Last week the cryptocurrency markets bounced up in a surprise move. Majors like Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) retested their 200-day exponential moving averages. BTC rebounded to over $8,000, ETH to over $500, and XRP to over $0.65. The altcoin NEO (NEO) exploded over 50% from $44 to $70 on the Binance exchange. NEO is an intriguing young cryptocurrency with promising potential in the short-term.
NEO was created in February 2014 as AntShares by Chinese programmer Da Hongfei and his company Onchain. In June 2017, the nonprofit project rebranded to NEO, after the character in the film The Matrix. NEO currently has a market capitalization of $4.5 billion and is the tenth most valuable crypto. NEO is highly liquid and traded on the Binance, Bitfinex, Upbit, OKEx, Huobi, and Bittrex exchanges. NEO currently has a circulating supply of 65 million NEO and is programmed with a maximum supply limit of 100 million NEO. NEO has an active community on social media, including Reddit, Facebook
Essentially, NEO is a blockchain platform designed to allow people to build scalable and decentralized applications. Dubbed the "Chinese Ethereum," NEO uses a similar token and gas system, with the NEO cryptocurrency yielding GAS tokens in order to pay for the transaction fees of decentralized apps. NEO's consensus mechanism uses a delegated Byzantine fault tolerance algorithm and claims to be able to support up to 10,000 transactions per second. Special nodes in the NEO network are randomly tasked with validating transactions to secure the blockchain.
NEO's mission is specific and ambitious. It has what it calls the three prongs of the future smart economy: digital assets, digital identity, and smart contracts. That means its vision includes peer-to-peer exchange of digital assets and currencies, highly scalable smart contracts, and digital certificates to digitalize asset ownership. Finally, the NEO Virtual Machine supports programming languages like C#, Java, and Python. That allows developers to code and create smart contracts and decentralized apps with already existing programming languages.
NEO and Ethereum, though similar, have a few key differences. First, ETH is more popular than NEO, as evidenced by market capitalization and the number of people who are familiar with them. Second, ETH is geared more to the West, while NEO is focused on the East. With ties to Russia and Europe, ETH has taken off in the West. Founded in China, NEO remains an Eastern project that does not trade on most Western exchanges. Finally, ETH uses its newly-created programming language Solidity to write smart contracts. Solidity has faced much criticism from computer scientists and programmers. But NEO supports popular, well-known, and time-tested languages, making smart contracts more accessible and trustworthy to programmers.
At its current stage, NEO might have more room to grow. One major risk is the specter of harsh regulation or even outright prohibition from the Chinese government. But as China's largest crypto, NEO might have some negotiating power in case policy changes. A long-term, forward-looking project, NEO could serve as a buy-and-hold, diversifying portion of an investor's portfolio.
The author owns a small amount of BTC.
- https://www.fxstreet.com/cryptocurrencies/news/neo-price-analysis-this-breakout-has-momentum-on-its-side-201804150710
- https://neo.org/
- https://www.forbes.com/sites/nguyenjames/2018/03/29/why-chinas-largest-cryptocurrency-neo-is-aiming-to-build-a-smart-economy/#250a4a6854d4
- https://stocksgazette.com/2018/04/02/neo-neo-april-will-be-a-month-packed-with-events/
- https://www.bloomberg.com/news/articles/2018-01-11/china-s-largest-cryptocurrency-thrives-despite-intense-crackdown
