Despite the fact that the NEO platform is very similar to Ethereum, analysts are sure that NEO will become the platform of the future decentralized economy, and its cryptocurrency will have every chance to become the strongest in 2018. Considered the project and a detailed analysis of both platforms.
About the project
The non-commercial blockchain project NEO aims to develop a decentralized “smart economy” designed to create and manage digital assets through smart contracts. Launched in China back in 2014, the project was originally called AntShares. It was founded by the Chinese businessman Da Hongfei, who is also the head of OnChain, together with Eric Zhang, the chief developer of NEO and the technical director of OnChain. This company is directly related to the project and was launched specifically to support the NEO platform. So, to understand NEO, you need to understand and OnChain.
OnChain, like NEO, was launched in 2014 and is developing a DNA (Decentralized Network Architecture) system for businesses and government agencies in China. The DNA system is an integral part of the NEO project and is a blockchain system that companies and government agencies can use within their organizations. In other words, if DNA is a private blockchain system, then NEO is a public blockchain that unites these networks into a whole decentralized economy.
OnChain is a participant in several international projects and has partner agreements with large companies that participate in the development and development of the DNA system:
Hyperledger is a project aimed at implementing blockchain into the work of leading companies in the fields of finance, banking, Internet of things, logistics, production, and technology. OnChain became the first Chinese blockchain-company that entered the project.
Microsoft China is OnChain’s strategic partner for several projects and one of the company’s first partners. In November 2017 it became known that NEO together with Microsoft China will host the first developer conference in China – NEO DevCon.
Legal Chain – a company that works on the blockchain, together with Microsoft China develops digital signatures based on blockchain-technology. Legal Chain monitors the compliance of the technologies developed within the framework of the project with the existing Chinese legislation.
Alibaba – Within the framework of this partnership, OnChain has developed and implemented an e-mail certification service for Ali Cloud.
Fosun Group – the largest private conglomerate in China, has invested in OnChain to introduce blockchain into its projects.
The Government of China – in cooperation with the state bodies of China, OnChain is working on the introduction of public digital identification services.
Analysis of the NEO platform versus Ethereum
Cryptoinvestor and author Medium Hacker Noon Noam Levenson conducted a detailed analysis of the NEO platform and the associated cryptocurrency, comparing them with solutions presented in the network Ethereum. According to Levenson, the NEO platform outperforms Ethereum in several respects, and its cryptocurrency can be the strongest in 2018.
Despite the fact that both platforms pursue the same goal – to become a platform for the future economy – Ethereum and NEO have a completely different approach: Ethereum is the leading player in the smart contract market and DApps (Decentralized Applications), while NEO is working on A product that will be in demand in the future – the platform of a new “smart economy”.
In the “smart economy”, users will be able to work with new digital assets, where proof of possession will be realized with the help of a blockchain. And thanks to smart contracts digital assets can be traded, exchanged or used as a loan. At the same time, such a “smart economy” will necessarily be regulated by the states, especially if it is a question of companies or conglomerates working with digital assets.
NEO: For the successful operation of a smart economy based on smart contracts, participants in the NEO platform should have access not only to currencies but also to other digital assets. Such assets should include real estate, cars, gold, precious stones and metals, machinery, clothing and even food. Thanks to smart contracts, platform users can work and conduct various operations with “digital counterparts” of these assets. At the same time, digital assets will be subject to state control, and each of them will be certified.
Ethereum: Despite the fact that the Ethereum network involves the provision and work with various digital assets, it does not provide for compliance with state-established standards. While NEO provides this point, providing certification of digital assets.
NEO: If companies and states plan to introduce a blockchain into their structures, but also want to work with digital assets, then there can be no question of anonymity. Developers of the NEO platform take into account this fact, in connection with which the project develops in accordance with the requirements of local authorities and financial regulators. Also, the platform will provide the ability to digitally identify users. Within the framework of the project, a system based on the X.509 public key infrastructure will be presented. Moreover, digital identification will become one of the key aspects of the ecosystem of the NEO project.
Ethereum: Decentralized applications are responsible for digital identification systems for users. This approach is not much different from what NEO offers, but NEO developers are already working on the introduction of a digital identification system in the work of bookkeeper nodes (bookkeepers are users who support the network’s efficiency for a fee).
Community City of Zion
NEO: City of Zion (CoZ) is an independent community of developers, translators, and designers working on the development of NEO. This community works in open source and is funded by the NEO project. Thanks to the work of CoZ members on the platform, the NEON crypto console and the NEO block scanner have already been launched. They also provide a translation of the project documentation and are working on launching the NEX platform, which will be discussed below. And in November last year, 10 CoZ members received a prize totaling $ 270,000 as part of the DApp Development Award.
Ethereum: Ethereum does not have a similar community yet.
Interaction with crypto exchange
NEO: On March 25 this year, CoZ developers will host the ICO platform NEX, which will support payment systems and decentralized exchange exchanges in NEO. NEO and NEX will interact with the NEOX protocol, which will ensure the compatibility of both platforms. Because NEO uses a new model of tokens and smart contracts compared to Ethereum, the platform needed a solution for decentralized exchange services. This decision will be the NEX platform.
Ethereum: There are already ERC20 standard tokens in the Ethereum network, which can easily be exchanged for other crypto-currencies on decentralized exchanges.
DApps and ICOs
Ethereum: In this area, the network Ethereum unconditionally leads, being the preferred platform for ICO, as well as the development and launch of DApps.
NEO: In NEO, a dBFT (Delegated Byzantine Fault Tolerance) protocol is used to achieve consensus, which is a modified standard of the PoS protocol (Proof of Stake). This protocol has several weighty advantages and one key drawback. The dBFT protocol involves the participation in the consensus of several delegates, called bookkeepers, who will be selected by holders of the NEO token. Buccivers support the network, confirming transactions, and their digital identifiers are known to network members. To reach a consensus, 66% of bookkeepers should come to a consensus and vote for the corresponding decision. This makes the NEO network faster and more efficient, but this protocol cannot be considered decentralized.
Ethereum: To date, the Ethereum network, like Bitcoin, uses the PoW (Proof of Work) protocol, which must evolve in PoS. Two key disadvantages of PoW are the 51% attack vulnerability and the high power consumption required to ensure network security. In this regard, before the end of 2018, the Ethereum network will have to switch to the PoS protocol, which consumes much less power without exposing the network to attack risks.
NEO: To fulfill the specified conditions, smart contracts use virtual machines or VMs (Virtual Machines). This is a kind of environment of any smart contract. So, in order to analyze the effectiveness of a smart contract, you first need to analyze its VM. In a network, NEO VM automatically optimizes the smart contract code before launching it, organizing it so that it works with the highest efficiency.
Although this approach is more effective in the long term, reorganizing the code requires more time to start and execute a smart contract in the NEO network than in Ethereum.
Ethereum: Smart contracts were first applied in practice on the Ethereum platform, which gives unlimited opportunities for writing and working with them. However, to do this, developers first need to learn their own programming language platform – Solidity.
NEO: Since the network supports the dBFT consensus protocol, transaction confirmation in NEO is much faster than in Ethereum. So in NEO can be processed about 1,000 transactions per second. However, NEO pays for this network by the lack of decentralization in the dBFT protocol.
Ethereum: The current implementation of the Ethereum network is capable of carrying out 15 transactions per second, maximizing this number to 30 transactions. However, network developers are working on the implementation of solutions like Raiden, which since September 2017 is working in a test mode.
NEO: The NEO network does not provide for forks since all bookkeepers’ decisions are final. To ensure that the transaction is confirmed, 66% of the bookkeepers must vote for it. The same applies to decisions regarding the development of the network – the proposed changes should be supported by 66% of voting bookkeepers. This approach is necessary to implement the economy that the NEO project seeks to support. Without a system guaranteeing that the decisions made in the network are final, neither the financial industry nor any other market will be able to successfully exist in it.
Ethereum: Ethereum network forks follow the same principle as Bitcoin, and are often caused by the division of the crypto community into those supporting a certain update and those who are against it. So, the network Ethereum already passed through the fork, as a result of which appeared Ethereum Classic.
NEO: Levenson, the author of this analysis, believes that NEO tokens are one of the key benefits of the project. So NEO provides for the work of two tokens, issued in the amount of 100 million each:
NEO – this token assumes a partial ownership of the NEO platform share. In this connection, the holders of the token can vote and choose bookkeepers. Neo is also an indivisible token and is not intended to pay for transactions. To do this, the network has GAS.
The GAS token is used to pay for all transactions in the NEO network. So, when a company registers on the network or tokens the digital assets, it pays for operations in the GAS, which are further distributed among all holders of the NEO token. To get a GAS, you simply need to have an NEO token in your personal wallet, for example, NEON, where the “claim gas” option is provided. Also, bookkeepers receive a commission at GAS for confirmation of transactions.
Thanks to this division on NEO and GAS, there will be low commissions for transactions on the network, and that’s why: in case of high commissions, new users will not want to register their assets and transfer their digital counterparts to a blockchain. The fewer assets registered in the network, the less reward will be paid to the NEO holders. In this regard, holders will rather vote for bookkeepers who will support low commissions. Passive earnings GAS is one of the key advantages of the network. To do this, you do not even need to confirm the share of ownership – this is done for the users of bookkeepers.
Ethereum: Ethereum network operates crypto-ether, the second largest market capitalization. To carry out operations (launching smart contracts, conducting transactions, etc.), GAS is also used on the network, but in this case, GAS is a small fraction of the existing broadcast. There is no separation between GAS and ether. When using the PoS protocol, there is no remuneration for the block, and the miners will earn a percentage of the commission.
NEO’s cryptocurrency entered the market in September 2016, and of the 100 million tokens still available, 65 million is still available. To date, NEO’s cryptocurrency is the eighth largest market capitalization company, which is $ 10.4 billion. The cost of one NEO coin is $ 160.52 or 0.01310110 BTC.
Cryptocurrency is represented on such exchanges as Binance, Bitfinex, Bittrex, Huobi, Okex, Kucoin, Hitbtc, Cryptopia, Gate, Quoine, Livecoin, Qryptos, Allcoin, and Livecoin.
For storing cryptocurrency, developers propose to use the NEON crypto-purse. Also, the following wallets support currency: Ledger Nano S (hardware), NEO GUI (desktop), NEO Tracker (online), NEO Wallet (online) and Ansy (paper).