Neo is a smart contract platform that was created in 2014 and survived the subsequent bull and bear market. Neo is aiming to create a smart economy which is composed of digital assets, digital identities and smart contracts. Smart assets are basically fungible and non fungible tokens as they exist on Ethereum in the form of the ERC-20 and ERC-721 token standards. The equivalent Neo ICO token standard is the NEP-5 token.
Unlike Bitcoin, NEO is not mined. A fixed supply of 100 million NEO was initially created. The ecosystem comes with a second token called Gas which is used to pay for transactions on the blockchain. Holding NEO automatically enables users to claim Gas tokens.
Due to its Chinese founders and ecosystem it was often labelled as the Chinese Ethereum. Da Hongfei is the project and commercial leader of NEO. He is one of the earliest adopters of blockchain technology in China and counts with excellent relationships to Chinese government officials.
The price of Neo peaked on January 15, 2018 just below 200$. It fell to 5$ in December 2018. The price performance of Neo mirrored the chart of most altcoins. What is more interesting from an investor’s perspective is the NEOETH chart since the performance of an altcoin against Ethereum is the benchmark for assessing the relative strength of altcoins.
From the total cryptocurrency market bottom in December 2018 the price of NEO declined another 75% against Ethereum until the beginning of February 2021. The price performance of the NEOETH pair is shown in the chart below.
The question we need to ask ourselves at this point in time is whether the chart has bottomed out? It might be that a trend reversal on the NEOETH chart is around the corner just as we have observed with other altcoins such as Cardano most recently.
Could Neo 3.0 be the catalyst of another fulminant bull run of Neo? If you look at what happened right before the launch of the Flamingo token you get an indicator of what could happen when NEO 3.0 eventually launches. NEO outperformed Ethereum more than 100% in the weeks ahead of the Flamingo launch.
However, the launch of NEO 3.0 is even much bigger news for the NEO ecosystem than the launch of Flamingo was back in the days. Therefore we might end up seeing NEO outperform Ethereum up to 200% measured from the February 1, 2021 bottom of the chart above. Also bear in mind that Neo measured in Ethereum is still historically cheap.
What to expect from Neo 3.0?
- NEO currently uses a Delegated Byzantine Fault Tolerance Algorithm consensus mechanism based on Proof of Stake. Neo 3.0 will feature an update and improvement to the current consensus mechanism.
- Furthermore, Neo 3.0 will contain a built-in oracle solution. If you are wondering why oracles matter just look at the price performance of ChainLink which is currently the most widely used oracle and has been on a massive bull run since years. Blockchains need oracles in order to obtain their full potential. In case you need more arguments check out our latest review on Berry Data.
- File storage will be introduced to Neo through NeoFS. It is another important use case for blockchains as was shown by projects like Filecoin or Siacoin.
- Identity Management: Neo 3.0 intends to support a protocol for the issuance of decentralized identifiers.
The list of improvements is not complete but gives you an overview of the milestones which will be reached with Neo 3.0. On top Neo 3.0 will deliver improvements to the Neo Virtual Machine and simplify the current architecture of Neo. Once the transition is complete investors will need to swap their tokens to the new blockchain.
When will Neo 3.0 launch?
A precise launch date was not yet officially announced but the Github repository of Neo 3.0 showed that 96% of the development was complete. The development aligns with the fundamentals of the crypto market which have been tremendously improving in the last couple of months. Accordingly, the Neo price has increased to more than 40$ – price levels not seen since June 2018. The trading volume for Neo is also increasing which can be considered as a healthy sign of the market.
It can be speculated that the launch is imminent and whales are already trying to front run the hype that will kick in as Neo 3.0 eventually launches in the middle of the 2021 crypto bull market. Be prepared for an imminent breakout if a lower Bitcoin price volatility hands over the stage to altcoins.