Ethereum (ETH) and NEO are two major cryptocurrency platforms that allow developers to build and deploy automated business logic via smart contracts and enterprise-level decentralized applications (dApps). Both these platforms have been implemented using blockchain technology and can be used to launch initial coin offerings (ICOs).
In this introductory article, we will go over briefly when and by whom both the Ethereum and NEO projects were launched; the type of network consensus mechanism and tokens each of them use; the different types of smart contract development environments they provide; and other details regarding their network management. In future posts on this topic, readers can expect to learn more about how both NEO and Ethereum plan to scale their networks and the business and regulatory activities associated with both projects.
How They Both Started
Proposed in late 2013 by Russian-Canadian programmer and writer, Vitalik Buterin, Ethereum is an open-source, public blockchain network – which provides a decentralized virtual machine (EVM) that is used to execute scripts on its network of public nodes.
Meanwhile, the NEO project was initially launched by Shanghai University graduate and developer Erik Zhang and self-taught computer programmer, Da Hongfei as AntShares in 2014, before rebranding in June 2017 to its current name. NEO, like Ethereum, is also open-source and computationally universal – or in other words, Turing Complete.
NEO And Ethereum Are Informally Turing Complete
Blockchain Consensus Mechanisms, DAO Attack, Immutability
NEO uses the delegated Byzantine Fault Tolerant (dBFT) consensus mechanism – which its developers claim is an improved version of proof-of-stake (PoS). At present, Ethereum is using the proof-of-work (PoW) consensus algorithm, however, the platform’s development team plans to eventually shift to PoS – as part of the ongoing scaling efforts for the Ethereum network
Proponents of the dBFT algorithm argue that it’s a superior consensus protocol because it is “hard fork proof.” Moreover, dBFT’s advocates claim that it provides better finality (of transactions), which means that once a set of transfers have been confirmed, their associated block cannot be split. Therefore, all transactions processed on NEO’s network cannot be rolled back.
Currently, the Ethereum network is arguably more prone to hard forks, with one occurring after the DAO attack. The DAO, which stands for Distributed Autonomous Organization (DAO), was created in 2016 by Ethereum’s developers and it was meant to be a decentralized venture capital fund for crypto-related projects. During the DAO’s creation period, it raised an unexpected 12.7 million Ether, an amount worth $250 million at that time. In June 2016, a hacker discovered a vulnerability in the DAO’s codebase, which allowed him to steal about 3.6 million ETH (approximately $70 million) from the DAO account.
Because of this incident, the Ethereum community was split into two groups: one wanting to hard fork the original Ethereum chain, which has now resulted in what we refer to as Ethereum (ETH), and the other network is called Ethereum Classic (ETC). The ETC chain exists today because certain members of the Ethereum community are seemingly more firm in their belief of the principle that blockchains must be immutable. This, they claim, is why they chose to stick to the same version of the Ethereum chain even after its state was said to be corrupted by the DAO attack.
Transaction Processing With Native Tokens
Transactions on the NEO network can be conducted by using two different tokens: NEO and GAS. The maximum circulating supply of these tokens has been fixed at 100 million each. Owning indivisible NEO tokens is equivalent to what may be considered shares in traditional markets, and their holders are entitled to voting rights.
So, those who have a stake in NEO may vote on key decisions regarding the platform’s ongoing development. The blockchain-based crypto network’s other token, GAS, is distributed as a type of reward (or dividends) to NEO investors.
Ethereum’s divisible (up to 18 decimal places) native token, Ether (ETH), is used to conduct transactions on its blockchain-based network. When the Ethereum mainnet went live in late July 2015, 72 million Ether tokens had been “premined” – which accounts for roughly 70% of total ETH in circulation, as over 28 million ETH have been created since the platform’s launch. The relatively large number of ETH that has been issued has raised some concerns about whether the token will be sufficiently scarce to preserve long-term value.
Notably, the term or word “Gas” is also used on the Ethereum network – but refers to an entirely different process (compared to NEO). Gas on Ethereum serves as an internal transaction pricing mechanism, which is used to help reduce spam on the blockchain and also to allocate resources to the network’s nodes.
NEO’S Emphasis On Regulatory Compliance
One of the main things that sets NEO apart from many other blockchain networks is that it focuses on complying with regulations. Although both Ethereum and NEO allow users to issue digital assets, the latter requires its network participants (individuals or organizations) to verify their identities. After NEO network users have been verified, they are assigned a unique digital identity.
In order for parties to conduct transactions on NEO’s network, their identities must first be properly verified. Moreover, nodes looking to validate transactions, or engage in other activities such as bookkeeping or accounting on NEO’s blockchain must also pass an identity check.
What To Expect In Ethereum Vs NEO Part 2, 3, …
As mentioned, in future posts on Ethereum vs NEO, we will carefully examine the scaling and ongoing development efforts of both platforms. We will also look into the businesses that are associated with both projects, and challenges each blockchain network is currently facing.