Last night, Malcolm Lerider, a “Senior R&D Manager” for NEO, wrote a medium post in response to my “Investor Warning: Major NEO Redflags” post. And it confirmed my worst fears about NEO and its management.

NEO is embarrassingly centralized for a 2 year old, $3 billion project

In my blog post, I argued that a major NEO red flag was its centralization, that there were only 13 validation nodes all controlled by NEO’s team.

Malcolm confirmed this and even one-upped me. He stated that NEO doesn’t have 13 validation nodes, it only has 7! My whole point was that NEO shouldn’t be this centralized after 2 years in the wild and it definitely brings into question whether a $3 billion valuation is fair.

Again, it also doesn’t matter whether they plan to decentralize the system or not. Of course they plan to do so. If they didn’t, NEO would be worth nothing. The essence of the problem is that NEO isn’t decentralized after so long and that’s very weird.

Limiting the number of consensus nodes should not make the blockchain faster - that’s a sign of a broken protocol

So NEO is supposed to be fast and operate alongside regulation. It’s supposed to achieve this by balancing the number of consensus nodes. But how does limiting the number of consensus nodes make the blockchain faster? If you knew anything about the blockchain, you would know that increasing consensus nodes only ever increases security. The network speed is only determined by the design of the protocol.

In Bitcoin, for example, its protocol dictates that blocks are generated in 10 minute intervals with block size capped at 1mb. Bitcoin’s protocol can be changed to have blocks generated every 2 minutes with an unlimited block size. This would significantly increase Bitcoin’s network speed. On the other hand, the world can have 100,000 or 1,000,000,000 Bitcoin nodes and it won’t affect network speed. That is the whole point of the blockchain, that everyone can run a node and the more people that do run a node, the more secure the network is.

If NEO is a system that gets slower the more consensus nodes there are, then it has a broken blockchain protocol.

NEO’s response claims that the October blockchain outage was misinformation, then agrees that it happened

Malcolm first declares my claim that the blockchain was offline in October was misinformation. Then he surprisingly proceeds to agree that it did, and that the outage was caused by “human error”. Everyone saw the effects of this error. No blocks were generated for several hours and that creeped out investors.

So how is it misinformation if the October blockchain outage did happen, and NEO’s team did need to shut down the network to perform “manual checks”? Answer: it’s not misinformation, it’s what happened and it’s incredibly scary that NEO’s team can, at a moment’s notice, bring down the entire network. This is wrong, this is not blockchain.

NEO’s reponse shows a lack of understanding of how software development works, confirming that the lack of GitHub activity is a huge problem for NEO

Two ridiculous claims are made here.

First, Malcolm claims that he would be concerned if there were still daily protocol changes done to a production main net. That is completely ridiculous! Look at Bitcoin and Ethereum. Daily commits are being made to their GitHub repos, sometimes more than 10 commits a day. Bitcoin Core constantly releases new versions of their client. So does go-ethereum. A big perk of cryptocurrencies is that the community can constantly contribute to and improve the protocol through contributing to public code repositories, whether they be hosted on GitHub or elsewhere. To say that people should not be committing code to NEO’s main GitHub repo because its main net is live is nonsensical and demonstrates a lack of understanding of how software development works.

Second, Malcolm claims that instead of committing to the main repo, NEO’s team likes to work with “forks”. Now I have been a software developer for several years now and this statement makes absolutely no sense. Forks in Git’s protocol are used by external parties looking to work on their own version of the code. For example, Litecoin’s code base was a Git fork of Bitcoin Core’s code base. No software development team iterates on their software by constantly forking their code in Git. That’s utterly ridiculous.

If Malcolm is talking about Git’s branch feature, which are forks internal to a Git repository, then it would make more sense. Alas, NEO’s GitHub repo currently only has 3 branches. And the 2 other branches besides the master branch have been practically abandoned.

From this passage, Malcolm demonstrates a lack of understanding of software development and because of this lack of understanding, throws out 2 completely absurd claims.

NEO’s response claims that NEO only works for the rich, yet the rich doesn’t want to work on NEO

I made the claim that there were only 6 smart contracts on NEO’s blockchain. Malcolm not only confirms this but also states that anyone who can’t pay a 500 GAS fee to deploy a smart contract will likely deploy one that is “useless”.

There are millions of amazing software developers out there that don’t have tons of money lying around to afford a 500 GAS fee. Why is NEO discarding them? How can NEO be an open blockchain where anyone can participate if it costs a fortune to do something as mundane as deploying a smart contract!

And what about the people that can afford 500 GAS? Why is no one deploying smart contracts on NEO’s production main net? Surely such a revolutionary smart contract platform where smart contracts can be coded in multiple languages will attract lots of developers right?

NEO’s response claims that knowing Bittrex, Bitfinex, and Binance is mostly used by Westerners is insider information

How is this insider information? It was made public that Binance “no longer allows Chinese customers to trade on the exchange”, and 82.5% of users on the exchange are located abroad. It’s also common knowledge that Bittrex and Bitfinex cater to the West. Bittrex, for example, states on its website that it’s an exchange “based and fully regulated in the USA”. It doesn’t even have multilanguage support!

“We do not want to hype”, yet we make announcements of announcements causing rampant speculation

Malcolm was the person who posted the “big announcement in 3 days” poster on Twitter. This caused wild rumours to circulate that the announcement would be something related to Chinese government regulations. This pushed NEO’s price up from $30 to $45.

Now he has the gall to come out and say that he doesn’t want to hype, and that it’s up to the community to judge. You know what? Some very powerful regulators are looking at this behaviour and they will also judge. Some people bought NEO at $45 because of this poster and they are hurting.


I have never seen anyone in any professional setting use the inane and childish term “FUD”. I was honestly quite surprised the article would be titled “Response to baseless FUD”. It’s also hilarious that the article calls my work “baseless FUD”, and then proceeds to confirm several of my points!