NEO and QTUM (pronounced quantum) are two blockchain smart contract platforms being built out of China. Both projects are lead by Chinese entrepreneurs and have their core development teams situated in Shanghai. It’s important to note that even though the QTUM Foundation is registered in Singapore, similar to how the Ethereum Foundation is registered in Switzerland, QTUM is a Chinese project.
Both projects have recently received significant attention partly because of big price surges over the last few weeks. NEO grew from $7 in July to an all time high of $60 in August after a high profile rebranding and the subsequent August 8th release of an upgrade to its smart contracts platform. There was a significant marketing drive from the NEO team leading up to and around this event. NEO is currently experiencing severe consolidation and its price is hovering around $35. QTUM on the other hand, had a much cooler price surge. From $7 in July to an all time high of $20 this week, QTUM rose in lieu of a series of mostly low profile but positive news such as its test net 2 launch, announcements of projects building on QTUM, and its listing on South Korea’s second largest exchange, Coinone. QTUM’s price has consolidated since its all time high and is stabilizing around the $16 to $18 range.
NEO and QTUM, being two smart contracts platforms out of China, are frequently compared with each other. People tend to use a zero-sum game approach to evaluating the two cryptocurrencies because of their similar use cases and Chinese origins. In short, people want to know who’s going to win and take the coveted title of the “Chinese Ethereum”.
I, like many others, have been studying both cryptocurrencies closely. I have written articles on NEO and QTUM. I wrote an analysis of NEO in July stating that NEO was undervalued at $7. I wrote an analysis of QTUM at the start of August stating that QTUM was undervalued at $11. In this blog post, I want to summarize all my research so far and hope to guide you in determining which cryptocurrency has the best chance at being the “Chinese Ethereum”.
NEO’s leadership team consists of Da Hongfei and Erik Zhang. Da Hongfei serves as the CEO of Onchain which is the company that started NEO as an open source project and continues to lead NEO development. Erik Zhang is an executive of Onchain and its lead engineer. He is the primary developer on NEO.
Not much is known about Da Hongfei though his LinkedIn does offer a brief overview of his education and professional background. Da Hongfei graduated from the South China University of Technology with a Bachelor of Arts. He served as the CEO of IntPass Consulting for 9 years and then founded Onchain and NEO.
Erik Zhang’s LinkedIn offers even less information about him than Da Hongfei’s. One only learns he graduated from Sichuan University. I’ve heard that he has an electrical engineering degree from the university but can’t find any credible sources. Erik Zhang has given technical talks on NEO in several large blockchain events. He has also written a paper on the delegated Byzantine Fault Tolerance (dBFT) consensus algorithm that NEO is currently using. The official link to Erik’s paper has been broken for a few days though it can still be found in Google’s cache.
NEO’s website only lists team member roles and provides very little team member background information.
QTUM has three co-founders: Patrick Dai, Neil Mahi, and Jordan Earls.
Patrick Dai graduated from Draper University and worked at Alibaba while pursuing a doctoral degree from the Chinese Academy of Sciences. He abandoned pursuing his doctoral degree to work in the blockchain industry and has been involved with blockchain technology for a few years now. In 2014, he was an investor in the BitBay project and helped with fundraising and marketing in China. He has since been accused of being a scammer by David Zimbeck, BitBay’s lead developer. Zimbeck claimed that Patrick manipulated BitBay’s price by faking volume and then dumping his BitBay coins, taking a profit for himself while crashing the coin’s price. Zimbeck is the only person making the accusation and has presented no hard evidence. Nevertheless, this accusation has spread around the cryptosphere and has hurt Patrick’s reputation. He remained silent about the issue for several months but has recently begun openly addressing the accusation and telling his side of the story. Patrick was recently named to the 2017 Forbes 30-under-30 list (Chinese edition).
Neil Mahi has a Master’s degree in Business Administration from ISCAE, but later specialized in computer science. He has 20 years of software development experience and 4 years of blockchain technology experience. Neil is not only a proficient software developer with significant blockchain experience, he was once a professional poker player and speaks 4 languages.
Jordan Earls is a self-taught programmer and has been developing software since he was 13. He is a well-known and trusted member in the cryptocurrency community, having reviewed 100 altcoins and identified multiple exploits in a few coins. Earls maintains a blog where he often goes incredibly in depth into blockchain technology. He’s also active on Twitter and QTUM’s Slack group.
NEO’s website does not list any significant investors. Neither Da Hongfei nor Erik Zhang has mentioned any significant investors. However, there was a recent Reuters article stating that Fosun International, a major Chinese international congomerate and investment company, had invested in Onchain.
These are Onchain’s significant investors:
- Fosun International, a major Chinese international congomerate and investment company
These are QTUM’s significant investors:
- Anthony Di Iorio - Co-founder of Ethereum
- Chen Weixing - Founder of Didi Chuxing (they beat Uber in China), billionaire
- Jeremy Gardner - Co-founder of Augur
- David Lee Cuo Chuen - Co-founder of Left Coast and Libai
- Bo Shen - General Partner at Fenbushi Capital
- Jehan Chu - Managing Partner at Jen Advisor
- Qingzhong Gao - Director of HuaWei SC
- Xu Star - CEO of OKCoin
- Lihua Yi - Partner at ZhongWo Investment
- Xiaolai Li - Bitcoin Startup Investor
- Roger Ver - Bitcoin Startup Investor
- Charles Xue - Billionaire angel investor
NEO is a smart contracts platform that uses its own smart contracts virtual machine (VM) and supports many popular languages such as C# and Java.
There are two assets on NEO’s blockchain: NEO and GAS. NEO represents ownership in the blockchain while GAS is what powers it. Owning NEO entitles the owner to passively generated GAS as well as voting rights within the blockchain on issues such as who gets to be bookkeeper nodes. GAS is what’s used to pay transaction and smart contract fees.
Since NEO uses the dBFT consensus algorithm, it requires bookkeeper nodes to validate network transactions using a proof of stake mechanism. A user that wants to run a bookkeeper node needs to have 1000 GAS in his/her wallet, nominate him/herself to be a bookkeeper, and be elected by NEO holders to be a bookkeeper.
According to Da Hongfei in his AMA, NEO can “handle 1000 TPS with 15-20 seconds for final confirmation”.
QTUM is a hybrid of Ethereum and Bitcoin technology, with its own technology interjected in between. QTUM uses an upgraded Bitcoin’s blockchain that includes both Segwit and the Decentralized Governance Protocol (DGP). DGP is a technology developed by QTUM’s team and allows the blockchain to adjust blockchain parameters without a hardfork. DGP changes can be enabled through elections over the blockchain. QTUM uses Ethereum’s smart contracts VM, or the EVM. The EVM is able to live on top of the Bitcoin blockchain through QTUM’s Account Abstraction Layer (AAL).
Why use Bitcoin’s blockchain? One reason is because the UTXO model that Bitcoin uses is more secure and efficient than Ethereum’s account model. Another reason is that QTUM can quickly integrate new improvements to Bitcoin’s blockchain practically for free (i.e. Segwit and the Lightning network). Most importantly, Bitcoin’s blockchain supports the Simple Payment Verification (SPV) protocol which allows QTUM lite wallets to engage with smart contracts and decentralized applications (dApps), opening the way for mobile smart contract applications.
Why use the EVM? Because the EVM is the most adopted, mature, and feature-rich smart contracts VM right now. The EVM will allow QTUM to take advantage of the existing solidity development community. In addition, Ethereum dApps can be easily ported over to QTUM with minimal changes. The EVM will allow QTUM to hit the ground running.
Finally, the AAL is great not only because it merges two unlikely technologies together but also allows QTUM to not be limited to the EVM. A different smart contracts VM can be developed on top of the AAL and replace the EVM. In fact, Jordan Earls is leading an initiative to build an x86 VM that will allow smart contracts programming in 32-bit languages like C, C++, C#, and Java.
NEO released its upgraded smart contracts VM on August 8th. The programming languages currently supported by its VM are C#, VB.net, F#, Java, and Kotlin.
QTUM released its first test net in May. The second test net was released on August 15th. The second test net is feature complete and has proof of stake and DGP implemented. The real blockchain, AKA the main net, will come online on September 13th.
QTUM released a prototype mobile wallet in July that was capable of running on an Apple Watch. You can see the demo here.
ICO adoption and projects building on each platform
Since the August 8th smart contracts upgrade, a few ICOs have started accepting NEO. They are:
- Red Pulse (banned Chinese citizens from participating after the Chinese government hinted at ICO regulation)
- Alis (retracted from accepting NEO tokens)
Projects currently building on NEO are:
- Red Pulse
It’s interesting to note that according to neotracker.io, NEO currently only has two smart contracts deployed on the blockchain. All of which were created by Erik Zhang as test smart contracts. The last one was registered in July of this year.
ICOs that have accepted, are accepting, or will accept QTUM:
QTUM’s community managers have hinted at 17 projects currently building on QTUM. 4 of them have officially announced their QTUM-adoption:
Corporate and government partnerships
Corporate and government partnerships are sparse for both platforms. There are lots of rumours of corporate and government partnerships for NEO but there has been no concrete evidence for most if not all of the rumours.
- NEO has a tenous relationship with Microsoft. No official partnership has been announced. Microsoft Beijing did host a NEO conference a few months ago and recently conducted a blockchain programming training session together with NEO in Shanghai
- Alibaba has no ongoing relationship with the NEO blockchain. However, there is some work between Alibaba and Onchain on building a private blockchain
- Chinese government?
- Onchain has claimed to be working with the Guiyang Government in developing an identity blockchain. It has also claimed to be working with China Clearing on an equity crowd-funding platform. No official press statements on both projects though. The Chinese government does not seem to have an ongoing relationship with the NEO blockchain
- Association of Cryptocurrency Enterprises and Startups in Singapore (ACCESS)
- The QTUM Foundation announced that it was a member of ACCESS on August 1st, 2017. ACCESS is the leading blockchain industry association fostering society’s adoption of blockchain technology in Southeast Asia. It does so by educating public and private institutions on the benefits of blockchain technology. It also aims to foster an open and clear dialogue between Singaporean cryptocurrencies, blockchain businesses, and society at large.
- Chamber of Digital Commerce
- QTUM recently announced that its membership in the Chamber of Digital Commerce as an executive committee member. The Chamber of Digital Commerce aims to promote the acceptance and use of digital assets and blockchain-based technologies through education, advocacy and working closely with policymakers. Other executive committee members of the Chamber include: TD Bank, Microsoft, BNP Paribas, BNY Mellon, Cisco, Wells Fargo, KPMG, and IBM.
Western vs Eastern interest
NEO seems to enjoy significantly more Western interest than Eastern interest. In fact, during its early August price surge when NEO reached an all time high of $60 on Bittrex, Bittrex was trading at almost $10 higher than major Chinese exchanges like Yunbi and Jubi. This large price difference persisted for an extended period of time.
Additionally, Bittrex has dominated NEO trading volume over the last month and continues to eclipse all other exchanges in terms of volume for NEO.
On the other hand, QTUM seems to enjoy more Eastern interest than Western interest. Volume from Chinese exchanges have historically dominated Bittrex volume and continue to do so. The recent Coinone listing has propelled the Korean exchange to the top in terms of volume for QTUM.
In fact, with the main net coming online in a couple weeks, QTUM trading volume on Eastern exchanges have started to challenge Ethereum’s trading volume, sometimes surpassing and sometimes coming within a few percentage points.
NEO’s commit patterns on GitHub are relatively sparse. A commit usually happens every 2 - 3 days. Erik Zhang is the NEO repository’s primary code committer.
QTUM’s GitHub repository has much more commit activity compared to NEO. However, keep in mind that some of the commits are merged in from Bitcoin Core and the EVM. If you look at the repository’s master branch, Jordan and Neil have been commiting to the repository almost everyday for the past month. There are usually 3-5 commits a day.
Independent development contributors
NEO has an independent group of open source developers called the City of Zion (CoZ) that has helped build tools around the NEO blockchain. Their projects include the NEON wallet, a light desktop wallet for NEO and NEOScan, a high-performance block explorer API.
It’s interesting to note that the number of CoZ members on GitHub has recently dropped significantly. A reddit post 2 weeks ago showed CoZ GitHub membership at 22. Currently, CoZ GitHub membership is at 10.
EDIT: a CoZ member claimed that the declining membership was because many members preferred to stay hidden because “they get spam, stalking, and they want to contribute anonymously for several private and professional reasons.” Regardless, it’s still interesting that 12 of the 22 members chose to hide themselves when many consider NEO as a high quality project.
There is no CoZ equivalent in QTUM’s community. However, there are a few companies building wallets for QTUM such as Jaxx and a couple Chinese companies.
NEO’s community interaction from its leadership team has been sparse ever since their August 8th event. Prior to that they did an AMA on Reddit and conducted several livestreams.
City of Zion developers are highly active on NEO’s Slack group. There’s been an account popping up in the Slack channel claiming to be Da Hongfei recently. The account doesn’t have a profile picture and says its on Pacific Daylight Time (Da Hongfei resides in Shanghai). The account has also been talking in the #market channel which is arguably unprofessional. Nevertheless, CoZ devs have come out to endorse this account but the whole situation is quite suspicious.
Da Hongfei’s Twitter account has been largely inactive since the August 8th event.
QTUM’s leadership team and community managers are highly active on QTUM’s Slack group. Patrick drops in once in a while while Jordan interacts with the Slack group more, often discussing QTUM’s technical details. The other co-founder, Neil, is MIA in Slack. QTUM’s community managers Brett and John interact with the Slack group the most and are often already chatting or are available to chat with.
Declining GAS price
One last note, keep a watch out on GAS’s price. GAS is the resource that powers NEO’s network and it has been steadily declining for the past couple weeks. Many people hold NEO in order to collect passively generated GAS. The fall in GAS’s price has been and might continue to be a leading indicator for NEO’s price.