NOTE: Not financial advice.
Founded as AntShares by Da Hongfei and Zhang Zhengwhen in September of 2016, NEO is the first decentralized, open source blockchain cryptocurrency founded in China. Its vision statement is to become the “distributed network for the smart economy.” Neo aims to accomplish its goals through smart contracts, much like Ethereum. It diverges greatly from Ethereum in its technology and features. These differences will be discussed in this coin profile.
The core of NEO’s utility revolves around its smart contract system, a concept now familiar to many in the crypto community thanks to Ethereum. For those who are unaware a smart contract is a computer program or protocol that carries out some predetermined function. This could be the creation, verification, or enforcement of a contract. The code of Bitcoin allows some actions to be taken such as holding in escrow, time locking, and payment channeling. However, Bitcoin’s script language is Turing-incomplete, and since we are getting into very technical territory here, let’s just say that it makes Bitcoin’s functions quite rigid.
While Ethereum improved upon Bitcoin’s code greatly, NEO took it a step further. Its script language is claimed to be Turing-complete, while Ethereum’s falls short. This allows greater flexibility in terms of the function of tokens. The developers of Ethereum also managed to drastically decrease network costs, an innovation implemented in NEO as well. Because of these similarities, NEO has been nicknamed the “Chinese Ethereum.”
The team developing NEO has the ambitious goal of allowing individuals or businesses to convert traditional assets into digital ones. These assets, potentially stocks, will be digitized using a smart contract, and will be protected by law using digital certificates. This could have serious ramifications for the financial sector as a whole. If financial businesses adopt NEOs technology, the coins value could grew exponentially.
A major perk is that NEO does not have its own exclusive programming language for creating smart contracts. Contrary to other cryptocurrencies, it allows developers to use existing programming languages. This means that the immediate number of potential smart contract developers is large. More programmers means more diverse ideas and applications, which means NEO should enjoy a fairly stable future.
While the previously mentioned features are all reasons for excitement, there is one more that stands out to potential investors. NEO has an integrated dividend system, called GAS. GAS is a separate asset and each time a new block is generated eight GAS is generated for every NEO in existence (100 million). This GAS will then be distributed to all NEO holders. The larger your NEO holdings, the higher your GAS dividend. This means that NEO holders have the opportunity to earn passive income if they purchase a significant amount of NEO. At time writing, if you were to own 10,000 NEO, you would be earning around $25k USD a year. Transactions within the NEO network require GAS, so this secondary token’s value cannot be taken lightly.
Even in the budding world of cryptocurrencies NEO is still relatively young. At just over a year old, NEO has already experienced its share of uncertainties. In September of 2017 China instated an ICO ban. Since NEO is based in China it was hit hard by this regulation, and investors grew afraid that the project would be shut down. Panic selling ensued driving the price down from its all time high of $50 to $13. This was only for a short while however, and NEO managed to climb back up to $30/token that same month. It has now stabilized around $35. For now it appears that NEO has weathered the storm and is headed for calmer waters. With a total supply of 100 million tokens NEO could experience a price growth similar to that of Ethereum’s, assuming its adopted at a similar level.
Evidently, the core of NEO’s appeal is its many technological innovations and its dividend system. NEO has already experienced its “hype pump” in September and is not likely to turn investors a quick 3x or 4x profit in the next few months (don’t quote me on that, you never know with crypto). However, as a long term hold, there are few coins that are as qualified as NEO. With a hardworking and well equipped team, massive use-case potential, and the opportunity for passive income NEO has all the makings of a mainstay cryptocurrency. Its platform will draw new users and investors due to its usability. If you are looking to make a quick buck, this coin is likely not for you. However, if you are willing to look years into the future and want to accumulate something which can make you passive income at an increasing rate, then you should definitely conduct more research on this coin.