No one could have guessed how successful cryptocurrency would become when Bitcoin first arrived on the scene. That was only the beginning. We soon saw a new cryptocurrency that addressed the problems with first-generation blockchain technology, such as Bitcoin. Ethereum and Litecoin followed which sought to improve upon its predecessor; however, they were not perfect either.
Soon, NEO came on the stage. It represents a blockchain platform also known as the Chinese Ethereum. In the following article, we’ll go through all the pros and cons of the NEO coin, as well as provide a detailed explanation of this blockchain and its features.
NEO is a blockchain project from China that was established in 2014 under the name Antshares. It was later renamed NEO. The developers of this project are dedicated to creating a “smart economy,” which would make it easy to use smart contracts through the NEO network.
The NEO network utilizes GAS as its second cryptocurrency, which can be seen as the fuel that keeps NEO running. Having one share of NEO is like having a piece of the pie when it comes to this network, and you need GAS to make transactions on said network.
When you save your NEO in an official wallet, it is possible to earn GAS passively. This principle works off of the idea of proof-of-stake, meaning that simply by holding your NEO coins in a wallet, you are entitled to a share of the GAS spent on the network relative to the amount of NEO you own. In this way, it’s possible to generate supplementary income for yourself, especially when prices for both assets begin to rise. When this happens, not only do you profit from appreciation in value for your NEO holdings but also from any extra GAS tokens obtained as part payment.
NEO is a popular investment but it cannot be mined like other cryptocurrencies—all NEO coins were distributed during the ICO. Of course, as with any project, many things have changed since NEO’s inception.
Advantages of Investing in NEO
NEO’s selling point is its smart economy, which distinguishes it from other cryptocurrencies like Ethereum. The smart economy contains digital assets and identities, as well as contracts that can be executed automatically.
By using a smart economy, we can convert physical objects into digital form and store them on the blockchain. Doing this would give these assets benefits like being decentralized, transparent, trustworthy, and traceable.
Digital identity is a system that allows organizations, individuals, and other entities to register and own an asset. It runs on a platform called Public Key Infrastructure (PKI).
Developers can use smart contracts to make the infrastructure work. Unlike Ethereum, NEO doesn’t require you to learn a new programming language just for creating smart contracts. This means that any developer familiar with existing languages can get started and build a smart economy on the NEO platform.
With NEO’s Universal Lightweight Virtual Machine, aka NeoVM, the ability to use any programming language is possible. Not only that, but this virtual machine provides efficiency and scalability of the platform.
The NEO platform’s most significant advantage is GAS. GAS can be understood as NEO’s asset paring. This means that holders of NEO will receive dividend payments for holding onto their coins.
GAS is calculated and given to users based on a set formula if you have NEO stored in your digital wallet. For example, if you own 100 NEO, you will get around 0.03411 GAS per year in return. Note that GAS prices have only been increasing lately.
Disadvantages of NEO
As with any crypto coin, NEO also has some disadvantages of its own. It’s up to you to weigh the pros and cons and see whether this is the right coin for you to invest in.
- Although NEO is a blockchain project, it cannot be compared to bigger projects such as Ethereum or Tezos.
- The primary NEO repository has shown below-average levels of activity since its creation, with an average of fewer than 10 commits per day.
- China has had a notoriously unstable relationship with cryptocurrencies in the past, but recent reports suggest that the country is beginning to warm up to them.
- NEO may be qualified as a security in the United States since it offers GAS, which acts as a form of a dividend.
Overall, NEO is a great project with a lot of potential. However, as with any big investment, there are risks involved that you need to carefully weigh in. Do your own research before investing and follow the main rule of investing—never invest more than you’re prepared to lose.