The Independent Republic

NEO, known as China’s Ethereum, has largely been unaffected by the recent market decline and  moved into the top 10 on CoinMarketCap for the first time. Up 15% today NEO is now valued at $10 billion and sits at #9 just in front of recent market darling IOTA. Growing out of the Antshares project, NEO is the first ever open source public Chinese blockchain project.

Where NEO differs from Ethereum is the lack of proof-of-work (PoW) mining phase of NEO tokens. Rather the NEO project opted for a fixed 100 million tokens which cannot be divided. The NEO tokens then give off an interest like mechanism known as GAS. NEO represents a stake in the blockchain like a share of stock and allows for voting rights while GAS is the currency required for apps and operations on the blockchain.

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Ethereum (ETH) was the first coin to introduce the smart contract to the blockchain. Smart contracts are automatically executing contracts based on preset parameters that control transactions. Two or more parties agree to the parameters and enter the contract. On the NEO blockchain, GAS tokens are the currency required to enter into contracts, run or develop apps and launch future ICOs on the NEO network.

TheKey Frustrates NEO Investors

TheKey is an ICO that has been big news in the NEO community for all the wrong reasons. The pre-sale and crowdsale launched at two very different NEO prices causing much confusion. At time of the pre-sale NEO was valued at ~$40 while just prior to close NEO was valued at $140. Many assumed by investing in the ICO near the close they would be awarded 3x TheKey tokens than pre-sale investors. This would allow late crowd funding to receive more coins that early investors.

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Fundraising also continued beyond the pre-set limits of the whitepaper. Originally limited to $22 million, after appreciation of NEO tokens funds quickly crossed $30 million. Rather than shutting down the crowdsale, TheKey continued with the crowdsale to raise an additional 10k NEO tokens. This led to the frenzy of late investors assuming they would get more tokens than pre-sale investors.

TheKey is a decentralized solution for identity verification. As it just wrapped up the ICO fundraising the website should be awash in information, graphics, the dev team, a whitepaper and some sort of roadmap. Heading over to the website returns a bad gateway error. Bad form after taking $30 million dollars from investors.

NEO Booming Despite the Frustration

Binance controls 30% of the market for NEO. The total volume is $800 million or 8% of the $10 billion market cap. Alone the marketcap does not explain why NEO is booming. The real value in NEO is the production of GAS tokens. GAS also has a market value of over $600 million and sits at #56 on CoinMarketCap.

Now worth $73 each GAS is expected to be the funding source for future ICOs, smart contracts, and financial transactions. By owning NEO Gas is given as a dividend. The price of each GAS token has tracked nearly half the value of each NEO which indicates the total market value of GAS should grow if the price appreciates and as more GAS is produced. The speed of GAS production is based on the speed of the blockchain with current block times at 27 seconds. With current estimates each NEO should produce just under 1 GAS token per year based on estimates found here.

The dividend is expected to grow which those who are involved in the NEO community understand. As the NEO network decentralizes the block time is expected to decrease. As solving each block earns the dividend, faster blocks means more blocks which leads to more GAS. As people realize the dividend will increase the hope is demand for NEO will increase.

The Future for NEO and GAS

Ethereum (ETH) launched July 2015 and by crypto standards is now middle aged and maturing. It is expected to convert from proof-of-work (PoW) to proof-of-stake (PoS) much to the chagrin of miners. The Ethereum network is starting to suffer the growing pains of added burden to the blockchain slowing the movement of ETH. The CryptoKotties craze nearly stopped the blockchain causing transactions to take hours to complete. NEO is quickly gaining steem to follow in Ethereum’s tracks for development through the addition of applications like TheKey.

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As more holders of NEO move tokens to their wallets without expectations to sell the circulating supply of NEO decreases artificially. This limits coins for purchase on the exchanges despite the growing project. Meanwhile GAS tokens will grow through the interest mechanism and trade on exchanges as a transfer of funds. As people learn how to earn GAS demand for NEO could increase driving the prices higher. This could explain why NEO has largely been sparred from the recent market decline and the only top 10 coin that is higher than last week. As always do your research prior to investing by checking out the website and Twitter feed.