How Does NEO Differ from Ethereum?
In the cryptocurrency world, the NEO platform is basically Ethereum’s smaller, Chinese cousin. However, despite Ethereum’s astronomical price rise over 2017, NEO’s gains outstripped it many times over. $1000 invested in NEO on January 1 2017 would be worth over $550,000 today, compared to $87,500 for the same amount invested in ether over the same period. Yet whether this is due to NEO’s underlying value proposition or simply the often irrational price movements in the cryptocurrency world is uncertain.
Similar Goals?
NEO, much like Ethereum, is a blockchain-based platform that provides a toolkit for developers to build decentralised applications, organisation and smart contracts. At first glance, the two platforms seem to have shared goals. Ethereum’s founders are intent on making a “more globally accessible, more free, and more trustworthy internet”. Meanwhile, NEO’s creators want “to digitise assets, to automate the management of digital assets using smart contracts, and to realise a “smart economy” with a distributed network”.
That’s quite a lot of jargon but there are subtle, nuanced differences. While both platforms indeed have similar capabilities, there are unique differences in their stated objectives. Ethereum is presently consolidating its position as the go-to platform for decentralised applications and ICOs, nearly all of which take place on its network. Ethereum is actively giving developers more power and control over the applications that they build in an effort to bring about Web 3.0.
A Smart Economy
So what is NEO doing? Well, rather than focus on eating away at Ethereum’s market share, NEO appears to be doubling down for the future. NEO’s mission of realising a smart economy, in essence, means that assets in existence today will be digitised and listed on the NEO blockchain, enabling them to be managed, bought and sold through smart contracts. Through the inherent proof of ownership that blockchain offers, NEO can protect and validate assets.
Ethereum can do this too. However, Ethereum is focused on enabling developers to build new ways to leverage the internet, rather than digitising assets. NEO’s vision of a smart economy lends itself particularly well to government oversight of transactions – essentially the polar opposite of what Vitalik Buterin, Ethereum’s founder, wants to build. NEO’s founders clearly believe that oversight and regulation are here to stay and intend to capitalise on this reality.
The Role of Government
It’s clear as day that China likes to play by its own rules. In most cases, this involves government regulation making it impossible for western tech companies to operate in China without breaching the law. A classic case-in-point is China repeatedly blocking Google over the years for contravention of censorship laws, which, intentionally or not, made way for Baidu to grow into an international tech behemoth. Similarly, Amazon has been defeated in China by Alibaba, which is now a major world player on the international stage.
NEO’s founders make a great deal of their platform being the first “compliant” blockchain platform, which seems to hint at some form of collaboration with the Chinese state. Ultimately, NEO’s smart economy vision offers a future where everyone has a digital identity, which will enable governments to closely monitor transactions and smart contracts on the blockchain. Ethereum has no such ambitions, nor do many other crypto-enthusiasts.
Overall, while Ethereum and NEO share capabilities, their goals are enormously different. Ethereum allows independent developers to prosper while NEO makes it easier for governments to regulate the blockchain. Therefore, the two platforms are not truly competitors and Ethereum’s massive lead in the ICO and DApp market might be irrelevant to NEO achieving its ambition of a regulated smart economy.