China's Largest Cryptocurrency Thrives Despite Intense Crackdown

A digital coin from China that takes its name from a character in The Matrix has become one of the world’s most valuable cryptocurrencies. And it’s done so by defying many of the principles that underpinned bitcoin’s meteoric rise.. NEO has surpassed $12 billion in market value, ranking 12th globally despite hailing from a country that’s banned digital coin issuances in one of the world’s harshest crackdowns on crypto-speculation.. But founder Da Hongfei, 37, thinks Beijing is mostly done and he can focus on developing his underlying technology.. Da designed NEO to be a rival to ethereum: a decentralized ledger that lets companies issue tokens and set up smart contracts or programs.. For now however, NEO’s still controlled by a handful of people -- mostly the co-founders and staff -- who decide who they work with.. That’s a long way from the libertarian ideal of bitcoin with its open network of thousands of miners. But Da says the plan is to move to a similar system as soon as 12 months from now.. “We want to be the place people go to when they want to do serious and reliable transactions,” Da said after an interview with Bloomberg Television on Thursday.. Da, a self-taught coder, founded NEO with a fellow Chinese programmer in 2014, before bitcoin captured the public’s imagination and ignited a frenzy of crypto offerings.. Hundreds of coins have been launched since with little regulation and growing concerns about a bubble among investors including Warren Buffett.. NEO was formerly known as Antshares, before taking on its current moniker to avoid confusion with Jack Ma’s Ant Financial.. Unlike bitcoin however, where anyone can become a miner, the NEO Council and coin holders decide who they work with. . That’s why as of December, it had just seven nodes or computers verifying transactions and adding blocks to its network -- a fraction of bitcoin’s.. “You can question the value of NEO,” said Zennon Kapron, managing director of Shanghai-based consulting firm Kapronasia and a former investor in the Chinese coin. “The risks in having a central control structure like that is whether the team is working in the best faith of the users of that platform.” . Da argues NEO’s selling point is faster decision-making. Having a centralized structure makes consensus easier to reach and can avert the kinds of conflicts that split the bitcoin camp.. NEO’s own blockchain -- or record ledger -- now processes as many as 1,000 transactions per second, Da says. Bitcoin handles about 10 transactions per second, on a good day. . “For early projects that are adapting and changing fast, efficiency is very important,” said Da. “Right now it’s not a distributed system, but we plan to make it one someday.”. One question is whether Beijing’s policies might play a role in its longer-term development. NEO’s managed to side-step much of the fallout from China’s crackdown on coin issues because it pre-dated those regulations, Da said. . “The regulation is already very stric