NEO is a cryptocurrency that was launched in 2014 by two Chinese developers, and that mainly gained name recognition due to the huge price increases in the bull run of 2017. Since then, the project has become relatively less popular, but the development of the network is still ongoing. in full swing. The NEO blockchain is used for transactions based on smart contracts, which is why NEO is sometimes referred to as “the Chinese Ethereum”. We will explain below why this is a skewed comparison.
The purpose of the NEO network and associated token is to stimulate a smart economy, in which transactions can be done digitally and efficiently. In that sense, they are well on their way, because since the NEO 3.0 update in 2020, ten thousand transactions per second can be processed with ease. Moreover, those transactions are always negligibly low in costs. That is something every blockchain builder dreams of, but NEO is still an outsider in the crypto world. On this page we discuss everything you need to know about the NEO token.
The NEO network uses proof-of-stake for transaction decision-making, which means you cannot mine this token. The algorithm that is used for the validation is, just like that for BNB, for example, a so-called Byzantine Fault Tolerant (BFT) consensus mechanism. We’ll spare you the technical details here, but at least no mining rigs are involved. At the end of 2020, a new version of the digital infrastructure, called NEO 3.0, was introduced.
The network is managed by nodes that receive staking fees. These are then paid in a second token on the chain, called GAS. It allows to pay transaction fees on the network, but these tokens are also tradable and have their own independent rate.
Important fact for NEO: the network is extremely centralized. Currently, even 7 out of 8 master nodes are managed by a single (Chinese) entity, which in turn is actually under the control of the Chinese government. That is of course diametrically opposed to the view of Satoshi and Bitcoin, but the founder invariably argues that it is a conscious choice to centralize. That will be!
Chinese roots (and leaves)
The project was developed in 2014 in China by two developers named Da Hongfei and Erik Zhang. At first they called the company Antshares , but that name was rebranded to NEO in 2017 . Their ambitious goal is to change the world by giving wings to the smart economy with the power of the NEO network. As just mentioned, they are currently trying to do that with an almost totally central network structure, and that doesn’t work as well as they had hoped.
Although the price of the token has recovered quite a bit from the bear market since the end of 2019, NEO has slipped in the ranking of high-profile projects in the crypto world. An important cause is the development of new projects such as Polkadot and BNB, which have decreased market share from NEO and its associates in recent years. Perhaps most importantly, the project continues to centralize – that just doesn’t appeal to the average crypto investor. The Chinese inventors have not yet realized this.
Nevertheless, there is reason for optimism. Where the Chinese rulers were skeptical about digital currencies and blockchain technology for a long time, that has changed in recent years. The communist party is now investing heavily in the blockchain sector, and China is leading the way worldwide in the field of digital banking currencies (also called CBDCs). NEO is lucky again, because with the support of the Chinese government it is a bit easier to grow.
What can I use NEO for?
Still, Ethereum is the tentative winner, as the distance between the two projects has become immense in recent times. This could be due to many things, but in the end there is one important thing that distinguishes Ethereum from NEO: it is decentralized. In addition to looking for returns, the world of crypto investors is also looking for the aspect of innovation and democratization.
The central interference that is preferred in China is not necessarily worse, but less attractive when you have the smart contract platforms to choose from. That seems to break up NEO and play into the hands of Ethereum – but otherwise NEO is very similar to its inspirator in the basic functions. Due to the good proof-of-stake architecture (and central validation), these transactions usually take place quickly and efficiently.
How do I get NEO?
As described, NEO shares many features with other smart contract platforms such as Ethereum and Cardano. For example, you can discontinue NEO to participate in the validation decision, and receive compensation in return. The only problem is that you get those fees in GAS tokens. That too is not unique to the NEO network: not one, but two crypto currencies on the network. Strike proceeds are therefore also paid out in that GAS unit. If you are somewhat familiar with Ethereum, then you know that this construction is not really an invention of your own (and not even the name).
The only way to get NEO is to buy it on an exchange that offers it. Then it is easy if the cheapest exchange in the Netherlands sells exactly the token you are looking for. Via the button below you can create an account with Bitvavo and benefit from free trades for the first €1000 in credit you trade.