A year in the life of NEO

June 05, 2018
Chris Wheal

Although it was launched in 2016 under the name of Antshares, it was only when NEO announced that it was working with the Chinese Government that investors began to take note.

NEO log on smartphone

NEO is well placed to dominate the Asian market: Shutterstock

Data from US Equity Research estimates the cryptocurrency market is expected to grow at a 32% rate by 2023, yet despite NEO being the most successful Asian platform to date, it hasn’t been able to gain good traction in 2018.

In April 2018 it hit prices as high as $95, but bearish trends have seen it suffer from the overall market downturn. At the time of writing it was trading for $54.10, a small rise after continuing its consistent fall for most of May 2018.

Ranked 11th in the market, it is listed on most of the major exchanges and boasts high trading volume, yet many critics worry it is too centralised and expensive. The cryptocurrency blog, Store of Value, says there are red flags surrounding this multi-billion dollar project.

Highs and lows

The coin had a surge in August 2017 from a price of around $1 in late June to an August high of just above $50. This skyrocket was attributable to a NEO website design and the transition from Antshares 1.0 to the NEO smart contract system 2.0.

Reflecting the market cryptocurrency rally in December 2017, the highest daily close for NEO of $84.11 was recorded on Tuesday, 19 December 2017.

Volume also soared in January and the USD pair had the highest USD monthly volume of $1,671,073,157.61 with the highest daily close of $197.56 coming on Monday, 15 January 2018.

As one expert, Ray King, pointed out, if you had invested in NEO in July 2017 when its price was about $6, your $100 investment would have grown to nearly $2,700 in January 2018 providing a return on investment of more than 2600%.

King says that NEO became popular on the back of Ethereum and its promise to offer more than Bitcoin with a platform that allows for the development of decentralised applications. He said: “NEO does the same thing as Ethereum but in a better way. This is what makes NEO a favourite among investors, developers and users.”

Beyond key events, NEO tends to follow the rest of the market and this year, the lowest daily close came on April 6th with a closing price of $44.39.

Geographic differences

NEO is well placed to dominate the Asian market and the cryptocurrency secured a partnership with the Chinese certificating authorities to develop smart contracts 2.0. It is also being used by many major businesses in the region such as Alibaba and Microsoft China.

Mircosoft logo outside a building in China

Microsoft China is using NEO: Shutterstock

This can only be good news going forward for NEO given China’s impact on the overall economy and size of the domestic market. It also means, however, that it will be affected by any regulatory changes and the state of the market in the nation.

Factors that have influenced price

NEO blockchain became one of 2017’s rising crypto stars after it announced the completion of rebranding efforts from its former Antshares identity. It also upgraded its blockchain nodes, technical documents, social media, official site and exchange name worldwide.

The upgrade catapulted it into the top 10 cryptocurrencies in terms of market value in August 2017 and also helped attract a range of blockchain start-ups such as Bancor, Coindash and Agrello to work within the platform.

The event-driven Chinese market research company Red Pulse, also announced it would build a research sharing platform within the NEO 2.0 smart contract platform. This allowed readers to guide market research and to use digital currency to reward analysts and contributors directly and fairly, disrupting the current financial research market models.

Yet at the end of August 2017, NEO received a powerful 15% hit to its price when Red Pulse tweeted that following proposed regulations in China regarding initial coin offerings (ICO), it wasn’t accepting Chinese investors anymore.

Many analysts thought, in the long run, this would be good news for NEO who would probably benefit from the fact that only trustworthy companies will create their ICOs using NEO blockchain.

The Trinity Network launch is also likely to impact on price this year. It is designed to improve NEO’s transaction processing times in much the same way as the Lightning Network aims to improve bitcoin’s scalability.

diagram of blockchain consensus algorithm

Community experts have criticised elements of NEO: Shutterstock

Community criticism

By February 2018, the market valuation of NEO started to decline, mostly due to criticism from community experts of its Byzantine fault-tolerant consensus algorithm. This included Eric Wall who tweeted: “In NEO, their system couldn’t handle the most simple error of one node.”

He apologised for the allegations after evidence from Da Hongfei, the Founder of NEO, Chris Hagar from City of Zion, and Erik Zhang, NEO’s lead developer proved them to be incorrect. However, he added that his retraction did not mean that “NEO is in the clear.”

Emin Gün Sirer, another crypto expert, added that: “NEO is just a 7-node system under the control of a single party, and the code isn’t designed to handle even a single, benign failure.”

Predictions for 2018

Despite the criticism, there have been optimistic predictions for NEO in 2018. Walletinvestor.com, a website that performs technical analysis, has made a NEO price prediction of $188.26 in one year.

This is due to the rising interest of institutional investors, the technical advantages offered by NEO’s platform over that of Ethereum as well as NEO’s focus on the digitisation of assets rather than just the digitisation of the currency.

Mark Cagney, co-founder at Social Finance (SoFi), thinks that NEO has the potential to replace Bitcoin because of its innovative use of blockchain technology.

Weiss Ratings came under market criticism recently for awarding NEO an A-class rating – the first blockchain to be given this. Martin D Weiss said: “I kind of expect it when we give a disappointing grade to a coin they love. Like Bitcoin’s C+, for example. But it seems the fury can be equally intense when we give a good grade to a coin they hate. In fact, that’s what we just saw happen this weekend with another explosion of buzz on the Internet about the Weiss Cryptocurrency Ratings. This time all about NEO.”

Brian Evans, a blockchain evangelist, has also come out in support of NEO. He said: “The big move for NEO is creating an entire smart economy. It has incorporated digital assets, smart contracts and a digital identity that can be used for real-world applications and become integrated into the real economy. China could (and may) be a candidate for that first real-world application and integration.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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