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The Ethereum were the first. Today, almost every ICO is based on ERC20 tokens, and the Creator of Ethereum Vitalik Buterin is one of the greatest minds of our time. 

But in a country called China, they play by their own rules: here Alibaba instead of Amazon, WeChat instead of social media, NEO instead of Ethereum. The red Dragon country is accustomed to using its own technology, and it cares little about what the West is doing. But at the global level of crypto economy, the question arises whether NEO can compete with Ethereum and whether this competition makes sense. 

Both candidates want to become the new platforms of the Internet: decentralized applications (DApps), ICO, and smart contracts. 

Along with this, their objectives differ. 

Ethereum's goal: to become a blockchain platform for the development of decentralized applications that will eventually lead to the creation of a more accessible and reliable Internet 3.0. And today, the platform is much closer to its goal. Now the market owns the Ethereum decentralised application. Its mission is to give users and developers more control and capabilities when developing applications. 

The purpose of NEO: to use blockchain technology and digital identification for digitizing assets, automation of digital asset management using smart contracts to implement the concept of a smart economy based on the principle of a distributed network. NEO is engaged in the development of products for the future. 

It is important to understand that both platforms have the same capabilities, but the differences in their objectives play a fundamental role. 

What is smart economy? 

The biggest difference between NEO and Ethereum is that the focus of NEO pays the so-called smart economy. The smart economy implies digitized physical asset that will use the blockchain as proof of ownership. These assets can be sold or exchanged with the use of smart contracts. And most importantly, the smart economy will be under the control of the government, and the platform that serves this smart economy will be consistent with government regulation. 

In this regard, the NEO pays special attention to compliance with regulatory requirements. Let's look at the points that the platform does for this. 

Digital identity 

Anonymity is very good, but companies can't afford it if they're working on digitizing assets under government supervision. For a platform that must comply with legal requirements, digital identity - identification in digital form-is a necessary evil. 

Today digital identity is based on a system called PKI (Public Key Infrastructure) X. 509. To make it very simple, the point is that there is an internationally agreed standard for digital identity components. The NEO plan is to issue digital IDs in accordance with this standard using blockchain. Registrars (described below) will have numeric identifiers and real names. This is required to register financial assets in the network and compliance with regulatory requirements. 

NEO already has a strategic partnership with THEKEY, a project developed on the NEO platform that will ensure the implementation of digital identification. 

What about Ethereum? It provides decentralized applications with the ability to develop digital IDs that can then be pinned to its blockchain. It's not that different from how NEO works, but NEO clearly demonstrates that digital identity integration plays a key role in the platform's ecosystem. 

Digital asset 

If you need a smart economy based on smart contracts, then you should be able to use any assets. To do this, there must be a way to digitize, for example, ownership of a house or a car; gold, diamonds and other jewelry; computers, clothing, food, and even dad's collection of vinyl records. Smart contracts can become powerful tools if they have the ability to digitize all these assets. 

What about Ethereum? Like NEO, it can protect digital assets, but they will not necessarily meet regulatory requirements. NEO is guaranteed. 

Protocols 

Ethereum uses the Protocol Proof-of-Work and plans to switch to Proof-of-Stake. NEO uses the dBFT (Delegated Byzantine Fault Tolerance) Protocol, which is a modification of the Proof-of-Stake Protocol. 

Theoretically, NEO allows transactions to be processed much faster than Ethereum: 10,000 transactions per second compared to 30 transactions per second. But in practice NEO carries out 1000 transactions per second and Ethereum — 15 transactions. 

This is a huge difference and a huge NEO advantage. This speed really allows NEO to become a platform for the smart economy. Ethereum with the current state of Affairs will not be able to (Vitalik and the team are well aware of the problem and are actively working on solutions that can fix it). 

In Ethereum, as in bitcoin, there is always a chance of a fork. NEO has some kind of "completeness." This is due to the fact that accountants must reach a consensus of 66% in order for the transaction to be placed in the blockchain. 

Here is an extremely simplified analogy to understand this distinction. Imagine the first grade of the school. Vanya asks how much chocolate milk is worth. Anya really knows how much (she's only in first grade), but shouts: "500 rubles!"Some students support her. But there is Peter, who loves chocolate milk knows how much it costs: 50 RUB, as he also tells the class. And most of the class supports it. With him the most. The Ani group is expected to recognize its mistake and agree with the Petit group, that is, to reach consensus. But if Anya would show special perseverance, it can continue to defend their decision, and this can lead to a fork. The answer may be wrong, but it's valid. It works about the Ethereum. 

NEO also works differently. Imagine the same scenario. Vanya again asks how much chocolate milk is worth. At first, Anya says: "of 500 rubles!"A few support votes, but it's clearly not 66% of the class, so its version is discarded. Then Peter says: "50 rubles." 66% of the class support its version and it becomes final. NEO offers registrars to include a response in the next block when 66% of them support the proposal. 

The consequences of this are significant. Perfection is incredibly important for that type of economy, which wants to support NEO. The financial industry and other complex, fast-changing markets (e.g. the stock) are unable to operate in the system without a final decision. They need to know that the information in the blockchain will remain there forever. They also need confidence that their blockchain won't suddenly become irrelevant because of the fork. 

Tokens 

The mother token is Ethereum the ether (ETH). The GAS required for the operation of the Ethereum network (execution of contracts, transactions, etc.) is only a small unit of ether. There is no separation between ETH and GAS. 

NEO token GAS necessary for the functioning of the network, separated from the NEO token. OWNERSHIP of the neo token implies partial ownership of the NEO platform. NEO token holders have the right to vote for registrars. The use of NEO as a share in the company rather than as a token contributes to the fact that NEO is indivisible. NEO is not a transaction currency: there is a GAS THAT is used for all transactions on the network. When a company registers or changes the assets in the blockchain, it pays the GAS, which is then distributed to all holders of NEO. Anyone can qualify for this GAS, just holding NEO in your personal wallet (NEON). 

Registrars are entitled to charge a reasonable fee (GAS) for all transactions in the blockchain that they have processed. However, separating NEO and GAS, there is an incentive to keep the fee low because of the high fees that get recorders, discourage people's desire to invest their assets. The fewer assets, the less rewards they will be the owners of NEO. Thus, the NEO owners are encouraged to vote for the registrars who will keep the fee low. 

It is not yet clear how the reward will be distributed among the ether holders when it goes to the Proof-of-Stake. Most likely, only large holders will be able to receive rewards. 

Smart contract language 

The key difference between Ethereum and NEO smart contracts is the programming languages themselves. In Ethereum, contracts should be written in the language of solidity, specially created for Ethereum (also recently announced language Viper, which is now in development). NEO also supports five well-known programming languages with plans to introduce support for another five. 

Execution of the smart contract 

Smart contracts use so-called virtual machines (VMS) that run inside miners ' computers or other validators. In other words, a VM is the environment in which a smart contract runs. 

NEO VM optimizes the code of the smart contract before it is executed. This means that it accepts the code and reorganizes it to make it more efficient. Imagine your wife giving you a list of groceries. Positions do not have an organization in it, so following the list, you can bypass the store several times. But, if you divide all products into categories that are in the same Department store, everything will be faster and easier. NEO is doing it; Ethereum — no. 

Additional differences 

Platform NEO quantum theoretically sustainable. The Ethereum — no. When quantum computation Statute is fairly common, the technology of the blockchain may become vulnerable. The creators of NEO has developed a (theoretical) quantum resistant blockchain.