History of the NEO cryptocurrency

June 05, 2018
Chris Wheal

NEO is China’s first ever open source blockchain and cryptocurrency and tags itself as a “distributed network for the smart economy”. Its goal is to “be the vanguard in the effort of building a smart economy” made up of digital assets, digital identity and smart contracts.

NEO coin

NEO is China’s first ever open source blockchain: Shutterstock

It is similar to Ethereum, the second biggest cryptocurrency after Bitcoin, with decentralised app (dApp) support, smart contracts and initial coin offerings. As such it is often referred to as ‘Chinese Ethereum’ by many.

Despite China’s ban on cryptocurrency trading, the Chinese government has embraced the platform and NEO continues to expand its offshore presence. It has a modest position by market cap of $3.9bn and at the time of writing is ranked 11th and has more than 65 million of its virtual coins distributed.

A brief history of NEO

NEO (currency code: NEO) was founded in 2014 by Erik Zhang and Da Hongfei and means new and young in Greek. It was formerly known as Antshares (ANS). As well as the NEO cryptocurrency, NEO has one more crypto-token called GAS (formerly known as ANC-Antcoins).

It is a non-profit community-based blockchain project that raised over $4.5m in its initial coin offering. In the Chinese cryptocurrency market, Antshares gained popularity amongst traders as a competitor to Ethereum.

In response to the attention from private companies after the development of Antshares, Zhang and Hongfei also established Onchain in 2014 and developed a technology known as Decentralized Network Architecture (DNA) that creates public and private blockchains.

Onchain is a private blockchain company collaborating with the Chinese government and large enterprises whereas NEO is a public platform with different community-led groups contributing to this public project. Yet, the company is crucial to NEO and many analysts believe the interoperability between the networks will allow unprecedented reach and usage for both networks in tandem.

Growth and development

When the AntShares Network was launched it proposed a different concept to the traditional single-token models with its two-tiered system of NEO and GAS. These two native tokens of the NEO platform serve different purposes:

NEO tokens represent the ownership of the NEO blockchain. It can be used for governance, to create blocks and manage the network. When users hold NEO in their wallet balance they are rewarded with GAS tokens. GAS tokens give users the right to use the NEO blockchain. Much like Ether to the Ethereum network, GAS is the fuel that powers transactions in the NEO system.

The maximum possible supply of both NEO and GAS is 100 million tokens. GAS is generated at a rate of eight GAS per block, lowering by one GAS per block after every two million confirmed blocks. Once GAS is collected, it can be converted back into NEO to earn even more GAS, or it can be traded for other tokens such as Bitcoin or Litecoin.

In addition, any project or business that wanted to use the platform, perhaps to release a dApp (decentralised application), would pay using the fuel. This fuel would then be redistributed to those that hold the governing coins. They could then use the fuel to interact with dApps or trade it as a currency.

Smart economy

The use of smart contracts is an important aspect of the NEO platform. This is the digital equivalent of holding money in escrow with a third party, with the intention of releasing the funds in the future.

diagram of smart contract elements

The use of smart contracts is an important aspect of the NEO platform: Shutterstock

An example of this is paying rent using a smart contract that triggers automatically once a month, instead of setting up a bank payment. Another example could be to track the validity of wine shipments to prevent fraudulent activity. The blockchain would verify the type of wine, age, price, and location via a microchip and when the bottle is opened, the blockchain will give a time stamp.

There is also heavy emphasis on digital identity to maintain a trusted link between digital and physical entities.

In 2005, China’s ‘Digital Signature Act’ allowed digital signatures to be legally binding in theory and in 2016 OnChain, with Microsoft China, founded Legal Chain with the goal of providing this means of identification. This is a key feature in NEO’s proposed smart economy.

NEO coins

NEO has indivisible units and cannot be divided like other coins such as bitcoin: Shutterstock

Uniquely NEO?

Bookkeeper nodes are tasked with verifying the blocks that are written to the blockchain using a consensus mechanism called Delegated Byzantine Fault Tolerance (dBFT).

Consensus is achieved if two-thirds of the nodes on the network can agree with a bookkeeper’s version of the blockchain and this is then validated. If not, an alternate bookkeeper is called and the process is repeated.

As it only uses a subset of the network, it claims to be able to handle more than 1,000 transactions per second, with a goal of optimising to more than 10,000 transactions per second. Ethereum, in comparison, has a current rate of 15 transactions per second.

NEO has indivisible units and cannot be divided like other coins such as bitcoin. This is because NEO token is like a security, similar to shares in the company and smallest unit of NEO will always be one share.

The two-tiered system of NEO and GAS is also a differentiating feature. It is different from mining in other coins. In Bitcoin, for example, the value of a Bitcoin mined is the same as the value of a Bitcoin purchased. In NEO, its value is decoupled from GAS, which is used to pay for transaction fees on the NEO network.

NEO also runs a virtual machine that allows developers to code the smart contracts in C#, Java, Python, or other popular coding languages. This means they no longer need to know a new language to code smart contracts.

Key players

Da Hongfei – Co-founder of NEO and chief technology officer at Onchain. He is now one of the most respected experts in crypto, especially when it comes to Chinese user adoption, enterprise applications, and government regulation.

Erik Zhang – Co-founder of NEO and chief executive officer at Onchain. He is one of NEO’s core developers. In a WeChat post, he stated that 90% of the enterprise blockchains are doomed to fail. “Without an open-source code that anyone can build upon, private solutions will not see the network effect of a healthy ledger.”

What are people saying?

Da Hongfei, founder and CEO, said: “We believe blockchain usage will eventually integrate real world applications, such as digital assets based on digital identity. This would allow for better anti-money laundering and know your customer capabilities in blockchain, of which there is a paucity in the modern blockchain ecosystem.”

Brian Evans, 500 entrepreneur and Influencive CEO believes that NEO will be able to sustain its momentum in the upcoming years by collaborating with Chinese authorities and commercial companies, and integrating physical assets into its smart contracts protocol.

Evans said: “I personally am excited to see how NEO’s smart economy will start incorporating into the real world. If it’s able to integrate physical assets and even intentionally involve government in China that could be a good thing for the growth of NEO’s project, in this case.”

The VALID project authenticates ID online and safeguards personal data. On February 14, 2018, the VALID team announced they would be integrating NEO’s native digital identity layer NeoID in their platform.

Procivis AG, the company behind the VALID project said: “We are pleased to announce that it will seek to incorporate NeoID, for the development of VALID’s agnostic e-Identity layer and are proud to confirm NEO Council as a key strategic investor in VALID.”

Parsec Frontiers selected NEO for its blockchain-based MMO game. Parsec’s CTO Andrey Tsirulev favoured NEO’s superior smart contracts, GAS transaction fee, 15-second block creation time and Windows support.

Tsirulev said: “While EOS is a great platform with undoubtful potential, we chose NEO because it’s currently more mature and industry-ready. NEO has very advanced smart contracts which support several mainstream languages including C# and Java, and we anticipate players will use them along with the diagram-based solution we’re considering implementing.”


  • February 2014 – NEO is founded as Antshares
  • 2014 – Onchain (Distributed Technology), a financial technology company dedicated to the area of blockchain, is founded
  • April 2016 – NEO releases a whitepaper on a new type of consensus protocol (dBFT – delegated Byzantine Fault Tolerance), the first from China.
  • August 2016 – initial coin offering opened
  • September 2016 – Onchain establishes a Technology Strategic Partnership with Microsoft and cooperation in multiple projects
  • June 2017 – Antshares rebrands as NEO
  • 2017 – US-based cryptocurrency trading platform Bittrex integrates support for NEO traders
  • April 2018 – Market cap at £3.9m
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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