The last few days have been a rollercoaster for NEO price.
NEO has surged by over 50%, trading at $48 after a tweet of Malcolm Lerider, a member of the NEO Council that made vague claims about an upcoming announcement.
The message, which is in Mandarin, has been roughly translated to mean :
People took this as a hint to buy and the price jumped as speculation about the possible announcement circulated. Most of them thought this could be related to a possible change in regulations in China. The community had expectations of regulation changes on next Sunday.
The message has fueled bullish sentiment in the community as trading volume went from just under $43 million before the announcement, to over $500 million on Saturday (Nov 18). NEO’s market cap had also gained around $1 billion in 24 hours after the announcement.
When the expected date of the supposed big reveal passed and nothing materialized other than a new developers’ conference, the price fell ! Traders, investors and self-proclaimed former supporters of the NEO project are attacking the team on social media and community forums over what they see as misleading behavior.
So what is NEO and why such announcement give a big impact to NEO price ?
NEO is a blockchain development platform similar to Ethereum
A blockchain development platform is an operating system other programmers use to build blockchain-enabled software programs. Think of it like the Android operating system. Programmers build applications (apps) on Android so their programs can run on mobile devices.
Like Ethereum, NEO has a programming language. It uses smart contracts. And it has its own cryptocurrency token.
Both NEO and Ethereum offer the equivalent of an operating system that others can build on. Developers can build blockchain applications. These applications can include smart contracts, private blockchains, crowdfunding, messaging, documentation retrieval, payment processing… the list goes on and on.
One of the things that makes NEO unique is that it’s the only blockchain operating system in full compliance with China’s tough Anti-Money Laundering (AML) and Know Your Customer (KYC) rules.
Companies that want to be compliant with Chinese law will want to use this operating system to build their blockchain applications.
Another key feature of NEO is its ability to interact with other blockchains. Right now, different blockchains, such as the Bitcoin and Ethereum blockchains, cannot share data. It’s like having two computers that can’t talk to one another.
NEO is able to link different blockchains together so both parties can share data with each other in a “cross-chain protocol.” The combination of the cross-chain protocol with NEO’ built-in compliance will make it the development tool of choice in China.
China’s Favor of Homegrown Technology
China has proven that it eschews Western technology companies in favor of homegrown solutions.
When they use a search engine, they go to Baidu instead of Google
When they use social media, they post on Tencent’s WeChat instead of Facebook or Twitter
When they shop online, they turn to Alibaba instead of Amazon
When they buy smartphones, they choose Huawei over Iphone
When they use ride-sharing company they use Didi, not Uber
Again and again, China has a history of rallying around a select group of dominant domestic players. So in terms of blockchain & cryptocurrency, instead of using Ethereum, China’s community will definitely use NEO.
China ICO Ban
On September 4, the People’s Bank of China (PBOC) banned all initial coin offerings (ICOs).
[ICOs are similar to initial public offerings (IPOs) private companies use to raise capital. They are also called “token sales.”]
And on September 15, it extended the ban to all Chinese crypto exchanges. Chinese exchanges have until the end of September to close.
This sudden crackdown has shaken the global cryptocurrency market. People are terrified that China will forever ban all crypto-based fundraising and cryptocurrency trading.
But most people see this as a “pause” rather than a permanent ban.
China’s History of Crypto Crackdowns
China has a history of allowing a sector to grow unfettered… then dropping down the regulatory hammer once that sector has exited its infancy stage.
In March of this year, China banned all bitcoin withdrawals from Chinese exchanges. Government regulators cited capital flight and money laundering concerns. Bitcoin and cryptocurrencies were being investigated as a potential threat to the nation’s “financial security.”
The move effectively froze the nation’s entire bitcoin supply on its exchanges.
But behind the scenes, Chinese government was working on a framework to regulate it.
Three months later, Beijing walked back those rules and started allowing withdrawals.
The entire crypto market had gunned up as much as 400 % and bitcoin was up 180%.
Some market observers have speculated that Chinese regulators will allow cryptocurrency exchanges to re-open once the government has measures in place to provide greater oversight.
What This Means to NEO
Once the regulatory dust settles and China starts digitizing its assets, we’ll see a huge price spike in NEO.
NEO could have a larger user base than Ethereum… making it one of the most valuable projects in the world.
So those explain why NEO’s price skyrocket last week when people expected regulation would changes after Malcolm Lerider’s announcement.