NEO is a Chinese cryptocurrency, often classed as the Chinese Ethereum. It was founded in 2014 by Da Hongfei and Erik Zhan under the name AntShares, but during the altcoin mania of 2017, rebranded as NEO.
Just like Ethereum, it’s a blockchain-based platform supporting its own NEO cryptocurrency, along with backing the development of smart contracts and digital assets.
Holders of the NEO token can generate monetary interest on their holding, known as GAS. This is a utility token used to deploy smart contracts, fetch data from the NEO oracle, and upload or download data from NEO’s file sharing layer.
The circulation cap of both NEO and GAS is 100 million tokens. There are currently 70 million NEO tokens in circulation, while there are only 10 million GAS. NEO is thought to be one of the scarcest public blockchain tokens, as it cannot be traded in fractional pieces.
This dual token mechanism is the first of its kind in the public blockchain. It separates the governance process from the network usage, while providing a means of acquiring the tokens needing to pay transaction fees. Therefore, this two token model lets users take part in the NEO ecosystem without reducing their stake in the network.
GAS is also used to operate and store tokens and smart contracts so that node resources are not squandered.
China’s influence
Governments globally are trying to figure out ways to regulate Bitcoin and the crypto landscape. On April 18, at a recent summit on this matter, Li Bo, the deputy governor of the Chinese central bank spoke. He clarified that cryptocurrencies should be playing an investment role or alternative asset but not acting as currencies.
His words sent Chinese altcoins NEO and VeChain soaring. NEO rose over 55% in a day as this piece of news makes cryptocurrencies particularly attractive as a money-spinning way to generate future wealth.
China has a particularly heavy weighting on the world of crypto because over 65% of Bitcoin is mined there. It’s historically been averse to the modern asset as it does not consider cryptocurrencies legal tender.
In 2017, China banned all initial coin offerings (ICO) calling them ‘illegal fundraising‘, and closed exchanges. But it took a U-turn in 2019 when it declared Bitcoin as virtual property with value.
More recently, China’s central bank, the People’s Bank of China, clarified Bitcoin ownership is now legal, as are mining operations.
The regulatory landscape is undoubtedly getting set for a major overhaul. Stablecoins such as Tether are gaining a foothold as payment solutions. With investments in cryptocurrencies reaching record highs, governors are seeking ways to regulate, both to protect economies and to prevent a casino environment for retail investors.