NEO vs. Ethereum: Battle of the Smart Contracts Platforms

NEO vs. Ethereum: Battle of the Smart Contracts Platforms

NEO vs. Ethereum: Battle of the Smart Contracts Platforms
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What is NEO vs. Ethereum?

The global blockchain market is set to increase from $706 million in 2017 to $60 billion by 2024. With blockchain set to explode in such a big way, everyone wants to know what companies, apps, and protocols are going to capture much of this value.

Two of the biggest blockchain platforms are Ethereum and NEO.

Ethereum (ETH) popularized the idea of “Blockchain 2.0”, or using blockchain for more than just payments (Blockchain 1.0). By using smart contracts, or self-executing contracts made of computer code, users can not only send money to each other in a decentralized way, but also build decentralized applications (Dapps), including decentralized financial services.

Because of this new blockchain paradigm, Ethereum and its cryptocurrency ETH exploded to the forefront of blockchain technology within a very short period of time.

Ethereum became so popular that it was the 2nd best investment of the decade behind Bitcoin (BTC).

In light of Ethereum’s explosion onto the blockchain scene, other competitors quickly emerged. One of these was NEO, also known as “The Chinese Ethereum” due to its origins in China.

In this NEO vs. Ethereum comparison, we’ll compare NEO and Ethereum in terms of their smart contracts, Dapps, transactions per second, fees, price, and future outlook. At the end, we’ll also give our thoughts on Ethereum vs. NEO going forward as well as other places you can learn more about the similarities and differences between these two blockchain titans.

NEO vs. Ethereum Smart Contracts

One of the main differences between NEO and Ethereum is their smart contracts. While both support smart contracts that can do various things, NEO smart contracts have the upper hand on Ethereum smart contracts for one simple reason. Developers can create NEO smart contracts using familiar programming languages.

Ethereum uses a new programming language called Solidity specifically made for writing Ethereum smart contracts. On NEO, however, developers can create smart contracts with familiar programming languages like C#, Javascript, Java, Python, and Go.

Ease of development is important since smart contracts can hold lots of money in the form of cryptocurrency. Building complex applications using unfamiliar languages were proven to be dangerous with The DAO hack.

The DAO was an Ethereum-based, “decentralized venture capital fund”, which raised $120m worth of ETH, the largest crowdfunding campaign at the time. However, an individual or group exploited vulnerabilities in the underlying smart contract code, which led to the loss of $50m worth of ETH.

Ethereum ended up hard-forking, or splitting the blockchain into Ethereum and Ethereum Classic (ETC), to return the lost funds. Nevertheless, this hack in ETH’s early days showed the dangers of building valuable smart contracts with unfamiliar tools.

The DAO’s huge crowdfunding campaign showed the potential of blockchain technology. Unfortunately though, The DAO didn’t last. Image credit: Bitcoin Magazine

Though it will probably become less and less important that Ethereum uses a new programming language, as developers get more used to Solidity, for now the use of Solidity makes the barrier to entry for building Ethereum smart contracts that much higher for Ethereum vs. NEO.

Ethereum vs. NEO dApps

Now that we know a little bit about how smart contracts are made on NEO vs. Ethereum, what about the actual Dapps that the smart contracts power on both platforms?

Ethereum takes this one by far, as some of the most popular Dapps use Ethereum. For example, MakerDAO, the top DeFi Dapp, has had nearly $10 million in transaction volume the past 7 days.

For comparison, NEO Dapps have very few users and transaction volume (almost none) according to State of the Dapps, Dapp Radar, and

NEO’s Head of Development John deVadoss has said that NEO is focusing on making the platform more developer-friendly first in response to NEO’s current lack of popular Dapps.

Regardless, the fact remains that Ethereum Dapp usage is currently exponentially higher than that of NEO’s. NEO is going to have catch up - and fast - if it wants to close the gap on NEO vs. Ethereum development.

DeFi, an Ethereum use case that has exploded in recent years, already has $1 billion of value locked in various DeFi smart contracts. Image credit: DeFi Pulse

NEO vs. Ethereum Transactions per Second

Another important thing to consider when comparing NEO and Ethereum is how many transactions per second each platform can handle.

If either platform wants to capture a good chunk of the projected $60 billion blockchain market by 2024, transactions per second is important since some of the most popular Dapps will have high usage demands and can’t be slowed down by a slow transaction capacity.

NEO wins here with a max limit of ~33 transactions per second to Ethereum’s limit of 15 transactions per second.

While NEO does have the slight edge here, both blockchains are inadequate to handle heavy mainstream usage. For example, Visa, the popular payments processor of credit and debit card payments, processes ~1,700 transactions per second.

A common misconception is that Visa handles 24,000 transactions per second. However, this amount is what Visa is “capable” of handling, when in reality Visa handles ~1,700 transactions per second (150 million transactions per day). Image credit: HowMuch

Related to each network’s transaction capacity is the Ethereum vs. NEO speed, or how long it takes for a transaction to go through on either network. Both Ethereum and NEO transactions take about 15 seconds.

However, NEO transactions are considered final after 1 block (group of transactions added to the blockchain, or record of all transactions, every 15 seconds). Ethereum transactions on the other hand, are considered final after 12 blocks (~3 minutes).

Therefore, NEO is a faster blockchain than Ethereum; nevertheless, both still have a long ways to go if they want to service mass amounts of users and Dapps.

NEO Fees vs. Ethereum Fees

Fees are also important to think about when comparing Ethereum vs. NEO. Nobody wants to pay a ton of fees for every little transaction that they make on either platform.

Most NEO transactions are free, with the exception of certain types of transactions and big transactions. You can also include a transaction fee to have your transaction processed faster during times of high network congestion. However, for basic transactions, transaction fees are optional.

(Note: unlike Ethereum, where you pay transaction fees with ETH, NEO requires you to pay transaction fees in GAS).

Ethereum transactions, on the other hand, aren’t free:

Ethereum transactions cost money. Moreover, the Ethereum average transaction fee has gotten quite high at times of high usage, such as during the cryptocurrency bubble of late 2017/early 2018. Image credit: BitInfoCharts

NEO has the edge when it comes to transaction fees since no one will want to pay a transaction fee everytime they make a transaction, especially small ones where the transaction fee costs more than the transaction itself.

NEO vs. Ethereum Price

So how do some of the comparisons we’ve made play out when it comes to the NEO vs. Ethereum price?

The current prices of NEO and Ethereum are $12.52 and $250.19 respectively. ETH is much more valuable, which makes sense for now since Ethereum has much higher usage in the form of popular Dapps like MakerDAO.

NEO vs. Ethereum Future

Ethereum is more valuable than NEO right now, but will this trend continue into the future?

On paper, NEO does seem like the better platform in some respects. For example, it’s easier to create NEO smart contracts due to the support of popular programming languages. In addition, it’s able to handle slightly more transactions per second, and transactions themselves are mostly free.

Another interesting aspect of NEO is that you can earn passive crypto income with NEO via NEO staking. Ethereum doesn’t offer any similar way to earn money on your ETH (other than holding it and hoping the price goes up). Though this will change if and when Ethereum transitions to Proof of Stake.

Nevertheless, Ethereum has one key edge over NEO: (lots) more people use it, as evidenced by the popularity of Ethereum Dapps.

Therefore, while NEO and Ethereum are both popular blockchain projects, Ethereum’s future looks brighter for now. However, we’re excited to see what happens moving forward since blockchain is fast-moving, and NEO has opened an office headed by ex-Microsoft executive John deVadoss in Seattle, Washington, USA, one of the world’s big tech hubs.

More NEO vs. Ethereum Discussion

Want to learn more about Ethereum vs. NEO? Here are some additional resources.

NEO vs. Ethereum Reddit

NEO vs. Ethereum Bitcointalk

NEO vs Ethereum - which coin do you favour as a long term investment?

NEO vs. Ethereum Quora

Is NEO or Ethereum a better investment?

NEO vs. Ethereum YouTube

NEO vs. Ethereum Medium

ETH vs NEO [Blockchain Basics Part 5]

Another place to continue the NEO vs. Ethereum discussion is the Exodus public slack!

This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.

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