptocurrency. Review of the platform, competitors, prospects

2021.03.16 2021.03.16 NEO cryptocurrency. Review of the platform, competitors, prospects

Oleg Tkachenkohttps://www.litefinance.org/blog/authors/oleg-tkachenko/

NEO cryptocurrency: The main idea of the platform, advantages and drawbacks, NEO mining. How to buy NEO, review of wallets. Analysis of competitors and prospects of the cryptocurrency

The NEO cryptocurrency is considered to be one of Ethereum’s main competitors. Though these 2 platforms are both meant for the development of applications, their purposes are different. The NEO platform is developed for combining the virtual and real economies and it’s not meant for decentralisation and anonymity. The emphasis is made on safety here. In spite of sharp rises and falls, NEO remains an attractive tool for earning with LiteFinance. Read further to learn about NEO’s prospects, what NEO is like, and what makes it different from other similar platforms.

NEO - the Chinese killer of Ethereum?

Not long ago, some new NEO-pairs were added to LiteFinance’s arsenal of cryptocurrency tools. NEO is called “Chinese Ethereum”, though they differ a lot in the structure of a platform and the approach to an information exchange. We may even say they are meant for different goals, but NEO developers tried way too hard explaining their idea. If the goals of Ethereum are understandable, NEO’s are quite complicated, which will confuse the outsiders. The fact alone that two cryptocurrencies are related to the platform - NEO and GAS - would be enough. Why? Read on below.

Not long ago, the currency from the top 10 list by CoinMarketCap (coinmarketcap.com) dropped to the 15th position. Why did it happen, what is the platform like and how can one earn from it via LiteFinance? Read further.

NEO - distributed network with smart economy

NEO (neo.org) is a decentralized platform for developing applications which from the very beginning was conceived as the main competitor of Ethereum in order to solve most of the latter’s problems. Vitalik Buterin’s platform appeared in 2013 and ran one of the most successful crowdsales as early as in 2015. That pushed two Chinese developers - Da Hongfei and Erik Zhang - to create their own analogue. Initially, the project was called AntShares and aimed at combining the virtual and real economies. Most probably, the platform was supposed to help real corporations create their virtual analogues on its basis in order to merge real and virtual money flows.

In China, AntShares becomes popular very fast, that’s why they decide to fully rebrand the startup. It seems the developers themselves didn’t expect such success and decided to approach the project in a more serious way. The technical documents were fully rewritten, the blockchain nodes were updated and huge initial currency offering was launched. That’s how NEO appears in June 2017. One of the reasons for rebranding is that AntShares was oriented to China and was badly supported from the marketing point of view. At the very least, the documents required translating into European languages.

What is GAS? NEO is a platform where 2 cryptocurrencies serve as assets: NEO and GAS. NEO is an indivisible unit: a user cannot buy less that 1 token, but the system provides for various kinds of commissions and rewards. And this role is perfectly played by GAS:

• NEO allows a buyer to get a share in the blockchain and a vote when making a decision. Besides, NEO allows voting for representatives and getting a share in the commission paid by the participants in the form of dividends.
• GAS is the fuel of this system. This cryptocurrency is used for paying commission for recording data in the blockchain, other kinds of service fees, and so on.

Why are the things so complicated? Ask the developers :) However, they promised to make NEO divisible after updates.

Benefits of NEO:

• No scalability problem which Ethereum is only starting to combat. NEO can process up to 1,000 transactions per second, which is a few dozens of times faster. According to the developers, the speed of 10,000 transactions per second is quite reachable in the future.
• Smart contracts can be written in any of the following languages: JavaScript, C#, Python. Many know them whereas Ethereum requires the knowledge of the Solidity programming language.
• Focus on business and regulation. The Chinese regulators don’t champion anonymity, so providing services to China meant openness in the first place. “NEO’s goal is serving the real economy, that’s why we stand for regulation”, - one of the developers will say later. NEO’s openness is a pass ticket for the USA and Europe where such projects are more favoured. As for Ethereum, it prioritizes anonymity.
• Low transaction fees.

Someone consider the 2-currency feature to be an advantage, but there’s no explanation why. Also, another advantage is the anti quantum cryptography mechanism NeoQS - anti-hacking protection through modern processors.

However, the efficiency of this mechanism hasn’t been verified in practice.

The number of NEO and GAS tokens is limited to 100 million, the number of NEO coins issued for trading - to 65 million. The cryptocurrency cannot be mined because the developers decided to be original in everything. Instead of regular Consensus algorithms used for authenticity proof (PoW, PoS or DPoS), the Delegated Byzantine Fault Tolerance method has been introduced.

Where to buy and how to store NEO

1. Exchanges

Despite a relatively big fall of NEO’s price, it’s still interesting for investors and doesn’t fear delisting. The trading volume is distributed quite evenly even though it’s a bit shifted towards the Binance exchange (34-36%) after the investors’ disappointment. NEO can be bought solely for BTC or USDT. Bitfinex ranks second (7-8%). Here the token is sold for the USD (cash) and the Japanese yen. HitBTC (6-7%) ranks third.

According to CoinMarketCap, the coin is listed on more than 100 exchanges, but real trading takes place on just 40 of them or a bit more. Out of the most exotic NEO pairs, we can single out TKY, NKN, GAS (third-level cryptocurrencies), the Indian rupee, the South Korean won, and so on. These pairs account for less than 1% of volume but it’s still an indicator of the multinational interest in the platform. можно выделить TKY, NKN, GAS (криптовалюты третьего эшелона), индийская рупия, южнокорейская вона и т.д. Правда, оборот по этим парам составляет менее 1%, но тем не менее это показатель мультинационального интереса к платформе.

NEO’s share in the Binance’s volume is only the 17th, which is not an optimistic picture. And it yields to some small-cap tokens.

However, NEO is on the TOP 20 list while its fellow cryptocurrency GAS isn’t even included into TOP 100 list. With its maximum historical cost of 70+ USD, today’s price is a bit more than 5 USD and the OKEx exchange accounts for over 50% of volume. It’s hard to say where this difference in capitalization comes from.

2. Wallets

It’s worth mentioning again that storing cryptocurrency in the wallets of exchanges bears risks. In case the account is blocked or the coins are stolen, you won’t be able to prove the robbery. Cold and hardware wallets have been the safest storage options so far. Unlike one of the competitors, EOS, that launched its first wallet just 2 months ago, NEO can boast more than 10 wallets of different types: Desktop, mobile, web, or hardware.

The main differences between the wallets of the same category are the following:

• Set of functions. For example, the NEON Wallet allows getting free GAS.
• Order of setting. The simplified version (NEO Tracker) doesn't require the knowledge of a code for setting and is suitable for beginners. Other versions require full synchronization with NEO (more complicated).
• Compatibility with browsers and language of wallets.

General principle of setting: download the app from the NEO site, enter your password, download Keystore, copy a secret code and follow the instruction.

NEO investment prospects

“Make the economy smart” - such was the goal of the Chinese developers. Despite a similar approach to the main idea of the NEO and Ethereum platforms, their goals are different. Ethereum was developed for creating diverse applications (most of which are “junk”) whereas NEO’s target was to integrate the real economy into a virtual environment. The developers even compare NEO and Ethereum with Amazon and AliBaba - the platforms seem to be similar, but the are actually focused on different markets and apply different organizational approaches, which minimizes competition between them. In other words, NEO can make its way to TOP 5 without forcing Ethereum out.

The developers’ ambitions are high: they plan to outperform all the competitors in terms of capitalization in just 2 years, among which:

• Ethereum. A short comparative description of both platforms has been already provided above.
• Cardano. Quite a new project whose success is still to be estimated: the platform hasn't been launched completely yet. NEO has an advantage here: its pitfalls have been worked on for 3 years already.
• EOS. Quite an ambiguous start-up that was even criticized. This platform meant for developing applications focuses on the safety of data transmission. The fact that EOS moved from TOP 15 to TOP 5 just within a few months and NEO fell to TOP 15 is quite eloquent.
• Qtum. Quite a serious competitor from the TOP 30 list created by Chinese developers as well. Instead of smart contracts, it uses master contracts which are analogues of agreements between contractors in the real world. Provides for an industry-specific division of master-contracts. The platform is tailored to business goals and has already taken first start-ups under its wing.

Here we should come back to the 2 distinctions that single out NEO among its competitors:

• No anonymity. OnChain (the controlling company) may access the history of transactions and trace any movements of information.
• Pseudo-centralization. Thirty-five million tokens are officially retained by the developers and no one knows how many tokens may still belong to them through daughter companies.

Both moments are ambiguous. On the one hand, the developers have made it clear that they are focused on absolute transparency and cooperation with the regulators. On the other hand, they reserve the right to violate those of the users and to use insider information.

This annual chart of quotes shows very well that the cryptocurrency’s price has been unstable:

• January’s peaks are due to the overall growth of the cryptocurrency market.
• There’s no information on the reasons of the sudden slump that took place on 6th February.
• Another serious slump by over 27% in early March was due to a major failure which took place on 3d March and wasn’t expected at all. We won’t go into details. But it’s worth mentioning that in mid-August there was information on the Internet about new vulnerability which could make a DDoS attack possible.
• The latest significant growth at the end of April- beginning of May cannot be logically explained. NEO and GAS rose by 15% and 16% respectively in 1 day. The only possible reason for that could be a buy-up of altcoins by a huge investor.

Also, we need to mention the hacking of the Apex start-up that chose NEO as a platform and crowdsale at the end of January 2018. Those cases are not single, which points to technical problems of the platform.

Conclusion. The NEO cryptocurrency can be called “a dark horse” of the whole market. Not long ago, it was on the TOP 6 list, and today it’s only on TOP 15. However, considering its rises and falls, it’s very likely to claw back its losses again. Such a roller coaster is a good opportunity for investors to earn. The main factors that influence the price are: the general market situation, the developers’ ability to remove vulnerabilities fast and perfect the platform technically. So, I invite you to join LiteFinance’s cryptocurrency traders and test the new instrument. Please share your ideas and strategies in the comment section.