What is a Smart Economy? Ethereum vs. NEO

The biggest difference between NEO and Ethereum is NEO’s focus on a smart economy. If we want to fully understand NEO, we need to understand why this distinction is important.

A smart economy will feature digitized physical assets. All of these newly digitized assets will have proof of ownership in the blockchain. These assets can be sold, traded, and leveraged through smart contracts. Their ownership can be protected and validated through the decentralized model of the blockchain. We’ve already seen iterations of this: from proposed supply chain overhaul to DAOs (decentralized autonomous organizations — essentially decentralized companies without a leader). I offered some real world examples of this economy in this article. Now while Ethereum will likely support many of the same capabilities that NEO has, the distinction between Ethereum and NEO’s objectives is what we care about.

The distinction is important because a smart economy will still be under a government and under governmental regulation. I don’t trust the government as much as your next libertarian; I’ve read 1984 too many times. But the fact remains that governments aren’t going anywhere. Thus, for a platform to service this “smart economy,” that platform needs to put specific thought and intention into how it will accommodate governmental regulation. So while Ethereum might offer the similar blockchain capabilities, the fact that NEO is developing FOR THIS PURPOSE is crucial.

TLDR: A smart economy is in our future. To accommodate the needs of this smart economy, the platform will need to be specifically designed for this new economy.

What is NEO doing to prepare itself for the smart economy?

NEO places particular emphasis on staying regulatory compliant.

To do this, they need:

Digital Identity
Anonymity is great. I think privacy should be at the forefront of today’s technological developments and discussions. But if companies and governments are operating on the blockchain, digitizing their assets, and issuing smart contracts, all under the watchful eye of the government, they can’t have anonymity. For a platform to be regulatory compliant, digital identity — a verifiable identity in digital form — is a necessary evil.

Today, digital identity is based on a system called the PKI (Public Key Infrastructure) X.509 standard. This probably means about as much as it does to you as it does to me. It just means that there is an international agreed upon standard for what constitutes a digital identity. NEO’s plan is to issue digital identities in accordance to this standard and then secure them using the blockchain. Bookkeepers (read about them later) will have digital identities and real names. Because of this, judicial action can be taken against them if ever need be. This is imperative when registering financial assets on the network and staying regulatory compliant.

There could also be businesses and projects that will only transact with people who have a digital identity, for regulatory reasons. NEO enables that possibility.

NEO is already working in a strategic partnership with THEKEY — a project being developed on NEO’s platform that will assist with providing digital identification.

What about Ethereum: Ethereum requires other DApps to develop digital identities which can then be secured on the Ethereum blockchain. This isn’t so unlike how it will work with NEO — however NEO has made it clear, through its plan to incorporate digital identity with its bookkeeper nodes, that integration of digital identity is of central importance to the NEO ecosystem.

TLDR: Governments don’t like anonymity. Industries don’t like pissing off the government. If NEO wants industrial adoption, it needs to have digital identities.

Digital Assets

A future digital asset?
If you want a smart economy based on smart contracts, you need to be able to leverage and exchange assets beyond currency. We need to be able to digitize assets like house, property, and car ownership; gold, diamonds, and other precious elements; computers, clothes, and food; even those baseball cards your mom keeps begging you to throw away. Smart contracts become so much more powerful when we have the ability to digitize all of these assets.

What about Ethereum: Very similar to the digital identity blurb. Ethereum absolutely can secure digital assets, but they won’t necessarily be regulatory compliant. NEO is ensuring that issued digital asset certificates will be compliant.

TDLR: Just read it

NEO’s complex network
The economy is complex; it has so many interconnected pieces. NEO’s platform is complex, with partnerships galore. Fully researching and understanding this is difficult. But I did it, so you don’t have to! Refer back to this visual to have a solid picture of how this network interacts.

Even though this looks like the deranged drawings of a conspiracist, it will make sense as you reference it while learning about NEO’s network

OnChain
NEO’s founders Da HongFei and Erik Zhang founded a company called OnChain. Understanding OnChain is critical to understanding NEO. They’re not the same company, but their interests align and they have a partnership together. OnChain’s system, known as DNA (Decentralized Network Architecture) aims to work with Chinese businesses and government. NEO acts as the foundation of DNA. If OnChain can integrate with Chinese businesses and government, that will greatly spur adoption of NEO.

Ultimately, DNA develops public and private blockchains for businesses. These blockchains then link up to NEO to join the decentralized economy. Businesses then have all the benefits of both private and public blockchains. Think of NEO as providing the public blockchains and OnChain’s DNA providing the private blockchains. Then, they can link up and get the best of both worlds.

OnChain also has several projects and partnerships and newsworthy mentions that all contribute to the DNA ecosystem:

1. Established in 2014, this is not a fresh-off-the-shelf company
2. First Chinese blockchain company to join Hyperledger — a collaboration of projects that work towards integrating blockchain with established businesses.
3. Legal Chain — works with Microsoft China in digitizing and securing signatures via blockchain technology.
4. Strategic partner of Microsoft China on multiple projects
5. Worked with the Japanese Ministry of Economy, Trade and Industry
6. Voted as KPMG’s top 50 Fintech Company in China
   7.Partnership with Alibaba to provide an email certification service for Ali Cloud
   8.Investment from Fosun Group—China’s largest private conglomerate — to integrate OnChain across their businesses.
   9.Collaboration with Chinese regional government — using OnChain to develop public services and digital identity

OnChain’s recent development was of the ICO Ontology. Ontology uses the same architecture as NEO but ultimately works with businesses in creating a private, encrypted data network. Essentially, this is important when we have information that we need securing, but we also need it to be private. This will enable people to bring this information in a secure manner to blockchains.

References on OnChain’s roadmap

Honestly, I don’t understand why NEO doesn’t advertise their collaboration with OnChain more. NEO in itself is solid, offering several potential benefits over Ethereum. But combined with OnChain, NEO truly has the potential to implement itself as THE smart economy platform of the East.

The Ethereum Comparison: Ethereum’s equivalent is the Enterprise Ethereum Alliance, an open source blockchain initiative dedicated to linking Ethereum with the business world. Their list of partnerships is robust and impressive — no surprise for those familiar with Ethereum. Included among their members are: BP, HP, Toyota, MasterCard, Microsoft, and Intel, among many others.

TLDR: OnChain is a company partnered with NEO. They have extensive experience and many accolades in bringing blockchain to businesses. They work with companies and governments in the East. They are a huge component to NEO’s potential.

NEOX:
NEOX is NEO’s version of atomic swaps (directly swapping tokens without any exchange) and cross-chain integration. Think Ark Ecosystem. This will enable people to swap crypto assets and transact across different blockchains. It also allows smart contracts to interact across chains.

NEOX is important because it allows collaboration between the blockchains (both private and public) created by OnChain and by NEO’s public blockchain. As more components of the Smart Economy develop, NEOX will link them all together.

Ethereum Comparison: Ethereum has the ability to do atomic swaps, but has only completed this once — this isn’t to put down Ethereum; NEO has never completed one. However, Ethereum will need an outside application to accommodate large scale cross-chain integration.
source: hackernoon.com