Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Should we buy NEO or be Afraid of it?

A coin called NEO has become the next big thing in cryptocurrencies and taken a lot of people by surprise. NEO became the world’s fifth largest cryptocurrency on August 14, 2017; with a value of $50 a coin, Live Bitcoin News reported.

NEO’s value has been growing by leaps and bounds, its value grew by 54.62% between September 9, 2016 and 13 August 2017, Coinmarket Cap data indicates. That’s extraordinary because NEO was trading at $0 USD as recently as October 25, 2016, or just nine months ago.

Such growth has many people wondering what is NEO anyway, and more importantly what is driving its growth? The answers to those questions are both interesting and indicative of cryptocurrency’s future.

What is NEO Anyway?

NEO is a Chinese Ethereum clone that has had a really slick marketing campaign. It launched last year as “Ant Shares,” before taking on the name of the hero from The Matrix movies.

The name Ant Shares was probably dropped because it associated the company with the $70 billion unicorn Ant Financial. Ant is the Alibaba (NYSE: BABA) spinoff that operates Alipay and other financial solutions.

Like Ethereum, NEO allows users to create smart contracts and documents that are embedded in cryptocurrency. This allows the creation of cryptocurrency-based agreements like wills and altcoin-based securities such as bonds. It can also be scaled up to create marketplaces.

Is Neo the First Respectable Cryptocurrency?

Unlike most cryptocurrencies; which are shrouded in secrecy, NEO has been highly public. The public face and cofounder of its team Da Hongfei, Tweets constantly and regularly talks to reporters. You can even find Da’s picture as his Twitter feed; and he regularly appears at events such as Ted talks and conferences.

Strangely Da might be bringing a disruptive new concept to the world of cryptocurrencies: middle class respectability. Da looks like a banker; or a college professor, and his team is running its initial cryptocurrency offering (ICO) like the IPO of a new bank.

This more than anything else might attract middle and upper class investors to cryptocurrencies. It also gives NEO an edge on competitors like DASH (formerly DarkCoin); and Bitcoin which have very sleazy histories. Particularly because its promoter looks like a guy your mother might buy a mortgage from.

What’s more interesting is that NEO has an office in China that looks the headquarters of any other tech company. Da Tweeted pictures of a bunch of geeks at work in an office space that might belong in Silicon Alley.

Is the Chinese Government behind NEO?

The sudden appearance of NEO, its’ fast rise and the well-financed and professional operation raise an interesting question: is the Chinese government or the People’s Bank of China (PBOC) behind it?

Last year, two high PBOC officials went public with their support of cryptocurrency. PBOC Vice Governor Fan Yifei wrote a Bloomberg Voices op-ed urging central banks to develop their own cryptocurrencies. PBOC Governor Zhou Xlaochuan denounced paper bills as a “last-generation currency” in an interview.

News articles also indicated that the PBOC was working on its’ own cryptocurrency. One has to wonder if NEO is the PBOC’s cryptocurrency. If NEO is backed by the PBOC; that is a real game changer; because the PBOC is China’s central bank, the People’s Republic’s equivalent of the Federal Reserve.

Why NEO might be the most Disruptive Cryptocurrency Yet

If NEO is the first cryptocurrency created and backed by a major central bank – that would be a real game changer. Widespread adoption of NEO would give the PBOC vast leverage over the cryptocurrency market and a greater ability to manipulate the economy.

For example it would enable the PBOC to issue additional altcoins in times of economic emergencies. The bank would be able to print money without permission of the government making it the first truly independent Central Bank. That would be a cryptocurrency equivalent of the Federal Reserve’s much-maligned quantitative easing strategy.

It might allow for greater economic expansion and lead to a system in which the central bank can distribute cash directly to citizens as economic stimulus. An example of this would be to use digital wallets; and an infrastructure such as the Lightning Network to distribute cryptocurrency to poor villagers via smartphones.

Is the PBOC the Key to NEO’s Value?

This might explain a lot of NEO’s value; investors suspect that it might be backed by the PBOC. It also puts the PBOC in a position to be the world’s dominant financial institution.

One potential power a cryptocurrency like NEO would give the PBOC; is the ability to manipulate the economies of other nations. Basically the PBOC would be able to control the monetary policy of other countries, which gives it the key to global empire. Another capability a cryptocurrency would give a central bank is the ability to stimulate foreign markets for the nation’s products. Since China is heavily dependent on exports for survival this might be vital.

A possible use of Cryptocurrencies would be to send money to Americans so they would buy more Chinese goods. Another would be to undermine another nation’s fiat currency or government as a form of economic warfare. For example pay another nation’s soldiers to stand down in time of war.

Will China Dominate Cryptocurrencies?

All this means that China might dominate cryptocurrencies because its issues might have government support. The cryptocurrency geeks will hate that but the investors will love it.

A possible use of NEO would be to create cryptocurrency government bonds to raise money for the PBOC and the People’s Republic. This is not that far-fetched, central banks were first organized to raise funds for governments; mostly to fund wars, by issuing debt.

Issuing NEO bonds would allow the PBOC to raise a great deal of money. It might also create a new market that will supersede bonds, and harm traditional issues such as the US Treasury.

Is Chinese Financial Dominance about to Begin?

That might make the PBOC the world’s dominant central bank and China the world’s dominant power.

Something to remember is that the Bank of England and the pound sterling were the engines that drove the British Empire; among other things they paid for the Royal Navy and the India Army. The Federal Reserve is one of the cornerstones of American Empire, and the greenback is a far more potent weapon than America’s nuclear arsenal.

If NEO becomes the world’s dominant cryptocurrency and currency of choice the age of Chinese empire might begin. Investors that pay attention might stand to make a lot of money in the process. Even as patriots in other nations, rightly become disgusted.

American, British, German, Indian and other patriots need to start asking their nations’ central banks an important question right now: why aren’t you developing a cryptocurrency? Such an instrument might be necessary to a nation’s survival in the 21st Century so why don’t we have one.

NEO might be far more than just a cryptocurrency. Smart investors would be well advised to buy it now, because the team behind NEO might have some important backers in high places – in Beijing.