How to Trade NEO

Why You Should Care about NEO

Cryptocurrency has come a long way since Bitcoin was launched in 2009. Now there are hundreds of new coins out there all with very different niches. You have everything from Ripple and the Ripple Network all the way to the hyper privacy offered by Monero. With the cryptocurrency ecosystem becoming more developed every day, traders are beginning to take a keen interest.

NEO has attracted trader interest because it seeks to improve on the foundations created by Ethereum. The Chinese developed token is designed to create more effective smart contracts and is well place to dominate the Asian market.

If you’re interested in investing in China’s Ethereum then you’ll need to know more about it. Let’s start at the beginning by asking the question, what is NEO all about anyway?

A Brief History Of NEO

NEO came into being under a different name. The Blockchain was placed on Github in 2015, making it China’s first open source public blockchain. It made its first appearance in the West in 2016 under the name Antshares.

Despite its potential, the cryptocurrency failed to see any major gains. This prompted the developers to rebrand to NEO. During the rebranding, the cryptocurrency secured a partnership with the Chinese certificating authorities to develop smart contracts 2.0.

This eventually led to interest from Western exchanges, particularly Bittrex. This led to NEO becoming traded in the West.

What Is NEO?

NEO is widely considered to be China’s answer to Ethereum. Both cryptocurrencies use smart contracts but NEO takes advantage of its unique blockchain in order to improve on Ethereum’s network. NEO have defined themselves as the distributed network for the smart economy. They define a smart economy as digital assets, plus a digital identity combined with smart contracts.

NEO’s network is built on two tokens. NEO and neoGAS (GAS). NEO tokens were all pre-mined during the genesis event. They have a hard cap of 100 million tokens which are used for block creation, network management, and any consensus requirements. The GAS token is designed to act as fuel for the NEO blockchain and act as a form of security. GAS was not premined and it is designed to be used to allocate resources and maintain the day to day running of the blockchain. It will also be used to reward users maintaining the blockchain.

NEO builds on Ethereum’s design to create the economy of the future. In the modern economy, one of the key problems is trust. After all, how can you do business with someone you don’t trust? Both NEO and Ethereum have attempted to solve this problem through smart contracts. If users wish to make an exchange, they first digitize their assets, turning them into NEO.

Then they create a smart contract that is stored on the decentralized blockchain. Then, the trade is executed to the exact specifications of the contract. This means that the entire trade is done without either party being directly involved. You don’t have to rely on someone else to hold up their end of the bargain because the blockchain will force them to do so.

Both NEO and Ethereum smart contracts are built using programming languages. The difference is that Ethereum uses its own native language called solidity. NEO smart contracts can be written and compiled in C# and Java. In the future the developers also want users to be able to write smart contracts in Python and Go. This allows NEO users to hire a developer for other projects and he will also be able to produce smart contracts. An Ethereum user needs to hire someone just to build smart contracts.

NEO also uses a digital identity to help protect its users. Individuals and institutions can all acquire their own digital identity and NEO users can choose only to trade with parties who have a confirmed identity. This helps to protect users from scams and will make it easier for NEO to comply with international law.

In short, NEO is a cryptocurrency that, uses easily programmable smart contracts in order to facilitate trustless trades of real-world assets through the Blockchain.

How Is NEO Made?

Like most cryptocurrencies, NEO is created by its community. Unlike most other cryptocurrencies NEO is based on a proof of service concept rather than proof of work.

When bitcoins are created it is because “miners” ASICs to solve complex transactions that add more blocks to the blockchain. They are then rewarded with Bitcoin.

Unlike Bitcoin, NEO users are rewarded based on the number of coins they possess rather than by using their computers to solve transactions. Instead, each NEO token acts as a sort of share on the blockchain.

Each time a new block is created, users are rewarded with neoGAS. This will continue happening until GAS reaches its market cap of 100 million coins. Then holders of NEO will be rewarded with a portion of the transaction fees.

A new block is generated every 15-20 seconds and 2 million blocks are generated in around a year. At this speed, the total limit of 100 million GAS will be reached in around 22 years.

It should be noted that in order for traders to receive GAS their NEO has to be held in a personal wallet and not in an exchange.

Should You Trade NEO?

NEO has the potential to be one of the most influential cryptocurrencies since Bitcoin. Like Ethereum it is attempting to use blockchain technology to bring cryptocurrency into the mainstream. The question is, if Ethereum already exists are there any compelling reasons to trade NEO?

There really are. Ethereum is an excellent platform but NEO offers a number of things that Ethereum doesn’t and has a distinct geographical advantage. To start with NEO is one of the few cryptocurrencies that has achieved something resembling state backing. The Chinese government has given the cryptocurrency its tacit approval. NEO has also gained backers in the private sector in the form of WINGS, Alibaba, and other large Asian tech companies.

The fact that NEO is a Chinese designed blockchain gives it instant access to an absolutely massive market. If NEO sees takeup in China, its popularity will soon grow across other Asian markets and this gives it a huge amount of potential. It also means that NEO will be able to weather Chinese ICO regulations better than many Western cryptocurrencies. In order to offset fears that China will legislate against Neo, the company has already stated their intention to work with the authorities.  

NEO also has the advantage of accessibility. Whereas developers who want to use Ethereum will have to learn solidity NEO smart contracts can be coded in multiple programming languages. This makes the blockchain more accessible to smaller companies who may not be able to employ a programmer skilled in a rare language like solidity.

Despite its potential, NEO did take a hit on the Chinese government’s decision to ban ICOs. If the Chinese authorities take the unlikely decision to completely ban cryptocurrencies then no amount of cooperation will save NEO.

What Drives The Price Of NEO?

Like all cryptocurrencies, NEO will tend to follow the rest of the market. If you see a fall in the price of Bitcoin then you should expect to see NEO and other altcoins take a hit as traders panic and attempt to sell off their assets before they make a loss. Like most cryptocurrencies, NEO is fairly volatile. You should expect to see some dramatic ups and downs.

NEO is also heavily driven by media attention. When NEO (then antshares) first hit Western headlines there was only a single broker to purchase the altcoin from. This led to a rush to buy it and the price was driven through the roof. Any price rise driven by headlines tend to go through a period of correction as traders engage in profit-taking and the value of the token slips.

NEO’s primary user base is in China. This means that the currency is more strongly influenced by news from that region. If you are interested in investing in NEO you will need to keep an eye on developments in China and any incoming regulations from the Chinese government’s. If NEO does partner with the Chinese authorities you should expect to see a large spike in value.

Like Monero and Dash, NEO will likely prove to be fairly resistant to any regulations. In Monero and Dash’s cases, this is because the currencies themselves encourage anonymity, which theoretically protects users. In the case of NEO, it is because they have openly stated their willingness to work with the authorities. This may make the Chinese government look more sympathetically at their cause.

The key drivers for NEO will be the state of the market in China and any regulations in that region. Particularly whether Chinese businesses start adopting NEO as their standard blockchain solution.

What Is The Price Outlook For NEO, and What Do Experts Say on Prices?

The price outlook for NEO is a little uncertain. In the short term, you should expect to see volatility as speculators take advantage of the uncertainty surrounding the cryptocurrency’s future.

In the medium to long term, NEO will go one of two ways. There is the unlikely outcome, that Chinese government will begin a full crackdown on cryptocurrency. In which case you should expect to see NEO’s value collapse. A more likely long-term outlook is that NEO and China will come to an understanding and the currency will see mainstream adoption among Chinese enterprises. If this happens then expect to see the value explode.

Experts are fairly bullish about NEO and its cousin Ethereum. The real world application of their blockchains means that experts like Mark Cagney think it has the potential to supplant Bitcoin. This is primarily due to their innovative use of blockchain technology.

Other experts have been concerned by China’s ban in ICOs. Mark Evans has suggested that NEO’s future relies on takeup by Chinese ICOs. The recent ban has been considered by many to be a huge problem going forward for NEO and other cryptocurrencies. That being said NEO has openly taken steps to state that it wants to work with the Chinese government and in the long term their interest is in the creation of a smart economy.

The CEO of Neo, Da Hongfei also unsurprisingly sees a bright future for the cryptocurrency. He believes that NEO will see a wide stream take up because they plan to allow contracts to be coded in languages that are understood by more than 90% of developers. He hopes that this will make the currency successful in the long term.

Generally, experts take a positive view of the currency’s future, although there are some concerns about its vulnerability to regulation from the Chinese authorities.

What is the current price of NEO?

You can see the price of Neo and other leading cryptocurrencies below:



 

How to “Buy” NEO

So after hearing all of the pros and cons you’ve decided that you want to trade NEO. The only question is how do you buy some? Well, unfortunately, this is where things become a little confusing. In order to buy NEO you’d first have to buy some Bitcoin and then trade that for some NEO. Not only is this time consuming it comes with a number of risks, some less obvious than others.

If you’re planning to trade NEO then you need to start taking your security seriously. You need to always enable two-factor authentication. Use a password manager, read up on operating effective security and keep yourself informed on the latest threats in the cybersecurity world. Failure to take these steps could lead to your computer or mobile device being compromised and all of your money disappearing into the wallet of a hacker.

As if this weren’t bad enough your NEO investment could also be compromised by the exchange itself. If the owners prove to be incompetent or corrupt, then your investment is very much at risk. This is a fact that many MtGox users found to their cost in 2013.

MtGox controlled 70% of the cryptocurrency market and was generally considered to be trustworthy. The problems began in March of 2013 when Fincen seized MtGox’s accounts. This prevented users from withdrawing any of their USD funds. Soon after this MtGox was hit by one of the worst hacks in cryptocurrency history. The attackers stole around $500 million worth of bitcoin and many users lost everything.

Unfortunately, exchanges don’t seem to have learned their lesson. in 2017 Bitfinex was hit by a similar attack. The hackers made off with $72 million worth of Bitcoin stolen by emptying random users wallets. In order to offset the loss reduced the balance of all users accounts by around 37%. This prevented some users from losing everything but was understandably a deeply unpopular move.

With all these risks you’re probably wondering if there’s a safer way to trade NEO. The answer is, yes, there is. Instead of buying NEO directly through an exchange you can skip all of that risk and hassle by buying contracts for difference (CFDs) through a safe regulated broker.

A CFD is a contract between you and the broker. You pick an instrument, in this case, NEO, and take a short or buy position. If the market moves in your favor then you will receive money based on your CFD. If it moves against you then you will have to pay. This allows you to take advantage of NEO without ever having to take on the risk of owning a single token.

There are lots of brokers out there and picking the right one can be a challenge. The first rule when deciding how to get NEO CFDs is to always use a regulated broker. These brokers have to follow a strict code of conduct which makes them much safer than ordinary unregulated brokers. You also need to compare the different fee structures and you should take advantage of the free demo accounts many brokers offer before you commit to a platform.

Trying to find the best-regulated broker can be challenging. Luckily we’ve already done the heavy lifting for you. We’ve done our research and for the vast majority of traders, Plus500 is probably the best way for you to trade NEO CFDs.

Plus 500 – Our top recommendation for trading NEO CFDs

Plus500 is a safe and secure way to trade NEO CFDs. Plus500 subsidiaries are individually regulated by the following agencies; Financial Conduct Authority (FCA)Cyprus Securities Exchange (CySEC)Australian Securities and Investments Commission(ASIC).

See the table below for exactly which regulator covers you in your country and what protection is offered.

RegulatorCountries CoveredProtection OfferedAdditional Protection Offered
Financial Conduct Authority (FCA)UK, Ireland and GermanyAll client funds are held in a segregated client bank accountFinancial Services Compensation Scheme (FSCS) may cover up to £50,000 if Plus500 fails.
Cyprus Securities Exchange (CySEC)Andorra, Argentina, Austria, Bahrain, Belgium, Bulgaria, Chile, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Gibraltar, Greece, Hungary, Iceland, Isle of Man, Israel, Italy, Kuwait, Latvia, Liechenstein, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Monaco, The Netherlands, Norway, Oman, Poland, Portugal, Qatar, Romania, Saudi Arabia, Slovakia, Slovenia, Spain, South Africa, Sweden, Switzerland, United Arab Emirates and Uruguay.All client funds are held in a segregated client bank accountThe Investor Compensation Fund may provide up to €30,000 if Plus500 fails.
Australian Securities & Investments Commission (ASIC)Australia, New Zealand and South AfricaAll client funds are held in a segregated client bank account

A large number of regulators demonstrates that Plus500 has gone above and beyond in order to comply with regulations across a number of different countries. This also means that in the unlikely event you have any problems you will be able to take them to a regulator in order to resolve the dispute.

Plus500 has a very competitive fee structure. Unlike some other brokers, they charge zero commission. Instead, users are only charged on the spread of their CFD trades. In the case of NEO CFDs, this usually sits at around 1.80% although it is subject to change. This is a competitive rate which will help you make the most of your trades. You should keep in mind that there are premiums for holding an overnight position and you might be charged an inactivity fee if you do not use your account in a 3 month period.

Plus500 comes with one of the most comprehensive risk management toolkits out there. You have the tools you might expect. Such as the ability to customize your leverage and set close at loss or close at profit limits. They also have some special tools that you are unlikely to find at other brokers.

This most useful of these tools is the trailing stop. This allows you to set your stop position to rise with the market. This means you can increase your profit without having to manually adjust your stop positions and if the market turns against you, you’ll still be protected. This helps you make more money from your NEO CFD trades.

Plus500 have gone out of their way to make their platform accessible to traders around the world. The interface is simple to understand and should help newer traders ease into trading in NEO CFDs. They also offer their platform in over 31 languages and the platform has been localized in 50 countries. This is a nice touch that will help traders from across the world feel comfortable using the platform.

Plus500 also comes with an excellent mobile app. This functions in the same way as their desktop platform and can help you trade while you’re away from home. One feature that we found particularly useful was the inclusion of the demo mode on the app. This will be invaluable for new traders who want to learn while they are away from their computers.

There are other brokers that might suit traders with specific requirements but for the majority of people, Plus500 is probably the best option to buy NEO CFDs.

No matter which broker you use, Remember that your capital is at risk

Any trade is a risk and NEO is a very volatile commodity. When you’re considering how to buy NEO CFDs you need to remember that even if you use a regulated broker your capital is still at risk. If the market turns against you there is the chance you could lose some or all of your initial capital.

Trading in NEO CFDs is the same as trading in any other instrument. Make sure that you follow the golden rule. Only spend what you can afford to lose. If you follow this and use a regulated broker to protect yourself then you are on your way to make the most of your NEO CFD trades.

Saul Bowden Author

Saul is our resident cryptocurrency expert. He spends his days searching for the next Bitcoin. A longtime advocate of blockchain technology, Saul believes that cryptocurrency represents so much more than an excellent investment, it represents the future of finance.

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