Ontology has been one of the strongest-performing cryptocurrencies over the past month, and it just jumped a little over 28% in just over 24 hours. The price has fallen back since ONT hit a high of $1.41, but it is still ranked as the 17th largest cryptocurrency by market cap. At the time of writing, Ontology’s $633.75 million market is still more than $30 million more than the next highest-ranked cryptocurrency: NEO.
While cryptocurrency rankings are in constant flux, Ontology overtaking NEO is particularly significant as both have significant overlap in their teams and there is sometimes confusion between where one ends and the other begins.
So why have these two closely-linked projects swapped places in the rankings? And how significant is this development for the supporters of both projects?
How significant is ONT being above NEO?
The data given at the start of this article is based on CoinMarketCap, but other coin tracking tools calculate the difference between NEO and Ontology slightly differently. For instance, Coin Gecko counts the total circulating supply of ONT as 613 billion tokens, compared to 494.8 billion on CoinMarketCap. Coin Gecko therefore has ONT as two places above NEO on its rankings, with a greater disparity in market cap – $762 million for Ontology versus $588 million for NEO. But whichever figure is more accurate, there is now consensus across coin tracking platforms that Ontology has surpassed NEO’s market cap. And while ONT’s price has corrected by around 9% since hitting $1.41, it looks like it will be holding above NEO for a while yet.
Even ignoring the disparity between the way different platforms calculate circulating supply, market cap is a very imperfect measure. The market cap is calculated by multiplying the price a cryptocurrency is currently trading at on exchanges by the total circulating supply. This means a small number of trades can pull the market cap up or down by a far greater amount than was ever actually invested in a given cryptocurrency. And it should be noted that there are a lot more people buying and selling NEO than Ontology – according to CoinMarketCap, Ontology’s total trading volume was $176 million over the past 24 hours, compared to $283 million for NEO.
But all these caveats aside, there is a great deal of psychological significance to Ontology being ranked above NEO. To understand why, its first necessary to understand how deep the ties between the two projects are.
From AntShares and OnChain to NEO and Ontology
The relationship between NEO and Ontology is complicated and there is often confusion between what exactly their relationship is. The confusion is made even worse for international crypto investors by the fact that most first-hand accounts of NEO and Ontology’s development are only available in Chinese. Piecing together a full picture of NEO and Ontology has often meant sifting through blog posts, which are often loaded with bias either intended to pump the price or fire FUD at rival projects. But the team behind NEO and Ontology have tried to clear up this confusion more fully in recent interviews, with figurehead Da Hongfei being particularly proactive in explaining the difference between the two projects.
As Da Hongfei clarifies in the video below, NEO and Ontology are completely separate entities. NEO is open-source and community funded, whereas Ontology is for-profit and funded by a major Chinese financial group. Da Hongfei is co-founder of NEO and heavily involved in its on-going development. He has limited direct involvement in Ontology, though he is CEO of OnChain, which is Ontology’s parent company. Both utilize similar blockchain architecture, including the distribution of secondary ‘Gas’ tokens as a reward to token holders. And in the future they aim to make NEO and Ontology’s blockchains interoperable. The greatest difference between the two platforms is that NEO is an open platform that anyone is free to develop for, whereas Ontology provides tailored blockchain solutions to private enterprise.
Looking back, it’s easy to see why there has been such persistent confusion between NEO and Ontology. NEO was created by Da Hongfei and Erik Zhang, who are respectively CEO and CTO at OnChain. Originally called AntShares, NEO’s development began in 2014 and was funded through a $4.5 million ICO. Since AntShare’s 2016 launch and 2017 rebranding to NEO, it has been funded through the contributions of a non-profit community-driven foundation and returns from investments made by NEO Global Development. OnChain, which also counts Da and Zhang among its co-founders, has always been driven by venture capital. The success of NEO generated a lot of interest in OnChain and helped it secure greater VC funding. This funding was partially used to further the development of OnChain’s Distributed Networks Architecture (DNA), which Da describes as being functionally very similar to NEO, though it is written in a different programming language.
In November 2017, OnChain announced the launch of Ontology. Ontology utilizes the technology of OnChain’s DNA, which is in itself developed from NEO’s open-source architecture, to connect and develop commercial blockchains. 20 million ONT tokens were distributed to NEO token holders, which may well have further contributed to confusion between the two projects.
Ontology’s positive recent price movement can be partially attributed to some ambitious projects and partnerships that the platform is involved in. Movie Block, announced in an official blog post on Medium just over a week ago, is a prime example. Ontology is developing Movie Block in conjunction with Pandora.tv. Pandora.tv’s other projects include KMPlayer, essentially Korea’s answer to VLC Player, which has been downloaded more than 800 million times. Movie Block aims to create a content distribution network that will allow content creators access to transparent data on their content’s performance and a fair share of platform revenue. It will also reward users who contribute things like subtitles to the platform.
Earlier this month, it was announced Ontology are partnering with GoWithMi to develop location-based services. In February, it was announced Parity Games are working with Ontology to develop VR blockchain-based games and enable the exchange of in-game assets. In October 2018, Japanese healthcare providers GenkiCell announced they were working with Ontology to develop blockchain-based solutions for patient IDs and secure medical record storage.
Ontology’s wide-ranging and growing network of partnerships are causing some to predict that it will continue its ascent all the way into the top 10 cryptocurrencies by market cap. But it’s worth remembering that NEO was riding a similar wave of hype not so long ago.
NEO was one of the star performers during crypto currency’s insane 2017 bull run. AntShares traded at under $0.30 per token until late April 2017. By the time of it’s late June rebranding to NEO, it had hit $10. By the time the bull run peaked in mid-January 2018, NEO had soared to $162. And much of NEO’s meteoric rise was fuelled by hype about the projects set to launch on the platform.
The first NEP-5 tokens made it to crypto exchanges in December 2017 and were met with a great deal of initial excitement. Red Pulse and Deep Brain Chain both experienced explosive growth in their first few weeks of trading, respectively moving from $0.04 and $0.07 in December to highs of $0.77 and $0.60 in the second week of January 2018. But the price of both tokens collapsed just as quickly as they rose. NEO has long slipped far behind networks like TRON and EOS in the hype stakes while simultaneously slipping out of the top 10 cryptocurrencies by market cap.
We recently asked whether the upgrades that will form NEO 3.0 might be enough to return NEO to the top 10 cryptocurrencies. But its increasingly look like Ontology might have a much better shot of getting there first.
Does it matter?
One person who is unlikely to be bothered by ONT leapfrogging NEO is Da Hongfei. During an interview with the Crypto Brad YouTube channel, Da said that he was unconcerned by NEO’s massive decline in price during the crypto bear market. And he also said that while Ontology and NEO are distinct projects, each stands to benefit from the other’s success.
The main effect of the recent price movement is that Ontology now has the appearance of being a more significant project than NEO. If this new reality lasts for the long-term, this is likely to be remembered as a very significant moment in the ongoing development of both platforms.