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Introduction to NEO. Part 1. NEO and Onchain

Neo is a blockchain platform that is known as “The Ethereum of China.”

In the last several decades, China has made incredible progress in nearly all sectors, including science, technology, and manufacturing. Today, many of the Western companies realize that they can’t compete in China with their Chinese counterparts. Examples of extremely successful Chinese companies include WeChat, a messaging app, Didi, a taxi app behind the deal in which Uber left China, Huawei, a telecommunications equipment giant, Alibaba, an e-commerce platform that is catching up in size with Amazon, and more. For all these reasons, Neo has attracted a lot of attention from investors from all over the world.

In January of 2018, the Neo platform had a market value of around USD$10 billion and was one of the top cryptocurrencies in the world. NEO was founded by Da Hongfei, a self-taught software developer, as AntShares in 2014. The company has later changed its name to Neo, taking the new name from a character in the movie The Matrix. The company changed the name to avoid potential confusion with Ant Financial, a division of Jack Ma’s Alibaba Group.

 

Neo and Onchain

One of the reasons why Neo has become so popular so quickly was that Da Hongwei has also started another project, called Onchain. Neo and Onchain are separate entities. Onchain is a private cloud designed as an enterprise solution and Neo is a public cloud.

What Onchain and Neo have in common is that two out of five people that started Onchain have started Neo. The consortium version of Neo called Distributed Networks Architecture or DNA has the same smart contract architecture as Neo. The connection between the two projects is one of the reasons for the price of Neo tokens going up when the market learns about progress with Onchain.

Da created Onchain in 2014. It took the company over a year to start providing services to customers in the financial industry. In April of 2016, the company published a whitepaper about delegated Byzantine Fault Tolerance Protocol. In May of 2016, Onchain became a member of Hyperledger, an umbrella project by the Linux Foundation for open source blockchains. In August of 2016, Onchain created a legal blockchain in China called the Legal Chain after having partnered with Microsoft. The goal of the legal blockchain was to target the inefficiencies of the digital applications that exist in the legal system of China.

 

Onchain, Guizhou and China’s 13th five-year development plan

In 2017, Onchain formed a partnership with the government of the Guizhou province in southwest China for the province to start using digital identities to provide public service.

Guizhou has been one of China’s poorest provinces, yet in the first half of 2016, the province posted 10.5% growth, making Guizhou the third-fastest growing Chinese regional district. In part, it was able to accomplish such astounding results by developing human talent and computing resources aimed at working with big data. This has attracted investments from Foxconn Technology Group, the manufacturer of Apple iPhone, chipmaker Qualcomm, and local telecommunication leaders China Unicom and China Mobile.

The partnership of Onchain and Guizhou province is especially important in the light of China’s 13th five-year development plan.

State-level development plans are a key characteristic of communist and socialist economies. In such economies, the state develops and announces a plan that the entire country is supposed to follow.

The Union of Soviet Socialist Republics implemented its first five-year plan between 1928 and 1932 under Joseph Stalin. China and the Communist Party of China have implemented the first Chinese five-year plan between the years of 1953 and 1957 under the leadership of Mao Zedong. Thirteenth Five-Year Plan of China covers the development of the country for the years between 2016 and 2002. One of the goals of the plan is to have China keep developing information and communication technologies, including the Internet, cloud computing, bio-genetic engineering, and blockchain.

To comply with the plan, China’s Central Bank called the People’s Bank of China (PBOC) announced in 2016 that it will start working on the creation of its own digital currency. The bank has put a team to work on blockchain-related projects in 2014. In 2016 and 2017, PBOC has been looking at regulatory issues and possible economic impacts of launching its own digital currency. PBOC has also started working with experts from Citibank and Deloitte.

Benefits of launching a digital currency include reducing costs associated with the circulation of regular fiat currencies, an increase in transparency of financial transactions, prevention of tax evasion and money laundering, and breaking barriers between financial solutions and people who are currently not using any bank services.