So, how are you, my intelligent investor?. Today we will discuss Neo cryptocurrency which is popularly known as Chinese Ethereum and solves the problem of smart contracts with oracles.
If you don’t know, we analyse every cryptocurrency both fundamentally and technically to find out whether it is a good investment or not. Don’t worry we will discuss the terms like smart contracts, oracles etc during fundamental analysis.
But before we begin, if you are a crypto investor then you should consider investing in Vechain because it is very strong both technically and fundamentally.
Technical analysis of Neo (N3)
Like Vechain, Neo has two tokens which are Neo and Gas. As always we will discuss the significance of having two tokens while doing fundamental analysis.
For now, let’s have a look at the market performance of Neo and Gas tokens in the year 2021.
|Past 12-month return||80%||278%|
|Market cap||$1.5 Billion||$51 Million|
|Volume||$114 Million||$7 Million|
Note: Current market value of Neo might differ from that mentioned in the table. You can visit the source below for getting the current market information.
Source – https://coinmarketcap.com/currencies/neo/
Source – https://coinmarketcap.com/currencies/gas/
As seen in the table Neo gives negative and Gas gives positive returns in the past 12 months. You can ignore it for a while because currently when I am writing this article the whole crypto market is down, so it is better to ignore these numbers and compare Neo with other cryptos with almost the same market cap.
Neo vs Enjin coin vs OKB
As clearly visible in this graph, NEO has given the least return of 64% from 2021 till date, OMG token with a market cap of about $1.2 Billion gave a return of 141%, Gas gave a return of about 252% and Enjin coin gave the highest return of 1359%.
NEO vs Bitcoin vs Ethereum
Surprisingly NEO surpassed Bitcoin in terms of returns in the past 12 months but failed to beat ethereum which gave the highest return of 300%.
NEO price prediction
Generally, I don’t predict the future prices of cryptocurrency but today I will try to predict the price of NEO in the upcoming year using technical analysis.
Note: The prediction is just based on technical analysis so please do not make an investment decision from it and do read fundamental analysis.
The red line shows the slope if we connect the peak prices of Neo. It forms a negative slope of 33% which means the next peak will be around $70-$80.
The blue and red line shows the speed at which the prices rise and fall. In the later graph, prices tend to rise quickly and fall slowly as compared to the previous one. If I project this data then Neo will see its next peak in November 2023 but Neo has recently launched its new crypto N3 which is more efficient, so you can predict that NEO can see its next peak in November 2022 if everything goes well.
Disclaimer- This is just my prediction. I am not influencing anyone to invest in NEO. Prefer taking the help of an expert before making an investment decision.
NEO fundamental analysis
NEO performs smart contracts in its blockchain network with the help of its crypto tokens NEO and Gas. Smart contracts is just a program stored in a blockchain network that automatically performs a task if a certain condition is satisfied. It is like ‘If’ this then ‘that’. It could be like recording the temperature of New York after every 5 minutes. Since it uses blockchain technology, data stored in it cannot be changed which increases transparency and reduces the overall chances of fraud.
You may wonder how smart contracts will know the temperature of New York? The answer is simple: Neo has its own oracle for collecting information.
Oracle is a concept which is easy to understand and difficult to explain. I will try my best to explain it to you and please comment if you understand it clearly. So let us now begin.
Oracle is a database of information that is managed by Nodes. Nodes are trustworthy individuals and organisations and transmit them to smart contracts. In the above example, a weather company can be a Node which will provide the temperature of New York after every 5 minutes.
To avoid misinformation and fraud there are multiple nodes in Neo to verify the information through voting. Let’s understand this concept with the help of a detailed example:
Suppose there is a smart contract between you and me on the Neo blockchain in which I will give you $1000 if Apple shares reach $400 by the end of this year. Now the smart contract will be connected with the Nodes available in Neo. In case any node signals that Apple shares crossed $400 then the blockchain verifies it with other Nodes and if the majority votes in favour, the contract will be executed and $1000 will be transferred to your account.
You may think about how blockchain pays $1000 in your account. The answer is simple, $1000 needs to be locked in the smart contract at the time of its formation. In case Apple shares do not cross $400 by the end of the year the money will be given back to the prescribed person.
In contrast, measurements like temperature, weight etc. Neo averages the inputs given by Nodes to find output. For example, if Node 1 tells the weight of a chocolate 30g and Node 2 tells 30.1g then blockchain will average it and will show 30.5g as the output.
Before going further, you may be thinking about why an individual or an organisation will act as a Node. The answer is simple: they get paid in the form of Neo and Gas tokens. There are 100 Million Neo tokens in total and 50 Million are reserved for maintaining Nodes and developing the cryptocurrency. Also, a person needs to pay Gas tokens as a fee to form a smart contract on Neo and these Gas tokens are also used to pay Nodes. I hope you got the point so let us proceed further and know more about Oracle.
You can visit the official website of Neo if you are interested in becoming a Node.
Why two tokens( Neo and Gas)?
First of all you must know that Neo is just a copy of Ethereum that is why it is also known as Chinese Ethereum (Chinese because most of its operators are from China). Ethereum is also giving the facility of smart contracts but it’s very expensive that’s why Neo was started in 2017. So Neo started to become more efficient than Ethereum. It is mentioned in their official website and here is the screenshot
( Source- https://neo.org/technology#all-in-one)
To reduce cost, Neo introduced a Gas token. The concept of Neo and Gas is the same as the concept of VET and VTHO, and share and dividend. You will get a Gas token for holding Neo and Gas tokens are used in the form of fees for making a smart contract on Neo. The rate is close to 1% per annum for a normal user. You can visit https://neo.org/neogas#tokens to calculate the number of Gas tokens you get for holding Neo for a specified period.
You get some extra Gas tokens for participating in the governance of Neo but I will not discuss it because it is not important as a normal investor.
Should you invest in Neo (Fundamentally)?
Fundamentally, you should not invest in Neo. The reason is that it is just a Chinese copy of Ethereum and it will lose its value when Ethereum innovates. To understand it let’s have a look at the all-time chart of Neo:
So at the time of launch in 2017, Neo got a major price hike and goes up to $180 but when the concept of Ethereum 2.0 became popular in 2018, it lost its and came down to $8. Post that there is very little fluctuation in the price of Neo but when Neo introduced the concept of N3 its price jumped from $43 to $115, another reason for its price hike was the crypto boom at that time and now it is again at $20. Some people say that it is due to the crypto crash and I agree with that but Neo has not witnessed any growth in the last 3 years.
In my opinion, Ethereum 2.0 will be a disaster for Neo which is predicted for June 2022. So, at last, I suggest you not invest in Neo because it has weak fundamentals, instead of that consider Vechain which is strong both technically and fundamentally.
I tried my best to give you precise and accurate information about Neo. You may disagree with my views and it’s completely ok because we can have different opinions on the same thing. But always analyse crypto fundamentally if you are planning to invest in it for the long term.
Frequently Asked Questions
Is Neo a good investment?
Neo crypto is not a good investment.
Is Neo Chinese?
Yes, Neo is Chinese and it is also known as Chinese Ethereum.
Is Neo decentralised?
Yes, it is decentralised because anyone can become a Node in Neo.