NEO, Future of Smart Economy
The Fordham FinTech Network Research & Development Team
By Louis Liu
As of 2/1/2018
- Market Cap: $75 B or 853,151 BTC
- Price: $115.20
- Volume: $374,408,000 USD or 42,658 BTC
- Max Supply: 100,000,000 NEO
What is NEO?
NEO is a community-based, non-profit blockchain project better known as the Ethereum of China. However, the two have very different consensus algorithms and blockchain protocols. NEO aims to use digital identity and blockchain technology to create a smart economy where digital assets can be exchanged freely and automatically by using smart contracts on its blockchain. NEO’s goal is to develop a platform for future applications. In 2017, NEO went through some significant changes. It rebranded its name from Antshares to NEO and refocused its marketing strategy as well. The changes turned out to be an enormous success for NEO as its network continues to grow in user numbers.
Why invest in NEO?
We all know that China plays by its own rules. China uses its own technology, enormous market (1.3 billion population), and strong censorship to protect their startups from outside competition. Playing by China’s rules has proved fruitful for many tech companies. In China, you won’t find Western companies like Google, Facebook, Twitter, WhatsApp, Uber, or Amazon. Instead, you see the success of local businesses like Baidu, RenRen, Weibo, Tencent, Didi, and Alibaba. WeChat, a subsidiary of Tencent, has over 1 billion accounts registered making it one of the world’s most popular social media apps. NEO is positioning itself to be the next big names on this list of tech giants. Ultimately, NEO as the Ethereum of China will benefit from playing by the rules of the Chinese government. In fact, NEO project aims to create digital identity with the help of Chinese government. Unlike many other illegal coins in China, NEO owns its legitimacy from following government regulations and strong developers network on social media such as Reddit, Twitter, and Weibo. With NEO’s reputation in the blockchain space and its deep connection with the Chinese government, we strongly believe that NEO has the potential to capture significant market share in China’s DApps market.
NEO vs NeoGas, which one should you buy?
The NEO blockchain is built on Delegated Byzantine Fault Tolerant or dBFT. It is a proof of stake system specially designed by the NEO team. Unlike any other blockchain networks which have one cryptocurrency, NEO has two cryptocurrencies — NEO and NeoGas. NEO represents the right to manage the network. Management rights include voting for bookkeeping, NEO network parameter changes, and others. There are only 100 million NEO tokens created. However, only 65 million of NEO tokens are circulating in the market. The rest of 35 million of NEO tokens are held by the NEO Council for future investment. The NEO Council will redistribute the remaining NEO tokens according to its inflationary schedule.
year 1: 50M to 50M = 0% inflation
year 2: 50M to 65M = 30%
year 3: 65M to 80M = 23%
year 4: 80M to 95M = 18%
year 5: 95M to 100M = 5%
year 6+: 100M to 100M = 0%
Different from NEO, NeoGas is the fuel token for the realization of NEO network resource control. So how does it works? The NEO network charges NeoGas for its operation, storage of tokens and smart contracts. It acts as an incentive for bookkeepers to maintain the fairness of the network. Only 100 million NeoGas tokens will be ever created. It will be generated through a decay algorithm in about 22 years to address holding NEO.
In that sense, we recommend buying NEO instead of NeoGas because NeoGas will automatically distribute to the NEO address. That being said, if you have 1 NEO, you will get 0.0947 NeoGas at the end of the year, which yields about 4.2% (See calculation below). Not bad at all, if you compare it to the ten-year Treasury Bond which has a 2.7% yield. After receiving NeoGas, you can sell it on the market to buy more NEO to generate more NeoGas. (P.S: if you use Binance, you don’t have to move NEO to separate wallet to generate NeoGas)
Future Outlook
In 2018, we think NEO will be the one of the strongest cryptocurrencies and top performers in the crypto market. This year we can finally see some very interesting projects and events coming from the NEO ecosystem.
- NEO Developer Conference
- Ontology Network Blockchain mainnet launch in 2018
- The Key Blockchain mainnet launch in 2018
- Qlink Blockchain mainnet launch in 2018
- DeepBrain Blockchain mainnet launch in 2018
- Zeepin Chain Blockchain mainnet launch in 2018
- Trinity infrastructure protocol launch in 2018
With all the launches in 2018, we think the NEO ecosystem is becoming stronger as more DApps are building on its blockchain. The NEO Investment Council was created to support NEO-based blockchain project. They highly value its ecosystem growth and are willing to risk capital to build out their projects. Right now, NEO already has 30 DApps being built on its blockchain. The Ontology Network is the most exciting project so far on NEO’s blockchain. It aims to transform the way blockchains manage identity both for people and digital assets through cross-chain, cross-system, cross-industry, cross-application, and cross-device. The project will tremendously benefit NEO ecosystem with a more robust infrastructure adding on to it. Overall, we see multiple products launching in 2018 as a very positive sign for NEO as its platform slowly matures and expands.
Price Targets
At the time of writing, NEO was trading between $115 and $140. It had a tremendous run last year, but it recently fell from its all-time high because Bitfinex and Tether, the company behind the controversial USDT token, have been subpoenaed by the U.S. Commodity Futures Trading Commission. We prefer buying NEO below $120 with the view that it can quadruple over the next 6–12 months. We are not targeting a sell anytime soon because we think NEO is a long-term investment. We saw NEO’s unique potential in its relationship with the Chinese government, its well-established ecosystem with multiple products launching, and NeoGas generating feature.
DISCLAIMER: We are not investment advisors, and this is not investment advice. We are merely citing our opinions and we highly recommend that you do your own research before making any investments.
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