In 2013, Vitalik Buterin realized that the Bitcoin blockchain lacked its own scripting language for developing applications on it. Realizing the huge potential that this flaw represented, he published the “Ethereum Whitepaper.” The rest is history.
Today, Ethereum is the main platform of choice to develop cryptographic assets. By mid-2017, it accounted for 76% share of the total market capitalization of crypto assets. In July 2017, almost 100% of all applications launched in the market were based on the Ethereum blockchain, compared to a zero percent figure just a year ago in July 2016.
In the way Ethereum was developed on the limitations of the Bitcoin blockchain, we can expect a platform to capitalize on the flaws in Ethereum too. NEO might just be that platform.
Compliance with Regulations
Privacy needs to be the essence of technological advancement. But, the minute companies and governments get involved, anonymity is no longer appreciated. NEO is developing its technology around this idea. It knows that regulations and compliance will sooner or later catch up with the blockchain industry, unlike Ethereum, which takes this aspect on a lighter note. NEO is establishing digital identities on the lines of the PKI X.509 standard for its bookkeepers, which will then be secured on the blockchain. This will make it more popular for companies and government bodies. It is already backed by the Chinese government and touted as the “Ethereum of China.”
Ethereum initially started with the PoW (Proof-of-Work) protocol. With the danger of 51% attacks looming and the need for vast amounts of energy, Ethereum switched to the more efficient PoS (Proof-of-Stake) protocol. NEO uses the Delegated Byzantine Fault Tolerance protocol, which is an advanced version of the PoS protocol. This makes it much faster and safer than Ethereum.
Dependence on the PoS framework has not compensated for the transaction speed on the Ethereum platform, which is just 15-30 transactions per second (tps). This is a limitation for a system that is considered to act as the backbone for the internet-of-value. On the other hand, NEO has a faster transaction speed of 10,000tps, which will make it ideal for the exchange of digital assets on the platform and creating a “smart economy,” which is its aim.
NEO supports multiple coding languages. Its smart contracts and DApps can be written in languages like Java and C++. Future developers will be able to write contracts in Python and Go. This will bring down the barriers to entry for developers around the world. Ethereum relies on a language called Solidity, which is known by a lesser number of people.
Quantum computers have the power to break into or hack cryptography algorithms and this poses a significant security threat for apps. NEO claims to have developed an anti-quantum cryptography mechanism, called NeoQS, which secures its applications against attacks. Ethereum lacks such functionality.
Ethereum is continuously working on improving its platform, and will likely come up with solutions to its limitations. However, NEO has a definite vision, which is the creation of a “smart economy,” and for this, it is focusing on being more compliant with regulatory frameworks, something that Ethereum doesn’t intend to do. This might lead to Ethereum being eventually beaten by NEO.