Like many cryptocurrency prices this year, theĀ Neo priceĀ has enjoyed monster gains peaking at 37,500% on Aug. 13, when Neo tokens hit an all-time high of $52.63.
TheĀ price of NeoĀ was just $0.14 on Jan. 1. With the current Neo price at about $40, the year-to-date gains still stand at more than 28,000%. And much bigger gains likely lie ahead for this China-based project, as Iāll explain shortly.
The primary cause of the Neo priceās explosive run was a rebranding announcement that took place on June 22 at Microsoft Corp.ās (Nasdaq:Ā MSFT) Beijing headquarters.
The cryptocurrencyās name was to change to Neo from āAntshares,ā the name it had from its creation in 2014. The development team said it chose āNeoā partly because it means ānewā in Greek, and partly as a tribute to the Keanu Reeves character in āThe Matrixā film series.
That announcement, along with the revelation of several upgrades to the Neo blockchain, made it a cryptocurrency darling.
But the spike in the price of Neo is not a fluke, and it would be a mistake to dismiss it as just anotherĀ overheated cryptocurrency.
Neo is much more than that…
The Chinese Government Wants Neo to Succeed
You see, Neo isnāt just another cryptocurrency ā itās the first open-source blockchain developed in China.
And just as importantly, several of the developers behind Neo also work for a company called Onchain, one of Chinaās top āfintechā (financial technology) companies.
The projectās high public profile means it has the tacit endorsement of the Chinese government, which has restricted the use of other cryptocurrencies such as Bitcoin.
Weāve seen this play out in other areas of tech. In China, home-grown tech alternatives almost always dominate foreign ones. For instance, Baidu, the Chinese search engine, has a 77.1% market share in China, while Google has a mere 1.7%.
But Neoās appeal to the Chinese government extends beyond the fact that itās native born. The developers also tweaked the code to make it authoritarian-regime friendly.
One of the main objections China has to digital currencies like Bitcoin is that the transactions are anonymous unless you can link a Bitcoin address to an individual.
The Neo white paper says the cryptocurrency uses a āmature digital identity systemā based on the combination of several technologies.
In a recent āAsk Me Anythingā session on Reddit, Neo founder and CEO Da Hongfei pointed out that while the project has āno formal cooperation withā the Chinese government, it has a āgood relationship with local governments and various governing bodies.ā
Itās not surprising the Chinese government would encourage the Neo project. It recognizes the vast economic potential of cryptocurrencies. But it also wants a degree of control over how that potential is realized.
Remember, this is a country that maps out five-year plans for its economic development. And itās no coincidence the policies of the current five-year plan (for 2016-2020) emphasize the need for āinnovation-driven development.ā A government-friendly cryptocurrency platform fits that bill nicely.
And the Neo developers made sure their platform would have economic appeal…
Why Neo Is the āEthereum of Chinaā
The Neo developers carefully chose which cryptocurrency they wanted most to emulate, ultimately settling onĀ Ethereum. Neo has so much in common with that project that itās come to be known as the āEthereum of China.ā
One similarity is that Neo can run āsmart contracts.ā These are digital contracts run on the blockchain that execute automatically when their conditions are met. The āNeoContractsā even do Ethereum one better ā the network can translate a NeoContract from multiple programming languages (Ethereum requires developers to use a single, designated language).
The other key technology Neo shares with Ethereum is that itās āTuring complete.ā That means its network can run programs much like a PC does ā but on a global scale.
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On Wednesday, the Bulgarian-based AdEx Network announced it plans to become the first company to release a Neo-based āDappā (distributed application). Ethereum has a growing stable of more than 600 Dapps.
With Neo, China can harness all the disruptive power ofĀ Bitcoin and EthereumĀ without the aspects of those cryptocurrencies it finds troublesome.
Which brings us back to the Neo price.
With Neo set to be Chinaās platform of choice for blockchain innovation, it has the potential for extraordinary gains in the months ahead ā as much as 12 times the current price.
Letās do the math…
How the Price of Neo Could Skyrocket to $500 Within a Year
About the Author
David Zeiler, Associate Editor forĀ Money MorningĀ at Money Map Press,Ā has been a journalist for more than 35 years, including 18 spent atĀ The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving atĀ Money MorningĀ in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple forĀ The SunĀ in the mid-1990s, and had an Apple blog onĀ The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.
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