BMJ Score: 4.2
Description59 Investors read this
Is NEO, the so-called "Ethereum of China," a good investment? Find out in this NEO evaluation, based on the expert insights of Bitcoin Market Journal analysts.
Market and Advantage
NEO stands out within the altcoin market because it has a clear focus and solves a real problem. It is designed to provide a blockchain for running distributed applications and executing smart contracts.
In this sense, NEO is very similar to Ethereum. Although there are some technical differences between Ethereum and NEO, such as the consensus mechanisms that they use, both blockchains deliver the same core distributed application and smart contract functionality.
However, NEO's similarity to Ethereum is not necessarily a bad thing. Unlike Ethereum, NEO enjoys official backing by the Chinese government, which gives it a clear and significant advantage over Ethereum in the large Chinese market.
That said, NEO's endorsement by the Chinese government does have a downside; NEO is highly regulated in China, where ICOs are currently banned.
NEO's regulatory challenges partially balance out the market advantage that it enjoys because of Chinese government backing, but, overall, our analysts still think that NEO is in a strong position market-wise.
NEO faces a lot of current and potential competitors. Besides Ethereum, a number of other blockchains aim to deliver distributed application and smart contract functionality. More will probably appear in the future.
So far, Ethereum has proven more popular as the basis for ICOs than NEO. However, if the Chinese government decides in the future to permit ICOs, NEO will almost certainly dominate the Chinese ICO market, which would give it a huge economic boost.
Our overall take on NEO's economic potential is that NEO faces stiff competition. Its ability to win depends largely on what the Chinese government does with ICOs in the future.
NEO Management Team
The entrepreneurial team behind NEO is very promising. Its core developers, Dong Hongfei and Erik Zhang, have strong backgrounds, and the team operates transparently. The developers engage actively with the community in forums like Reddit.
Our analysts give NEO's management team an especially high score.
NEO's digital token is well designed. It is integrated deeply into the NEO blockchain because it serves as the payment mechanism for processing power. Token holders also receive dividends, so they have incentives to acquire and keep tokens.
The only major downside to NEO tokens is the fact that, like the rest of the NEO platform, they are subject to regulation by the Chinese government.
NEO's Overall Potential
NEO's strongest points include its well-designed token and the strength of its core development team.
NEO's biggest challenge is competition from other blockchains that are designed to deliver similar functionality.
Whether NEO will ultimately overcome this competition hinges largely on the extent to which the Chinese government, as the regulator of the NEO blockchain, permits ICOs or other economic activities surrounding NEO. Although NEO ICOs are currently not possible in China because of a general ban on ICOs in the country, NEO would be the clear leader in the large China market if ICOs become permissible there.
So, if you choose to invest in NEO, you are essentially making a bet that the Chinese government will regulate the altcoin in such a way that allows it to succeed economically. As a blockchain platform, NEO is not strikingly different from alternative blockchains like Ethereum. Its major standout feature is its official backing by the Chinese government. That could prove to be a good or a bad thing in the long term, depending on exactly how Chinese regulators manage NEO.
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Bitcoin Market Journal analyst briefing for NEO.
Questions and Answers
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