NEO versus Ethereum: Why NEO might be 2018’s strongest cryptocurrency NEO is a platform with a purpose. Can it compete with Ethereum? Or better yet, does it even need to? LINK: https://ethstepium.stepium.com/

1. NEO versus Ethereum: Why
NEO might be 2018’s
strongest cryptocurrency
NEO is a platform with a purpose. Can it compete with
Ethereum? Or better yet, does it even need to?

2. Why Read This Article?
NEO and Ethereum — which pill will you take? Sorry, couldn’t
help myself. We care about this debate because we’re investors.
From a developer’s perspective, functionality is the most
important. There is no brand loyalty in blockchain yet. So if a
platform can do something better than its competitors, it will
win over developers. So which one does it better?
This article is long because I have chewed through all the
information I could find about NEO and Ethereum and digested
it for you. There are lots of articles summarizing the
“differences” between Ethereum and NEO, but they do the
debate little justice. They skim over things, don’t explore them
well, explore only one aspect, or aren’t holistic in their analysis
and don’t explain why the differences even matter and what
their relevance to the real world is. I was frustrated by the lack
of a comprehensive article. This article is my response.
I will admit that I explore NEO more in-depth than Ethereum.
This is because so much information is widely available for
Ethereum. With NEO, there is much less. As such, I focus on
explaining NEO and then comparing that explanation to
Ethereum’s capability.
So bear with me, grab yourself an espresso and lock yourself in
that room you “do work in.” This will be well worth your time. I
also won’t blame you if you just read the TLDR — Too Lazy,
Didn’t Read — under the articles.
Let’s begin
If Ethereum is Goliath, NEO is David. If Ethereum is Brad Pitt,
NEO is Brad Pitt’s cousin, Zach Pitt—younger, better dressed,
and more talented — but right now relegated to serving cocktails
to Brad and his friends while he acts on the side. Ethereum did
it first. It was revolutionary and exciting and took the crypto
world by storm. Web 3.0. Today almost every ICO is built on

3. Ethereum’s ERC20 token platform and Vitalik Buterin is one of
our time’s greatest minds. Yet if we’ve learned anything from
the fact that Alibaba is closing in on Amazon’s market cap and
WeChat dominates China’s social media scene, it’s that China
plays by their own rules. The Land of the Red Dragon uses their
own technology, their own networks, and cares little for what
the U.S. is doing. The question is, can NEO compete with
Ethereum, and does it even need to?
Ultimately, NEO and Ethereum are aiming for similar roles in
the crypto community. Both want to be platforms for the new
internet: for DApps (Decentralized Applications), ICOs (Initial
Coin Offerings), and smart contracts.
Overview of Ethereum and Neo
While both NEO and Ethereum have generalized blockchains
that provide a toolbox for would be developers, their objectives
differ. I would summarize each platform’s objectives as such:
Ethereum’s goal is to create a platform for the
development of DApps in order to create a “more
globally accessible, more free, and more trustworthy
Internet:” an internet 3.0.

4. NEO is a blockchain project “that utilizes blockchain
technology and digital identity to digitize assets, to
automate the management of digital assets using smart
contracts, and to realize a “smart economy” with a
distributed network.”
That’s a mouthful. Let’s breakdown these objectives to fully
understand the projects. It’s important to understand that both
platforms share many of the same capabilities, but the
distinction in their branded objectives is very important.
Ethereum: Ethereum’s goal is to be the platform for DApps
and they are largely accomplishing this. They own the DApp
market right now. Their roadmap is all about giving users and
developers more control and more options in developing their
applications.
NEO: NEO is working towards developing a product for the
future. It not only rebranded from Antshares to NEO in June of
2017, but they refocused their marketing as well — with
enormous success. Neo’s objective, while ultimately utilizing

5. many of the same technologies as Ethereum, is to be the
platform for a new smart economy.
In short: Ethereum is developing in response to new
demands. NEO is developing their platform in
anticipation of future demands.
What is a Smart Economy?
The biggest difference between NEO and Ethereum is NEO’s
focus on a smart economy. If we want to fully understand NEO,
we need to understand why this distinction is important.
A smart economy will feature digitized physical assets. All of
these newly digitized assets will have proof of ownership in the
blockchain. These assets can be sold, traded, and leveraged
through smart contracts. Their ownership can be protected and
validated through the decentralized model of the blockchain.
We’ve already seen iterations of this: from proposed supply
chain overhaul to DAOs (decentralized autonomous
organizations — essentially decentralized companies without a
leader). I offered some real world examples of this economy
in this article. Now while Ethereum will likely support many of
the same capabilities that NEO has, the distinction between
Ethereum and NEO’s objectives is what we care about.

6. The distinction is important because a smart economy will still
be under a government and under governmental regulation. I
don’t trust the government as much as your next libertarian;
I’ve read 1984 too many times. But the fact remains that
governments aren’t going anywhere. Thus, for a platform to
service this “smart economy,” that platform needs to put
specific thought and intention into how it will accommodate
governmental regulation. So while Ethereum might offer the
similar blockchain capabilities, the fact that NEO is
developing FOR THIS PURPOSE is crucial.
TLDR: A smart economy is in our future. To
accommodate the needs of this smart economy, the
platform will need to be specifically designed for this
new economy.
What is NEO doing to prepare itself for the
smart economy?
NEO places particular emphasis on staying regulatory
compliant.
To do this, they need:

7. Governments don’t love these guys
Digital Identity
Anonymity is great. I think privacy should be at the forefront of
today’s technological developments and discussions. But if
companies and governments are operating on the blockchain,
digitizing their assets, and issuing smart contracts, all under the
watchful eye of the government, they can’t have anonymity. For
a platform to be regulatory compliant, digital identity — a
verifiable identity in digital form — is a necessary evil.
Today, digital identity is based on a system called the PKI
(Public Key Infrastructure) X.509 standard. This
probably means about as much as it does to you as it does to me.
It just means that there is an international agreed upon
standard for what constitutes a digital identity. NEO’s
plan is to issue digital identities in accordance to this standard

8. and then secure them using the blockchain. Bookkeepers (read
about them later) will have digital identities and real names.
Because of this, judicial action can be taken against them if ever
need be. This is imperative when registering financial assets on
the network and staying regulatory compliant.
There could also be businesses and projects that will only
transact with people who have a digital identity, for regulatory
reasons. NEO enables that possibility.
NEO is already working in a strategic partnership
with THEKEY — a project being developed on NEO’s platform
that will assist with providing digital identification.
What about Ethereum: Ethereum requires other DApps to
develop digital identities which can then be secured on the
Ethereum blockchain. This isn’t so unlike how it will work with
NEO — however NEO has made it clear, through its plan to
incorporate digital identity with its bookkeeper nodes, that
integration of digital identity is of central importance to the
NEO ecosystem.
TLDR: Governments don’t like anonymity. Industries
don’t like pissing off the government. If NEO wants
industrial adoption, it needs to have digital identities.

9. Digital Assets
A future digital asset?
If you want a smart economy based on smart contracts, you
need to be able to leverage and exchange assets beyond
currency. We need to be able to digitize assets like house,
property, and car ownership; gold, diamonds, and other
precious elements; computers, clothes, and food; even those
baseball cards your mom keeps begging you to throw away.
Smart contracts become so much more powerful when we have
the ability to digitize all of these assets.
What about Ethereum: Very similar to the digital identity
blurb. Ethereum absolutely can secure digital assets, but they
won’t necessarily be regulatory compliant. NEO is ensuring that
issued digital asset certificates will be compliant.
TDLR: Just read it

10. NEO’s complex network
The economy is complex; it has so many interconnected pieces.
NEO’s platform is complex, with partnerships galore. Fully
researching and understanding this is difficult. But I did it, so
you don’t have to! Refer back to this visual to have a solid
picture of how this network interacts.
Even though this looks like the deranged drawings of a conspiracist, it will make sense as
you reference it while learning about NEO’s network

11. OnChain
NEO’s founders Da HongFei and Erik Zhang founded a
company called OnChain. UnderstandingOnChain is critical to
understanding NEO. They’re not the same company, but their
interests align and they have a partnership together. OnChain’s
system, known as DNA (Decentralized Network Architecture)
aims to work with Chinese businesses and government. NEO
acts as the foundation of DNA. If OnChain can integrate
with Chinese businesses and government, that will greatly spur
adoption of NEO.
Ultimately, DNA develops public and private blockchains for
businesses. These blockchains then link up to NEO to
join the decentralized economy. Businesses then have all
the benefits of both private and public blockchains. Think of
NEO as providing the public blockchains and OnChain’s DNA
providing the private blockchains. Then, they can link up and
get the best of both worlds.
OnChain also has several projects and partnerships and
newsworthy mentions that all contribute to the DNA ecosystem:
1. Established in 2014, this is not a fresh-off-the-shelf company
2. First Chinese blockchain company to join Hyperledger — a
collaboration of projects that work towards integrating
blockchain with established businesses.
3. Legal Chain — works with Microsoft China in digitizing
and securing signatures via blockchain technology.
4. Strategic partner of Microsoft China on multiple projects
5. Worked with the Japanese Ministry of Economy, Trade and
Industry
6. Voted as KPMG’s top 50 Fintech Company in China
7. Partnership with Alibaba to provide an email certification
service for Ali Cloud

12. 8. Investment from Fosun Group—China’s largest private
conglomerate — to integrate OnChain across their businesses.
9. Collaboration with Chinese regional government — using
OnChain to develop public services and digital identity
OnChain’s recent development was of the
ICO Ontology. Ontology uses the same architecture as NEO
but ultimately works with businesses in creating a private,
encrypted data network. Essentially, this is important when we
have information that we need securing, but we also need it to
be private. This will enable people to bring this information in a
secure manner to blockchains.
References on OnChain’s roadmap
Honestly, I don’t understand why NEO doesn’t
advertise their collaboration with OnChain more. NEO
in itself is solid, offering several potential benefits over
Ethereum. But combined with OnChain, NEO truly has
the potential to implement itself as THE smart
economy platform of the East.
The Ethereum Comparison: Ethereum’s equivalent is the
Enterprise Ethereum Alliance, an open source blockchain
initiative dedicated to linking Ethereum with the business
world. Their list of partnerships is robust and impressive — no
surprise for those familiar with Ethereum. Included among
their members are: BP, HP, Toyota, MasterCard, Microsoft, and
Intel, among many others.
TLDR: OnChain is a company partnered with NEO.
They have extensive experience and many accolades in
bringing blockchain to businesses. They work with
companies and governments in the East. They are a
huge component to NEO’s potential.

13. NEOX:
NEOX is NEO’s version of atomic swaps (directly swapping
tokens without any exchange) and cross-chain integration.
Think Ark Ecosystem. This will enable people to swap crypto
assets and transact across different blockchains. It also allows
smart contracts to interact across chains.
NEOX is important because it allows collaboration between the
blockchains (both private and public) created by OnChain and
by NEO’s public blockchain. As more components of the Smart
Economy develop, NEOX will link them all together.
Ethereum Comparison: Ethereum has the ability to do
atomic swaps, but has only completed this once — this isn’t to
put down Ethereum; NEO has never completed one. However,
Ethereum will need an outside application to accommodate
large scale cross-chain integration.
Not quite the City of Zion we’re talking about…
City of Zion:
City of Zion (CoZ) is an independent, open source community of
developers, translators, and designers who work towards the
betterment of NEO. They have received funding from NEO to
help incentivize project development. The community has

14. contributed considerably to NEO. They have developed the
NEON wallet, created a NEO block scanner, translated
documents for NEO, and developed the NEX platform (see
below). They recently received NEO funding to award $270,000
to 10 winners as part of their DApp competition. It is incredibly
advantageous to have a network of support such as CoZ.
Ethereum Comparison: There isn’t really a good
comparison for this on the Ethereum network.
NEX:
Nex is an upcoming ICO developed by City of Zion that offers a
platform for the creation of payment solutions and
decentralized exchanges on NEO. It links to NEO with NEOX.
Because of differences with NEO in the token model, account
balances, and way smart contract interact — in comparison to
Ethereum — NEO needed a solution to be able to effectively
house decentralized exchanges. NEX offers that solution.
Ethereum Comparison: Already ERC20 tokens are easy to
transact with on decentralized exchanges.
ProjectICO:
A turnkey, all-in-one ICO company that helps blockchain
companies develop: from initial idea to ICO. They recently
decided to move from Ethereum to NEO. They have an
interesting Reddit AMA on their reasons for switching.
Ethereum Comparison: TokenHub is a similar project
developing on Ethereum.

15. Microsoft China:
NEO is currently hosting a developer competition in
partnership with Microsoft China with $490,000 as prize
money.
Ethereum Comparison: Ethereum is incredibly well
connected with established corporations. NEO is playing
catchup.
DApps and ICOs:
The bread and butter of platforms; until now, NEO has only had
one ICO (Red Pulse) and one DApp (AdEx). However, with
several planned in the near future and with an upgrade last
month which will enable NEO smart contracts to interact with
website interfaces, I think this is only the beginning for NEO.
Ethereum Comparison: Ethereum hands down beats NEO
in this area. Ethereum is the go-to platform for ICOs and
DApps.
Ecosystem Recap
We hopefully have a strong understanding of the differences in
the goals of Ethereum and NEO, as well as a good overview of
NEO’s network and the network’s advantages in the smart
economy. It’s important to understand this network for NEO
because NEO is more than just a public blockchain, it is a piece
in the larger picture. When NEO’s public blockchain can link up
with OnChain’s private and business oriented blockchains and
ultimately with all other DApps on it’s platform, it could truly
become a smart economy.

16. The biggest differences between
Ethereum and NEO
Ethereum’s energy consumption could power 1,025,438 American homes for a year. —
Source —
Protocol
Ethereum uses the same protocol as Bitcoin — Proof of Work
(PoW). With Proof of Work, computers on the network compete
to solve mathematical formulas and win the right to confirm
transactions into the blockchain, and thus, secure the network.
The two major drawbacks to the PoW protocol is the danger of a
51% attack and the massive energy consumption required for
network security. For these reasons, I think that PoW will
soon be an outdated system, as blockchain transitions to a
new protocol called Proof of Stake (PoS).
Proof of Stake works similarly to PoW except that instead of
computers validating the network and receiving rewards
equivalent to their relative computing power, PoS uses token

17. holders. Those who hold tokens can “stake” their tokens
(staking means to temporarily place the tokens in a locked
smart contract — until staking is over) and in exchange, confirm
transactions and receive rewards based on the relative number
of tokens held. In PoW, if you operate 5% of the total
computing power of the network, you can expect to get
5% of the block rewards. In PoS, if you own 5% of
tokens, you can also expect to receive 5% of block
rewards.
PoS offers a solution to the issues plaguing PoW — mainly it
takes virtually no energy to run PoS — without compromising
the security. I would argue that it actually improves security.
With Ethereum, and all other PoW protocols, the difficulty
algorithm (how hard it is to solve the mathematical formula)
must constantly be updated to account for better computer
hardware and more powerful mining groups. With PoS there is
no need to do this. With Ethereum, you could conceivably
purchase enough computing hardware to achieve a 51% attack;
even after comprising the network, you would still have all of
that hardware and could potentially use it to attack other PoW
platforms. With PoS, because you must stake your coins, any
malicious behavior results in the loss of all staked coins. So if
you bought 51% of all tokens, you would immediately lose your
substantial investment. In addition, the costs of purchasing 51%
of the network tokens are equal for everyone. The costs of
obtaining 51% of computer power — due to discounts for mass
computer purchases and countries with extremely cheap
electricity — are not.

18. Byzantine Fault Tolerance attempts to solve the Byzantine General’s Problem
NEO uses a protocol called dBFT (Delegated Byzantine
Fault Tolerance) sounds like a term you’d see on your AP
History Test. The simplest explanation of Byzantine Fault
Tolerance is the issue with how to get everyone on the network
to be honest and work together — because one bad apple
could ruin everything. NEO’s dBFT is a modification of the
classic PoS protocol, with some significant advantages and one
primary disadvantage.
I imagine dBFT as working similar to how the U.S. Senate works
(and if that analogy made you want to just give up on Neo
entirely, I understand, but hold on…keep reading). If every
person in America — all 323.1 million—was allowed to directly
participate in the governmental decision making process, it

19. would be catastrophic. It would be brutally slow as millions
competed for the microphone, all shouting their opinion and
arguing with each other. Making decisions would also be
agonizingly slow. So instead, everyone in the country gets a
vote. And with this vote, they can elect their representatives,
someone to speak for them. This system directly reflects NEO’s
governance. Instead of everyone participating in the validating
process — which can be incredibly limiting in terms of
transaction speed — those who hold NEO tokens can vote for
delegates. These delegates (called bookkeepers) maintain the
network for everyone. Thus, NEO can run faster, more
efficiently, and with quicker and more finite decisions, and you
can stay home, drink Bud Light, and watch the Patriots game
with your computer in sleep mode.
Remember too that these bookkeepers will have their digital
identity known, making NEO much more compliant with
national regulations.
The disadvantage with this system is a lack of decentralization.
In its purest sense, instead of thousands of validators being
scattered all across the world, governance is concentrated in a
few dozen validators. The majority of these nodes are currently
operated by the NEO team. However, as of Quarter 1, 2018,
NEO will hold less than 2/3 and will continue to hold fewer as
time progresses. Regardless, NEO will never be as
decentralized as other pure PoS platforms.
I would however argue that Ethereum is also not as
decentralized as you might think. While the PoW protocol
is decentralized, you can count the number of core developer’s
for Ethereum on one hand. In addition, while I trust Vitalik
Buterin, he does have enormous power and influence over the
direction of Ethereum.
Ethereum will transition to a PoS protocol in the future. They
already have begun the process and the mining difficulty of

20. confirming new blocks will increase exponentially until it is
impossible to mine anymore and everyone must transition to
the PoS protocol. This will happen but it is likely more than a
year out.
TLDR: Ethereum uses a Proof of Work protocol and
will evolve into Proof of Stake. NEO uses a Delegated
Byzantine Fault Tolerance (dBFT) protocol which is a
modification of the standard proof of stake protocol.
Transaction Speed:
Because NEO doesn’t run on PoW and has a more streamlined
PoS protocol, NEO can process transactions far more quickly
than Ethereum. Now when we compare these, there are
both theoretical and practical speeds. Theoretical transaction
speeds are the absolute maximum speed mathematically
possible for the network. For NEO, this number
is 10,000tps (transactions/second). Ethereum can
do 30tps. In practicality, because of real world inconsistencies
and difficulties, NEO can do 1,000tps in comparison to
Ethereum’s 15tps. As protocols improve it is possible that both
platforms will approach their theoretical speed.

21. This is an enormous difference and a massive advantage for
NEO. NEO’s transaction speeds could conceivably
accommodate the kind of smart economy they’re envisioning;
Ethereum’s can not. Now in exchange for this speed, NEO is not
as decentralized as Ethereum. In addition, it’s important to
recognize that Vitalik and Ethereum are well aware of this
limitation. Solutions such as Raiden and sharding (two
fascinating technologies but far beyond the scope of this article)
are on the roadmap for Ethereum and could drastically improve
Ethereum’s transaction speed.
TLDR: Ethereum can transact at 15tps with a
maximum of 30tps. NEO can transact at 1,000tps with
a maximum of 10,000tps. Ethereum has plans and
solutions to scale to close this gap.
Forking and scaling:
Ethereum forks to update its software, just like Bitcoin. I
describe this here. Forks aren’t necessarily bad, but they
certainly can be. Look at Ethereum’s DAO fork for an example
of this. After millions were stolen from an Ethereum smart
contract, Ethereum forked to refund the money to the original
holders. Whether or not this decision was correct, it divided the
community and Ethereum Classic was created alongside
Ethereum.
Forks happen because there is no finality in the consensus
mechanism of Ethereum. Multiple chains in the blockchain can
be created at once — ultimately, both are valid chains and can
continued to be mined on. Forks happen constantly but are
usually resolved when the chain with the most computer power
is chosen as legitimate. With Ethereum, it’s always
recommended that when you place a transaction, you wait until
a few blocks have been mined on top of yours before considering
the transaction permanent.

22. NEO has finality. This is because the bookkeepers must reach a
66% consensus for the transaction to be placed into the
blockchain. Here is an analogy to understand this. Imagine a
first grade class. Timmy asks how much chocolate milk costs.
Cynthia has no concept of price (she’s in first grade for God’s
sake) and shouts $15! A few students walk over to her in
agreement. Bobby’s a chocolate milk aficionado — he knows his
milk. He says $1.25. Most of the room walks over to him. He has
a majority. Now assuming Cynthia’s group realizes their flaw
and joins Bobby’s group, then the group reaches consensus. But
if Cynthia is having a particularly stubborn day, she could keep
on with her decision — a fork. It might not be the right
answer, but she still has a valid answer. This is how
Ethereum works.
Only in Israel do they have chocolate milk in a bag…
NEO works like this. Imagine the same scenario. Timmy again
asks how much chocolate milk costs. First Cynthia speaks up:
“$15!” A few murmur in support, but it’s clearly not 66% of the
class so her idea is discarded. Next Bobby says “$1.25.” 66% of
the class support his claim and thus, his idea is final. With NEO,
the bookkeepers each propose the correct state of the next

23. block. When 66% of them support the proposition, the block is
finalized.
The implications of this are huge. Finality is incredibly
important for the type of economy NEO hopes to support. The
financial industry and other complicated, fast moving markets
(stock markets for example), can’t operate on a system without
finality. They need to know that when their information is
placed into the blockchain, it is there for good. They also need
the assurance that their blockchain won’t suddenly become
irrelevant because of a fork.
TLDR: Ethereum can fork; NEO can’t — this is
important for adoption by our real world economy.
Decoupling of GAS and NEO
This may very well be NEO’s most ingenious characteristic. The
native token of Ethereum is ether. The gas needed to run the
Ethereum network (execute contracts, conduct transactions,
etc.) is actually just small units of ether. There is no separation
between ether and gas.
However, NEO decoupled itself from the token needed to run
the network: GAS. The NEO token is like partial ownership of
the NEO platform. NEO token holders are entitled to vote
for bookkeepers. NEO’s use as a share in the company rather
than a token is furthered by the fact that NEO is non-divisible.
NEO is not meant to be transacted with — that’s why there is
GAS.
GAS is used for all operations on the NEO network. Now when a
company registers or changes assets on the NEO blockchain,
they pay in GAS — this GAS is then distributed to all NEO
holders. Anyone can claim this GAS by just holding their NEO
in a personal wallet. Such as this one: NEON

24. Bookkeepers are entitled to charge a transaction fee (in GAS) for
general transactions on the blockchain that only they (the
bookkeepers) receive. However, by decoupling NEO and GAS,
there is an incentive to keep transaction fees low; here’s why:
High transaction fees, which only benefit the bookkeepers, will
prevent people from wanting to register their assets on the
blockchain. The less assets registered, the less rewards NEO
holders will get. Thus, NEO holders are incentivized to vote
in bookkeepers who will keep transaction fees low.
“ Low transaction fees = more users = more
assets registered = more GAS to NEO
holders.” — Malcolm Leriderfrom his article:
Bookkeepers are primarily incentivized by their desire to secure
the network. They use the network, benefit from it, and have
money staked in NEO. Thus, it is advantageous for them to
secure it.
It is unclear how rewards will be divided amongst ether holders
when Ethereum becomes Proof of Stake. However, it appears
that only large Ethereum holders will be able to stake and
receive rewards.

25. The NEON Wallet with the “claimgas” button
The genius of the NEO token is that it allows users to passively
acquire GAS in their wallet. No need to run the computer, keep
the wallet open, or expend electricity. No need to “stake” your
tokens — bookkeepers do this for you. You could even have your
NEO in a paper wallet. GAS is collected when you physically
push the “claim GAS” button. This also ensures that the NEO
network doesn’t need to calculate the interest of NEO holders
with every block, reducing traffic and simplifying the compound
interest formulas. The delegated bookkeepers maintain
the network; your investment gains interest. This
would not be possible without two separate tokens.
Both NEO and GAS are capped at 100 million tokens.
TLDR: Ethereum has one token: ether. NEO has two:
NEO and GAS. There are huge advantages to having
two tokens when using a proof of stake protocol.

26. Source
Smart Contract Language
The biggest difference between Ethereum and NEO smart
contracts is the coding language options available. With
Ethereum, contracts must be written in solidity — A coding
language created specifically for Ethereum. NEO on the other
hand supports a variety of different languages, including the
most commonly known. NEO supports five programming
languages with plans to support an additional five in the future.
There are certainly advantages to crafting a particular language
for a particular platform. Ethereum developers designed
solidity for Ethereum. However, far fewer people know solidity.
By supporting the most common coding languages, NEO has
an advantage in facilitating adoption. Most programmers
today would have to learn solidity before working with
Ethereum whereas with NEO, their knowledge is already
applicable. It’s also possible that existing business platforms
could be placed onto the NEO blockchain without much
modification.

27. TLDR (seriously? It’s like two paragraphs): Ethereum
has one coding language: Solidity. NEO supports many
different coding languages.
Smart Contract Execution
Smart contracts use what are called virtual machines (VM).
Essentially, in layman’s terms, virtual machines are machines
that execute smart contracts and run inside the computers of
miners or other validators. The VM is the environment that the
smart contract runs in. Thus, if we want to know how efficient
and effective smart contracts can be, we need to analyze the VM.
NEO’s VM optimizes smart contract code before executing the
contract. What this means is that it takes the code and
reorganizes it to make it more efficient. Imagine your mom
gives you a grocery list. If it’s anything like my mom’s lists — and
she will probably object to this — the items have no organization
and I am constantly ping-ponging back and forth across the

28. grocery store. But by organizing all the items into categories
that I can then pick up together at the same part of the store
(dairy, canned goods, cereals), my job becomes much quicker
and easier. NEO does this; Ethereum does not. Now while this
makes things much easier in the long run, in the initial phase it
takes a bit longer to organize the list. NEO’s contract execution
takes slightly longer than Ethereum’s, but is much more
efficient in the long run.
Ethereum plans to roll out this mechanism, but there is no
timeline for it. Ultimately, this allows NEO to execute and run
complex smart contracts faster and more efficiently than
Ethereum.
TLDR: NEO has a more efficient and faster way of
executing smart contracts than Ethereum.
Additional Important Differences
1. NEO is theoretically quantum computer resistant,
Ethereum is not — When quantum computers develop
enough, blockchains could be vulnerable. NEO has
theoretically designed their blockchain to account for this.
Ethereum does not have that capability.
2. sk-Snarks: Ethereum’s new privacy tool. sk-Snarks is
the privacy protocol of ZCash. While there are far smarter
people who can explain the technology far more intelligently
than me, essentially sk-Snarks is important when we want to
have data or contracts whose contents are private or
confidential. We need to maintain the privacy of the data,
but at the same time, prove we have ownership of it. sk-
Snarks allows users to prove they have ownership without
actually giving up the private data. NEO has no such
capabilities. However, NEO’s partnership with
OnChain’s Ontology offers NEO a privacy solution for
businesses.

29. NEO’s Recipe for Success
In my opinion, NEO has two possible avenues for success.
NEO’s two paths towards success are:
1. The above mentioned benefits allow it to compete with
Ethereum directly and it begins to be the go-to platform for
ICOs and blockchain development.
2. It doesn’t compete with Ethereum but instead becomes the
DApp platform and foundation of a smart economy in the
East.
The First Possibility
I think this is the least likely of the two paths to success. Yes,
NEO beats Ethereum on several fronts. But Ethereum already is
an established platform. And Ethereum will close the gap with
its scaling plans in the future. To overtake Ethereum will be very
difficult. However, I do think that NEO has a lot more room to
grow, even if it can’t fully compete with Ethereum. Already
we’ve seen an influx of ICOs developing on NEO — this will
increase. And as it does, NEO’s price will increase. I also believe
that eventually the market will support more than one platform.
But that doesn’t mean NEO will ever replace Ethereum,
especially in the West.
The Second Possibility — some political analysis in
here too
This is definitely the most exciting of the two possibilities. Take
the almost 1.4 billion Chinese; add to that an even larger
untapped market in the surrounding area and that means that
the blockchain platform that captures this market will make
Ethereum’s $44 billion marketcap look like chump change. And
as I wrote about before, China uses their own products and

30. businesses. The issue is, we don’t even know if China is looking
for a platform. Currently, China has banned all ICOs and
exchanges. If the ban continues, no one will capture the Chinese
ICO market — because there will be nothing to capture. So the
question then is, if — and it’s a big if — China legalizes ICOs, can
Neo be the big man on the block?
In my opinion, China will soon open up blockchain
development. China right now sees an opportunity to be a global
political and economical leader. Already with the world’s second
largest GDP, China is not afraid to adapt and evolve for the
benefit of their economy. Their dedication to renewable energy
exemplifies this. China was certainly not known for their
environmental friendliness; but they recognized that the world
was moving in that direction; they recognized the benefits it
offered; and they recognized the enormous potential if they
could lead the pack. And now? China is the leading investor in
renewable energy.
Additionally, China’s political structure means that
development can happen fast. They can evolve quickly and
lead world renewable energy effortsbecause they are a
one-party state. There is no balance of power and need to appeal

31. to a divided voter base delaying development as there is in
America.
China knows that blockchain is going to be extraordinarily
disruptive. They demonstrated this when they released
their five-year blockchain plan. China banned exchanges and
ICOs because they recognize the potential of blockchain. If they
didn’t understand its significance, they never would have
banned it. They banned it because they want to control it;
because they will control it. They banned it to flex their muscles,
establish their power, and give them time to formulate a plan
for how and when they will move forward. It’s very difficult to
influence things when adoption has come; it’s much easier to
impose early restrictions and shape the direction of the
disruption.
When they have their plan, they will likely become the world’s
leading country in blockchain technology. And with the
capability for rapid economic development, when China opens
up ICOs and blockchain development…look out.
The question then is, what will China utilize? It’s possible that
they design their own governmental blockchain services, but I
think this is incredibly unlikely. China integrated with social
media, not by banning it or by creating their own platform.
Instead, they integrated by selectively banning western social
media and directing the Chinese market to Tencent — in
exchange, Tencent employs communist workers, stays
regulatory compliant, and maintains the party’s censorship. And
now, Tencent is bigger than Facebook. Thus, I believe that
China will join the blockchain world by integrating with an
already present platform; one with a willingness to work with
the Chinese government; one with a focus and framework that
will support governmental compliance. NEO and OnChain fit
that mold. Their work and partnerships within China, NEO’s
development and dedication to compliance, and their

32. envisioned smart economy gives me confidence that when the
day comes, NEO could be China’s platform.
Recognize that this is my own opinion. Nothing is guaranteed,
especially in the crypto space. All we can do is formulate a
hypothesis and provide a strong supporting argument; I hope
that I at least did that.
Summary
Ultimately, if I had to categorize NEO and Ethereum in a few
words, I would say that NEO is Ethereum but with a
specific purpose: to enable a smart economy. Ethereum
is just a platform to enable entrepreneurship, innovation, and
development — the direction it goes is up to those individuals
building on Ethereum. NEO has a direction; it is shaping its
platform with a goal in mind.
Yes, NEO has some definite advantages over Ethereum, but as I
said, Ethereum will likely scale to close the gap as the platform
gains adoption. NEO’s true value is in its dedication
towards fitting the mold for a regulatory compliant
smart economy platform. They are doing this; now China
just needs to takes notice.
Disclaimer: I am invested into both Ethereum and
NEO. This is not investment advice, merely my
opinion on the platforms. Do your own research.