March 20, 2018 Skalex

NEO vs. Ethereum: The Difference Between Smart Contracts Platforms

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March 20, 2018

In the world of blockchain-based smart contracts, there’s one major player: Ethereum. It’s the biggest, most widely used, and most developed smart contracts platform in the world. However, NEO, dubbed “the Chinese Ethereum,” is a new player on the scene with strong credentials. Both these platforms support smart contracts and decentralized apps (dApps) built on top of their blockchain. Today, we’ll explore the NEO vs. Ethereum debate.

The idea for decentralized contracts, executed on a peer-to-peer network, dates back to the early 1990s. Technologists and cryptographers imagined a system where a network could create trust and arbitrate conflicts, instead of legal battles in the judicial system. With the rise of blockchain, it became possible to create a secure network that can have contracts written (scripted in a programming language) on top of it. Ethereum was the first platform to do this, and NEO was not far behind.

While the two platforms are certainly similar, there are key differences between them. In this article, we’ll dive in depth on the similarities and differences between NEO and Ethereum. Will NEO topple Ethereum from its throne, or will Ethereum continue its dominance?


Ethereum Background & Team

Ethereum Background and Team


Ethereum launched in 2014. It’s the brainchild of founder and lead developer Vitalik Buterin. Buterin imagined a system where the computing power of the blockchain’s nodes could be used for more than just hashing a proof of work algorithm. Instead, Buterin argued, you could use that processing power to execute contracts and applications as part of the blockchain.

These smart contracts and dApps would run as part of the blockchain’s network. Therefore, they’d be decentralized. No one server or computer could control these applications, and they would continue to exist as long as the Ethereum network continued.

This was a revolution for blockchain technology. Up until this point, blockchain had mostly been used as a simple value transfer (like Bitcoin). With the rise of Ethereum, you could write code to run on the blockchain that was tamper-proof and immutable once you submitted it.

Ethereum was the first to successfully implement blockchain smart contracts. They’ve since grown to be the biggest provider of decentralized applications. The Ethereum team has grown to thousands of people, including hundreds of developers working on the platform. That’s not to mention the independent developers who are creating dApps and smart contracts that run on Ethereum.

Most new tokens are Ethereum ICOs, and most new dApps are Ethereum-based. Today, Ethereum is second only to Bitcoin in terms of the power and influence it wields over the blockchain industry.

NEO Background & Team

NEO background and team


The ideas behind NEO also began in 2014. Chinese blockchain and technology experts Da Hongfei and Erik Zhang began consulting with Chinese companies about the potential applications of blockchain. They started a company, OnChain, that developed blockchain solutions for private companies.

During this time, they also planned a public blockchain that could integrate a whole economy of smart contracts and dApps, along with integrations to the various private chains in existence. Thus, the idea for NEO was born. However, it wasn’t originally known as NEO. The project’s early name was AntShares.

AntShares launched in 2016 after Da and Zhang spent two years of research laying the groundwork. In 2017, it rebranded to NEO due to overlapping problems with the company’s Chinese name. Since launch, NEO has quickly risen to become a top ten cryptocurrency. It’s the strongest competitor to Ethereum in the smart contracts space.

NEO implements many of the same solutions as Ethereum, with support for smart contracts and dApps. However, it differs in its approach to scalability, programmability, and philosophy.

Market Dominance

Market Dominance - Ethereum or NEO?


The first key differentiator between Ethereum and NEO is market dominance. Ethereum is by far the bigger project. It has a large team of dedicated developers working hard on improving the platform. Hundreds of dApps and thousands of smart contracts run on Ethereum every day.

Ethereum is a dominant force in the blockchain industry. There’s no disputing its advantages in terms of adoption and influence. Ethereum’s market share makes NEO look tiny in comparison.

However, NEO is betting on the Asian market, specifically China. They have good reason to believe they’ll dominate there. During China’s ICO ban and the debates around Chinese blockchain regulation, Da Hongfei, NEO’s founder, consulted with Chinese government officials on crafting and implementing regulations.

NEO’s sister company, OnChain, is also well connected in the Chinese economy. They’ve worked with companies like Microsoft and Alibaba to develop and test blockchain solutions. While NEO’s connections in China don’t place it in the same league as Ethereum, it’s an important marker that NEO is a serious project that won’t be going away any time soon.

NEO’s private partnerships are impressive, but let’s keep in mind that Ethereum is the de facto leader in blockchain evangelism to private companies. The list of major corporations that are part of Ethereum Enterprise Alliance is staggering.

Solidity vs. Other Languages

Solidity vs. Other Languages: Java, Python, C+


The smart contracts on Ethereum and NEO are pieces of code. As such, they need to be written by smart contract developers in a programming language.

Ethereum uses Solidity, a niche programming language, for its smart contracts. Solidity has certain advantages for smart contract development. It’s strongly typed and has security benefits built in.

However, the need to learn a new language often scares away developers who are new to smart contracts development. This is a barrier to developer adoption.

NEO has done away with the need to write smart contracts in a specific language. Instead, they allow a variety of popular programming languages to write the contracts and dApps. These include C#Java, and Python. In the future, NEO plans to add support for more languages. This makes developer adoption easier, and it leads to lower switching costs for average developers to get started with smart contracts.

Transaction Throughput

Blockchain Scalability


Ethereum has a problem with blockchain scalability. Currently, the Ethereum network maxes out at about 15 transactions/second. As its network has grown more popular, this has proven to be a major bottleneck. At times when demand for the network is high, miners on Ethereum charge high fees (known as gas) to get your contract included in the next block. If you don’t pay the fee, you could be waiting hours or days for your contract to execute.

Ethereum’s scalability problem stems from its use of proof of work as a consensus mechanism. Proof of work only allows for a limited block size. Each full node on a proof of work blockchain must download the entire history of the blockchain in order to verify that transactions are legitimate. So, block size has to be limited so the transaction history doesn’t grow too quickly.

Ethereum is working on several proposals to change its consensus mechanism. It’s considering a complete overhaul of its consensus toward proof of stake, changing the method and energy required to create a new block. It’s also looking into methods like sharding and processing some smart contracts off-chain in order to increase throughput. This is Ethereum’s biggest challenge, and solving it is key to the network’s success.

NEO, on the other hand, is designed for scalability. Its consensus mechanism is known as Delegated Byzantine Fault Tolerance. dBFT is different from other consensus mechanisms in that it doesn’t allow for forks of the network to exist. This property is called finality, and it means that all honest nodes on the network must agree to a new block, and once that block is created, no other block can reference the preceding block. Finality means that nodes on the network only need to maintain a history of the recent blocks, not the whole chain.

Block size can grow to meet network demand on NEO. Tests have shown that NEO’s network could handle up to 1,000 transactions per second without sharding.

ERC-20 vs. NEP-5 Tokens

ERC-20 vs. NEP-5 Tokens


Ethereum has standardized the creation of new cryptocurrencies with its ERC-20 protocol. Most new tokens are ERC-20 tokens. It has become the gold standard in token creation. These tokens have great support and they integrate smoothly with wallets, exchanges, and each other. The ERC-20 community is the most well documented and supported standard for new tokens.

NEO has entered the game with its own token standard, NEP-5. NEP-5 follows many of the same rules and guidelines as ERC-20, but it’s based on the NEO blockchain. Projects interested in building dApps or decentralized autonomous organizations on NEO can now create their own NEO-native tokens.

NEP-5 is not as widely supported as ERC-20, yet. It doesn’t show signs of overtaking Ethereum’s dominance over new token creation, either. However, it is promising to see NEO thinking about standardization on its platform moving forward.

Difference of Philosophy: World’s Computer vs. Smart Economy

Smart Economy


NEO and Ethereum are similar and can help developers accomplish very similar goals. Perhaps the greatest differentiation between NEO and Ethereum is their philosophy.

Ethereum has been called “the world’s decentralized computer” and rightly so. Tons of dApps and contracts run on Ethereum all the time. It’s an enormous processor of applications, no matter the source.

Everything Ethereum is working on points toward that mission. They want to increase scalability and decentralization of the platform. They want to give developers more tools while making sure the smart contracts the developers enable are safe and secure to run on a public blockchain.

NEO, on the other hand, bills itself as the platform for a “smart economy”. This implies a connected ecosystem of integrated apps and organizations that all fit together. NEO treats the dApps on its platform as partners and members of a community.

This difference could only be a function of scale. Ethereum is much larger than NEO, and therefore it’s more difficult to manage, care for, and direct such a large community.

However, we would argue that NEO’s mission and master plan are slightly different from Ethereum’s. NEO has ambitions to digitize assets and physical objects, making the whole economy live on-chain. It’s true utility will come when it begins to have synergy between dApps, private chain partners through OnChain, and regulatory standards from the Chinese government. If it can establish itself as the compliant, enterprise-friendly dApps platform, NEO has a chance to differentiate itself and step out from Ethereum’s shadow.