The bitcoin ecosystem has grown quite competitive, with many cryptocurrencies vying for the same position. NEO vs Ethereum is one such cryptocurrency pair that is frequently seen vying against one another.
While Ethereum is the second most popular cryptocurrency after Bitcoin, NEO has been rapidly developing and is attempting to catch up to Ethereum. Their rivalry is so we sometimes describe fierce that NEO as the “Chinese Ethereum“.
You might think, ‘What are the differences between Ethereum and NEO blockchain?’ ‘What makes NEO the “next Ethereum?” So, don’t worry – the solutions are in this guide.
In the conclusion, you will grasp the essential aspects of NEO and Ethereum, as well as how they vary.
So, let’s get this party started!
NEO vs Ethereum: The Fundamentals
Before delving into the fundamental distinctions between NEO and Ethereum, you should probably understand why they are competitors.
The primary reason for the NEO vs Ethereum dispute is that both projects provide comparable services. Unlike Bitcoin, which is only digital money, NEO and Ethereum fulfill several functions.
The Ethereum and NEO blockchains provide platforms for the creation of distributed apps and smart contracts. We often use smart contracts for purposes other than DApps. Don’t worry if you’re unfamiliar with these words; I’ll explain them briefly below.
Smart Contracts and dApps
A decentralized application (dApp) is simply a program that runs on the blockchain, making it distributed and decentralized. Developers can construct an application on top of an existing blockchain, such as NEO or Ethereum, rather than creating their own.
Smart contracts are the underlying mechanism of DApps. They are self-executing contracts in which an agreement’s terms are directly put into lines of code. There is no need for a third party to execute the contract because they wrote it in code rather than on paper! This shows that there is no centralized authority on which to rely.
Initial Coin Offering (ICO).
ICOs have become the most popular approach for new cryptocurrency companies to receive initial capital. Both Ethereum and NEO provide a venue for new currencies to launch their initial coin offerings (ICOs).
It has already issued ICOs totaling around $10 billion in 2017 and 2018.
DApps, smart contracts, and ICOs are the next big thing in cryptocurrency, and as a result, several cryptocurrencies are competing for a piece of this market. Ethereum and NEO are the market leaders in this field, as well as the major competitors.
So, now that you understand the fundamentals of the NEO vs Ethereum conflict, let’s look at how they vary.
NEO vs Ethereum: Key Differences
While Ethereum and NEO are both attempting to serve the same market, they vary in many ways. Let us compare them to some of the most important criteria.
Because it enables programming in several languages like C++, C#, Go, and Java, NEO has gained quick traction within the developer community. As a result, anyone who knows one of these languages may develop applications on the NEO blockchain. Let us now compare the Neo versus Ethereum adoption.
Ethereum only supports one programming language: Solidity. Furthermore, because Solidity is a novel language, relatively few people are familiar with it. As a result, anyone who wants to create DApps or smart contracts will require.
NEO can handle around 10,000 transactions per second, whereas the Ethereum network presently supports only 15 transactions per second. As you can see, there is a significant difference in transaction speed. When both Bitcoin and Ethereum are failing to speed up, NEO offers an excellent option.
Blockchain power source.
The NEO blockchain has two coins: NEO and GAS. Unlike NEO and Ethereum, Ethereum gas is the same ‘gas.’ Let’s have a look at it. Anyone who has a NEO in their wallet receives a GAS payout. Consider NEO to be a company’s equity and GAS to be its dividend.
Users can then use this GAS to pay for NEO blockchain transactions.
Ether is Ethereum’s native money, and we know smaller quantities of Ether as “gas.” Consider Ether to be the money and gas to be the pennies.
To clarify, NEO and GAS are two unique tokens, but Ether and gas are the same; ‘gas’ on Ethereum is just smaller units of Ether.
Ethereum (Ether) is divisible into smaller pieces (gas), but NEO is not. That’s correct! NEO is one of the few currencies that, like a company’s shares, you cannot divide. As a result, you cannot transfer 10.5 NEO or 1.2 NEO because they only exist in full numbers. That is why it requires another token, GAS, which is divisible.
China is well known for developing its competitors to prominent western services, such as Alibaba vs. Amazon, WeChat vs. WhatsApp, Baidu vs. Google, and so on.
Similarly, NEO is China’s response to Ethereum. NEO is the first and largest Chinese cryptocurrency and has the backing of the Chinese government. The Chinese government, on the other hand, does not endorse Ethereum. NEO has a tremendous chance of catching the vast Chinese market and other Asian markets.
So, these are the primary distinctions between Ethereum and NEO. Given the benefits that NEO provides, it is easy to see why it is being dubbed the “new Ethereum.” Another critical component for any cryptocurrency is the individuals that are behind it. Let’s compare the scalability of a NEO with Ethereum.
Scalability of NEO vs Ethereum
Most of you know that blockchain is the technology at the heart of cryptocurrencies. Cryptocurrencies with more resilient and scalable blockchains are, as predicted, technically better. We must compare one extremely significant component of the Ethereum and NEO blockchains: the Consensus Mechanism.
What exactly is a consensus mechanism?
Because blockchain is a decentralized, peer-to-peer network, no one leader can make major choices. So, how do decisions get made? How do you determine whether a bitcoin transaction is valid?
This is when the consensus process comes into play. They confirmed a blockchain transaction when the network members reach a consensus (group agreement) that it is a genuine transaction.
It’s not as simple as it seems but bear with me while I explain.
To solve a problem and convince the rest of the network that their answer is accurate, network members (called “nodes”) must run complicated operations on their computers. A consensus mechanism is a way of decision-making.
The following are the critical variables in the NEO vs Ethereum debate that depends on the effectiveness of the consensus mechanism:
- Transaction time.
- Scalability of the network.
- Transaction Fee.
There are various prominent consensus processes, and the sort of consensus mechanism they employ may distinguish cryptocurrencies.
NEO employs a consensus technique known as delegated Byzantine Fault Tolerant (dBFT). NEO has upgraded the Proof-of-Stake (PoS) method. Ethereum, on the other hand, employs a Proof-of-Work (PoW) system.
So, if we were to arrange them in ascending order of improvement, it may look like PoW, PoS, and dBFT. As you can see, NEO has already surpassed Ethereum in terms of the consensus process.
In the NEO vs Ethereum debate, dBFT allows NEO to be more scalable than Ethereum. Ethereum continues to rely on a costly and inefficient consensus method (PoW). This provides NEO an advantage.
The good news for Ethereum enthusiasts is that the Ethereum consensus method is being upgraded to PoS, which is far more efficient than PoW.
Vitalik has also hinted that they may adopt another scalability approach known as Sharding. So, what effect will sharding have? All network participants must validate each transaction under the PoW. During sharding, only a tiny subset of network members will validate each transaction.
As a result, multiple groups will check concurrently a greater number of transactions, boosting scalability. This would significantly improve Ethereum’s prospects. In terms of scalability and consensus processes, NEO is now ahead, but Ethereum is closing the gap. What remains to be seen is how quickly Ethereum can affect these improvements.
Ethereum Price Trend
With a market value of $68.17 billion, Ethereum is the second most valuable cryptocurrency. Ethereum received a lot of support from investors and developers since it was the first cryptocurrency to provide a framework for smart contract development.
The price of Ethereum increased from $9 in January 2017 to $1,389 in January 2018, as shown in the graph below. That’s a 17,000% return in just one year! Let’s have a look at what the opposition offers in the NEO vs. Ethereum fight.
NEO Price Trend
If you believe that beating the returns provided by Ethereum is too impossible, you are mistaken. NEO has done exceptionally successfully thanks to the Chinese government’s help and superior technology.
It increased from around $0.16 in January 2017 to over $162 in January 2018. That is an increase of almost 111,400%. Isn’t it mind-boggling?
The current market capitalization of NEO is $4.96 billion.
With popularity, Ethereum is the obvious victor. It has a sizable fan base of investors, developers, and enthusiasts. It is also the most widely used. However, Ethereum has to develop in areas where NEO excels, such as scalability.
So you now understand the intricacies of the NEO vs Ethereum battle.
You know that NEO is being regarded as the new Ethereum because of the technological benefits it provides over Ethereum.
You know also that Ethereum has an advantage in terms of acceptance and popularity. Furthermore, the Ethereum team is currently working on methods to enhance their technology to compete with or outperform NEO’s technology.
Without a doubt, NEO vs Ethereum is a challenging discussion with no clear winner. We’re still in the early stages, and there’s a lot to see – only time will tell.