Why NEO Co-Founder Erik Zhang Says Ethereum Will Overtake Bitcoin
NEO appears to be losing ground in the popularity contest, at least lately. In the glory days of 2017, the “Chinese Ethereum” was a top 10 cryptocurrency with unstoppable potential. NEO was touted as being faster, better, and capable of handling way more transactions than other major networks. The hype surrounding the project was palpable.
Since its heyday in January 2018 when its market cap was over $10 billion, NEO has slipped to 18th place with a market cap around half that amount.
What’s happened to see it fall out of favor?
The crypto community may be losing interest in NEO, but its co-founder, Erik Zhang, isn’t losing any sleep.
In fact, ask him what NEO price is on any given day and, chances are, he hasn’t even checked.
“I don’t care about NEO’s price and market capitalization at all,” he told me.
I caught up with Zhang to find out what’s going on with NEO, why being compared to Ethereum irks him, and how his cat writes most of his code. Check it out.
Everyone’s heard of your charismatic co-founder Da Hongfei; he’s the face of NEO. Do you prefer to work behind the scenes? What is your main role at NEO?
“Da Hongfei has done a great job in promoting NEO and made great contributions to the development of blockchain industry,” he says.
“Da had more exposure to the public whereas my contributions were more focused on the GitHub.”
Despite his reduced share of time in the spotlight, Zhang isn’t just the co-founder of NEO; he’s also a core developer. And he’s completely disinterested in the NEO price and the crypto market fluctuations in general.
His job, he reminds me, is to focus on building out NEO and strengthening the community.
“What’s the difference between the top 10 and the 18th?” he questions, “We are developing a blockchain project instead of playing a capital game. I just want to make this project even better.”
Is it accurate that NEO is often called the “Chinese Ethereum?” Do you mind that association or is this something that annoys you and the team?
Like a red rag to a bull, Zhang really begins to come into his own here. Somehow, I had the feeling that the constant comparison to Ethereum might be a sticking point.
The labeling is a hype. We never introduced NEO this way, and I’m personally against this labeling.
He goes onto explain that he has nothing against Ethereum, however; he even calls it a “great project.” But he reaffirms that the two blockchains are very different.
It’s easy to call WeChat the “Chinese WhatsApp” and Baidu the “Chinese Google,” but that’s probably where the similarities end. It’s pretty much watered down marketing for dummies in the West.
NEO may have been conceived in China, but Zhang explains that it’s a global project contributed to by developers throughout the world.
“Although it was initiated by two Chinese people, I believe that the founder’s nationality is not the nationality of the project.” And Zhang isn’t real keen on projects having a figurehead.
In my eyes, the founder is nothing but a mascot.
He then comes out with an extremely valid point on the NEO/Ethereum comparison:
Lastly, I have to say that the one that can defeat the Ethereum can never be another Ethereum.
So, what are the key differences between NEO and Ethereum at the technological level? And at a visionary level?
“NEO and Ethereum both have their own tokens. They can all run turing-complete smart contracts. But they also have a big difference. First, their consensus mechanisms are different. Ethereum uses a PoW algorithm, while NEO uses the dBFT algorithm,” he says.
Even the smart contract features the two networks provide are different, Zhang explains:
The interfaces provided by Ethereum for smart contracts are relatively simple, and they are usually provided through the EVM instruction set. NEO provides a large number of powerful APIs for smart contracts, and they are provided in a way similar to virtual devices.
Beyond the technical differences, the greatest chasm lies between the vision of the two projects. Says Zhang:
Ethereum wants to be a world computer that cannot be stopped while NEO wants to serve the smart economy.
Da Hongfei said at Web Summit in Lisbon that NEO is ready for the “real economy.” What does he mean by this and how is this the case?
“In the past year, we have adhered to the principle of building NEO a compliance-ready blockchain. Although blockchain is treated differently in different countries, there’s no doubt that no country or region would turn away from blockchain technology,” he said.
From the perspective of social revolution, blockchain has to be well monitored for mass application and healthy development. We’ve seen the liquidity being facilitated by unhealthy development; however, it propagated a wrong way of usage.
“NEO’s vision of smart economy is composed of ‘smart contract,’ ‘digital identity,’ and ‘digital assets,’ of which ‘digital identity’ is a prerequisite for compliance and a feature of NEO,” he adds. “Digital identity is also the area NEO wishes to focus on to facilitate the development of the real economy using blockchain technology.”
You can be forgiven for not digesting all that in one go. With so much focus on digital identity, what does that actually mean to the end user? What does all this translate to?
Regarding the importance of digital identity and privacy in blockchains for the mainstream, what applications are available to take NEO to the mainstream?
“NeoID is an important component which facilitates the development of digital identity.” He reinforces:
Blockchain has to be compliance-ready and associated with the real economy to achieve growth.
NEO has never wanted to disassociate itself with the real economy, according to its vision in the whitepaper. NEO plans to make the existing economy better. Zhang confirms:
What’s in NEO’s plan is to use blockchain to empower the real economy, and we firmly believe that NEO will build the future of smart economy.
Are you a believer in regulation despite the fact that ICOs and cryptocurrency exchanges are banned in China? Do you still think this is the right move?
“Although ICOs and exchanges are banned in China, the government still encourages the development of blockchain technology. I think it works positively. When the monitoring system is immature, it is a good idea to build compliance into blockchain technology.”
However, it’s also not falling behind in the race to blockchainize its economy in any way. But does banning crypto trading and ICOs not damage Chinese-based crypto?
Just to double check, cryptocurrency is not illegal in China, however, trading is? Has this hurt NEO’s growth? How will NEO be able to get ready for a formal economy if trading cryptocurrency is banned in China?
“Trading is not illegal,” Zhang corrects me, “exchanges are illegal. This won’t hurt NEO, or the damage to NEO is the same as any other projects. You cannot trade NEO or other tokens on Chinese exchanges. But you can legally trade NEO or other tokens in other countries.”
This is where he brings out a sucker punch to retail traders, the likes of which only a developer can, reiterating that the price of NEO is about as interesting to him as the latest tweet from a Kardashian.
Traders always think of ways, I don’t need to care about this at all, because I am not a trader myself.
What’s new with NEO at the moment? What’s coming up next?
“NEO’s goal is to have the ability to run large-scale commercial applications. To achieve this goal, we are doing two things. The first is to improve NEO’s infrastructure so that it has higher tps and a more reliable dBFT consensus algorithm.
“After half a year of development, the improved NEO consensus algorithm dBFT is about to be completed. dBFT will become the best consensus mechanism for blockchains.
“The second is to develop a distributed storage network, NeoFS, so that applications can store massive amounts of data. The development of the first release candidate (RC1) of NeoFS is expected to be completed in Q3 2019.
“In February, we will hold the second NEO DevCon in Seattle and will share more details about the progress.”
What’s the importance of DevCon for NEO and for the industry? Can you tell us a bit about the event?
“The DevCon is strategically held to keep the community informed of our development progress. It also provides a chance to the people interested in blockchain to learn about the latest technological advances, interesting applications and discuss the possibilities of future changes with relevant experts and scholars.
“NEO DevCon will be held during Feb 16-17 in Seattle revolving around Layer2, consensus mechanism and distributed file storage system etc., with more topics to be decided. This time we also invited some speakers from Seattle-based tech giants to share their insights with us.
“By holding the DevCon, we hope to build more connections between blockchain and traditional large enterprises to facilitate a wider application of blockchain technology.”
Do you see this year’s event drawing as many people as your last event, given the fact that many companies like ConsenSys are laying people off?
“The NGD marketing team has been dedicated to the preparation of DevCon, and we are confident of the result. Our objective is not restricted to the blockchain industry alone; instead, we expect to incorporate blockchain technology into higher-dimensional scenarios and industries to serve large-scale business purposes,” he continues, adding:
It is worth mentioning that in the past six months, we had more than a dozen new talent join the team and witnessed a growth in technology communities. Our vision is clear and we always focused on technology development, so market volatility doesn’t have a big impact on the team’s development.
So, that being the case, would you still encourage developers to get into blockchain despite the slump?
“Of course! This is one of the things I officially do. Just as the Internet has brought people into the digital economy era, I believe that the blockchain will lead people into the era of the smart economy. The changes in the economic system will bring people a better life.
“I think this is something that deserves to be done. We need more talented developers to join in the innovation. It has nothing to do with the market situation.”
Let’s get back to NEO and your plans. Can you tell us anything about the hard fork? Can you give us some details or a timeline for that?
“NEO will have a major update next year, which is NEO 3.0. To upgrade to NEO 3.0, we need at least one hard fork.” he continues:
We might even propose to start a new blockchain network, then migrate all the old data to the new chain.
However, “These are still under discussion. As for the type of upgrade that will ultimately be chosen, it depends on the final technical implementation. But in either case, it will not be implemented until next year.”
So, no hard fork in the road ahead for NEO until 2020, but there’s still plenty to look forward to as the NEO community continues along its roadmap.
Moving back to the cryptocurrency industry in general, what’s going on? Did you anticipate the Bitcoin Cash hard fork having such an effect on the industry?
“Personally, I didn’t pay much attention to the market fluctuations nor did I notice the BCH hard fork. So it is difficult for me to answer this question,” he said. However, he added:
From what I’ve observed, an industry has to weed out underperforming projects to achieve growth.
He then goes on to drop an unexpected prediction:
In my opinion, Ethereum will sooner or later exceed Bitcoin and get the first position. But Ethereum will also face very fierce competition from other projects such as NEO.
Where do you see the future of cryptocurrency? Are traditional financial institutions right to fear it?
“As far as I know, many financial institutions are exploring the application of blockchain technology in financial scenarios,” however:
I don’t think traditional financial institutions can make any real achievements in the blockchain field. Because in my opinion, the nature of the blockchain is to reduce the cost of trust transfer through decentralization, and the nature of traditional financial institutions is to create trust through a centralized authority. These two ideas are contrary to each other and difficult to unify.
Any hard-line predictions for us?
“No, I’m not a wizard.” (He also doesn’t mince his words.)
Okay then, lastly, can you tell us something about yourself that no one knows?
“Remember, NEO’s code is written by Erik’s cat.”
Featured Image from Shutterstock