NEO was founded as AntShares by Da Hongfei and Erik Zhan in China in 2014 and was rebranded "NEO" in June 2017. It is a blockchain-based platform that supports its own cryptocurrency.
NEO aims to automate the management of digital assets through the use of smart contracts, with an eventual aim of building a distributed network-based smart economy system.
Assets can be easily digitized on the NEO blockchain in an open, decentralized, trustworthy, traceable and transparent manner that is free of intermediaries and their associated costs.
Users are able to record, buy, sell, exchange or circulate various kinds of assets. The NEO platform allows for linking the physical asset with an equivalent and unique digital avatar on its network. NEO also supports the protection of assets.
Digital identity enables verifiable key information about participating individuals, organizations, and other entities that exist in the digital context.
Focus on Regulatory Compliance
NEO maintains a clear distinction from other standard blockchain platforms, as it is focused on being regulatory-compliant. While digitized assets and smart contracts are popular on other blockchain platforms like Ethereum, the third key feature of what it calls its “digital identity” separates NEO from the rest.
Neo Blockchain and Digital Identity
A digital identity is information on an entity used by computer systems to represent an external agent. That agent may be a person, organisation, application, or device.
The NEO platforms utilize the X.509 digital identity standard, the most widely accepted digital certificate issuance model, based on Public Key Infrastructure. Along with the aforementioned X.509 standard., the Web of Trust point-to-point certificate issuance mode, is supported as well.
Even the various nodes on the NEO network may need to have identification before they can contribute to the transaction verification and other activities like accounting and bookkeeping.
While NEO works like bitcoin and ethereum, Onchain focuses on the creation of private and consortium blockchains to meet the specific needs of the industry.
Onchain’s major product, Distributed Networks Architecture, uses digital asset applications to help businesses by creating private and public blockchains. DNA is believed to be the blockchain platform that can be customized to address all sorts of different problems in the private and public sectors.
NEO and Onchain: How They Differ
NEO and Onchain are separate entities that exist independently, and neither owns the other. NEO targets the business-to-consumer segment —where the "C" can refer to a customer or even community—while Onchain focuses on business-to-business (B2B) enterprise services.
Both are separately funded. NEO is funded by a public community, while Onchain is backed by China’s largest private conglomerate, called Fosun.
When asked why he chose Fosun as an investment partner, founder Da Hongfei said: “The three major arms of their portfolio include finance, medical science, entertainment and lifestyle, which has good synergy with blockchain tech. This is why we chose Fosun Group as an investment partner, because we highly value the Enterprise resource that Fosun provide, a platform for Onchain to display blockchain technology.
NEO and Onchain: Their Vision
The common founders of NEO and Onchain envision that they will be able to achieve cross-chain interoperability in the future. That is, a mechanism will be developed to connect and share information between the various blockchains whether they are public like NEO or private such as those operated by businesses.
As the number of blockchain-based systems continues to grow in both the public and private domains, there will eventually be a need to have interoperability among various blockchains. The teams at NEO and Onchain hope to fill this gap through their ongoing work.
However, to enable such interoperability, trust and identity become important. That gap will be filled by the intrinsic “Digital Identity” feature which is an integral part of the NEO blockchain platform.
Essentially, NEO and Onchain may pave the much-needed middle path between the completely decentralized, unregulated and anonymous blockchain system like bitcoin and the conventional KYC-compliant economy that is the present-day system of bank accounts and credit cards.
By taking an all-inclusive approach that attempts to involve and serve the needs of all parties—individual users, network contributors like miners, transacting participants, private businesses and even regulators—NEO and Onchain may be best placed to provide a holistic solution to the ongoing rift between closed-economy regulators and the open-system cryptocurrency enthusiasts.
A Solution for China?
The NEO platform acts as the foundation of Onchain’s DNA concept. NEO provides decentralized, public blockchains while OnChain’s DNA fills the need for private blockchains. Linking both these systems may enable the best of both worlds.
Onchain has already received an endorsement for DNA from the government of Guiyang, the capital of Guizhou province of Southwest China. Both parties jointly released smart contract 2.0 and other Chinese blockchain technology in early 2017.
In mid-2017, Onchain was among the first batch of companies that successfully passed the Chinese blockchain test, which was followed by an investment partnership with the Fosun Group. Despite China recent tightening of its grip on cryptocurrencies, the acceptance of blockchain technology is a clear possibility. In mid-2017, the Chinese government was reported to be experimenting and creating its own national cryptocurrency. (For more, see Chinese Government is Developing its Own Cryptocurrency.) Despite its hard stance on the various decentralized cryptocurrencies and ICOs, rumors are swirling that the government may be looking for an alternate solution and it remains open to working with companies that are willing to play by its rules. Being local Chinese ventures, NEO and Onchain are the top contenders if this is true. If the promising Onchain technology can be accepted and integrated with the Chinese government and businesses enabling an all-inclusive solution, then it will greatly increase the widespread adoption of NEO.
Smart Contract Smart contracts are automated contracts. They are self-executing with specific instructions written on its code which get executed when certain conditions are made. You can learn more about smart contracts in our in-depth guide here. So, what are the desirable properties that we want in our smart contract?
Anything that runs on a blockchain needs to be immutable and must have the ability to run through multiple nodes without compromising on its integrity. As a result of which, smart contract functionality needs to be three things: Deterministic, Terminable, Isolated.
The Bottom Line
The technical robustness of the NEO-Onchain concept and its centralized approach looks promising, making it an attractive option not just for Chinese authorities, but for other foreign governments that are wary of the anonymous and decentralized virtual currency market.
Investing in cryptocurrencies and Initial Coin Offerings is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the writing date of this article, the author owns no cryptocurrencies.
The History of Neo Blockchain
According to their website, Neo is a “non-profit community-based blockchain project that utilizes blockchain technology and digital identity to digitize assets, to automate the management of digital assets using smart contracts, and to realize a “smart economy” with a distributed network.”
Digital Assets + Digital Identity + Smart Contract = Smart Economy. Neo was started by the same duo who founded Shanghai-based blockchain R&D company “OnChain”, – CEO Da Hongfei and CTO Erik Zhang. Research on Neo started around 2014. In 2016, Onchain was listed in the Top 50 Fintech Company in China by KPMG.
Digital Assets
A digital asset is anything that exists in binary format and with the right to use. It is critical for a digital entity to have that “right to use” for it to qualify as a digital asset.
With the advent of the blockchain, it has become far safer to own digital assets. The blockchain technology makes the digitization of these assets decentralized, safe, trustworthy, and free of a third party.
