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Should you invest in Neo in 2018?

Why is Everyone Talking 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. 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. The cryptocurrency secured a partnership with the Chinese certificating authorities to develop smart contracts 2.0.

5 Interesting NEO Facts You Might Not Know

  1. NEO made its first appearance in the West in 2016 under the name Antshares.
  2. NEO uses the delegated Byzantine Fault Tolerant (bDFT) for blockchain consensus.
  3. 6119 BTC were raised during NEO’s 2016 ICO – creating 100 million NEO tokens.
  4. 50% of the NEO tokens were sold in the ICO, and the other 50% were distributed to the NEO Council.
  5. NEO climbed its way into the Top 20 coins achieving a $5billion market capitalization by the end of 2017.

 

Data from U.S. Equity Research estimates the cryptocurrency market is expected to grow at a 32% rate by 2023.

According to RnRMarketResearch:

“Growth is propelled by the benefits of compliance-free peer-to-peer transaction, cross-border remittance transfer, increase in use cases, volatility in the stock market, fluctuating monetary regulations in different countries, transparency, and immutability of the distributed ledger technology and benefits such as faster transaction and reduction in total ownership cost.

 

Founder Da Hongfei on CNBC

DA Hong FEI - NEO via CNBC

DA Hong FEI – NEO via CNBC

“I would say that there is a bubble in this industry, but would say it’s OK,” he said. “Every technology that is so disruptive — there’ll definitely be bubbles, like the train or the automobile.”

NEO Founder – Da Hongfei

 

Tech Influencer – Oliver Isaacs

“Like all business, management quality matters in this space too,” said Isaacs. “I would recommend beginner traders look for currencies (like Ripple, Dash or NEO) that are run by a full-time, professionally managed and experienced team that has a vision to grow, as opposed to those which are run by developers.”

Tech Influencer – Oliver Isaacs Source: Forbes

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.

NEO vs Bitcoin

How does NEO compare to Bitcoin? What are the key differences? See below for our head-to-head comparison:
 NEO (NEO)Bitcoin (BTC)
PurposeChinese smart contract systemDecentralized digital currency
Founded20162009
FounderDa Hong FeiSatoshi Nakamoto (alias)
Market CapOver $4 billionOver $250 billion
Current Price
All time High$79.76 (December 2017)$19,908 (December 2017)
All Time Low$0.08 (October 2016)$0.06 (July 2010)
How long did it take to hit $100?NEO has yet to reach $10051 months
Notable SupportersJeff Currie (Goldman Sachs)
Peter Theil (Venture capitalist)
Christine Lagarde (IMF)
Marc Andreessen (Early internet Pioneer)
Supply Cap100,000,00021,000,000
Initial DistributionICO (initial coin offering)Mining
Mining MethodASIC
Consensus MethodProof of serviceProof of work
Network Hash Rate*Over 40 BTC per hour
Difficulty increaseEvery 2,016 Blocks

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.

 

What is the Price of 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.

Mike Cagney – CEO of SoFi

Mike Cagney - CEO of SoFi via Flickr

Mike Cagney – CEO of SoFi

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

Brian Evans – Angel Investor

Brian Evans - Angel investor and blockchain evangelist

Brian Evans via youtube

“The big move for NEO is creating an entire smart economy. It has incorporated digital assets, smart contracts, and a digital identity that can be used for real-world applications and become integrated into the real economy. China could (and may) be a candidate for that first real-world application and integration.”

Brian Evans, angel trader, adviser and blockchain evangelist.

Other experts have been concerned by China’s ban of ICOs. Brian 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.

NEO Market Sentiment

We’ve gathered data from leading exchanges to determine the general feeling in the Neo market. Its calculation is simple; using data from the exchanges listed below, we gather buy and sell volumes for a given time period and weight this against the total transaction volumes.

Buy/Sell Sentiments:
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List of Cryptocurrency exchanges

  1. Binance
  2. Bittrex
  3. Bitfinex
  4. Lbank
  5. CoinEgg
  6. Kucoin
  7. Huobi
  8. HitBTC
  9. OKEx
  10. Cryptopia
  11. Coinnest
  12. Exrates
  13. Gate.io
  14. Livecoin
  15. BigONE
  16. Quoine
  17. CoolCoin
  18. TDAX
  19. Allcoin
  20. BCEX
  21. Qryptos
  22. Cryptomate

Source – CoinmarketCap.com

3 Reasons to Invest in NEO

  1. Chinese Ethereum Substitute
  2. Business Friendly Programming Language Support
  3. Chinese Tech Company Support

Chinese Ethereum Substitute

There is no denying that the Chinese economy is a dominant and growing market that is primed for innovation in the financial-tech (FinTech) sector. One of the key barriers in Ethereum penetrating the Chinese market is the language barrier as most of Ethereum development and market exposure has occurred in the west. A Chinese homegrown ‘Ethereum like’ platform can gain explosive adoption within China, particularly if it develops within the established business norms, culture and regulations of the country and manages to stay on the right side of regulators.

Business Friendly Programming Language Support

Unlike Ethereum which has its own programming language and environment, developers can interact with the NEO network in programming languages they are already familiar with. This means a potential reduction in development costs for businesses that are interested in launching services on the NEO network, bringing down the barriers to entry.

Chinese Tech Company Support

NEO has managed to spark the interests of large tech giants. Microsoft Azure has partnered with NEO on a competition, also known as developer bounties, designed to attract developers to the platform. Any milestones that the NEO network achieves are likely to draw the attention of other tech giants within China who will find it easier to interface with the ‘local’ platform.

2 Reasons Not to Invest in NEO

  1. Jurisdictional Exposure
  2. Platform Development Lag

Jurisdictional Exposure

Being associated with the Chinese market, one of the pillars of the world economy would normally evoke positive associations for any business or trading venture, but with cryptocurrencies, this can be seen as a centralized point of failure. Already spooked by the Chinese regulators closing down all Initial Coin Offerings (ICO) sales from operating in the country, and by closing down unregulated Cryptocurrency Exchanges in China, having a cryptocurrency where most of the development and use happens inside China leaves NEO particularly exposed.

Platform Development Lag

In terms of platform development, NEO is competing alongside other networks that are competing in the same space. Although NEO is making all the right moves in terms of open sourcing their platform and offering developer bounties, it is yet to be seen if it’s developers can compete with the huge Ethereum development community.

How to Buy NEO

So you’re convinced that NEO will be the next Ethereum? The next problem is figuring out how to buy NEO. It isn’t as simple as purchasing Bitcoin or Ethereum. The best way to acquire NEO is to first buy BTC and then exchange that for some NEO.

Coinbase

One of the most popular exchanges for purchasing Bitcoin is Coinbase. They are one of the oldest and most well-established exchanges. They allow users to purchase Bitcoin, Litecoin, and Ethereum using credit/debit cards or bank transfers. This makes coinbase the perfect choice for budding traders. The fees Coinbase charge are typically quite low. They charge 1.49% for most forms of bank transfer and 3.99% if you want to use a credit or debit card.

Once you’ve acquired your Bitcoin then the next step it to trade it for some NEO. Thankfully there’s an option that’s easy to use and only charges fees of 0.5%. Go to Changelly. Here you can use the simple interface in order to select Bitcoin and change to NEO. Simply follow their instructions.

When you’re deciding how to trade NEO you should keep in mind that it can be risky. You should always enable two-factor authorization and avoid keeping all of your coins in a single wallet. If your account or wallet is compromised you could risk losing all of your NEO investment.

Also, keep in mind that coins kept in an exchange are not safe. If you don’t hold the key to your wallet then you don’t own the tokens. The best way to protect yourself is to keep your cryptocurrency in a hardware wallet or by placing them in offline cold storage. Remember that you are responsible for your own security.

No Matter Which Exchange You Use Never Risk More Than You Can Afford To Lose.

When you’re deciding how to buy NEO keep in mind that there is always a risk. Cryptocurrencies are volatile commodities and even if you use a more reputable exchange like Changelly or Coinbase you could still lose all of your investment. If the market moves against you and you don’t sell in time there’s a very real chance you could make a big loss.

LocalBitcoins

You can also buy Bitcoins through a peer to peer Bitcoin Exchange without any ID. One of the best options is LocalBitcoins which allows users to buy Bitcoin with almost any currency. Once you have the Bitcoins you will then be able to trade these for Neo at another exchange.

If you choose to use LocalBitcoins make sure that you do your due diligence. Use the review function to check the profile and rating of the user. Some users have been known to scam new traders. If you see bad reviews it is generally best not to make the trade.

Managing your own Neo is not easy. Not only do you have to negotiate the exchanges but you also need to take extra security measures. You need to be wary of phishing scams, viruses, and other risks. You also need to keep very careful track of your wallet’s access codes. If you lose them, your Neo investment could end up locked in a wallet that you can’t access.

On top of this added stress are the risks you can’t control. 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, no, not currently. A popular broker, Plus500 added Neo earlier in 2017 but recently removed it from their platform. And when we contacted them their response was, “The Cryptocurrencies that the Plus500 platform offers its traders are being updated often according to the market. NEO was removed from the platform recently and Plus500 can’t currently say they have a specific intention to offer it again soon. The Plus500 team is constantly updated in the market needs and decisions on which Cryptocurrencies to include in the platform is being decided accordingly.”

How to Trade in Cryptocurrency CFDs

Our preferred method is to not buy Cryptocurrencies at all and instead, trade Contracts for Difference (CFDs) through a regulated broker.

To see which currencies are currently available to trade as CFDs on Plus500, visit their site here.

A CFD is a contract between you and the broker. Instead of directly buying Cryptocurrencies, you would buy a CFD 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 Cryptocurrencies 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 Cryptocurrency 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 Cryptocurrency CFDs.

Plus500 – Our Top recommendation for trading in Cryptocurrency CFDs

Plus500 is a safe and secure way to trade Cryptocurrency 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

How much does it cost to trade Cryptocurrency CFDs with Plus500?

screenshot of cryptocurrency trading page at Plus500Plus500 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. 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 Cryptocurrency 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 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 Cryptocurrency CFDs.

Plus500 Summary

  • Convenient, safe access to Cryptocurrency CFD trading.
  • Easy sign-up, compared to the cumbersome process of enlisting in a Cryptocurrency trading exchange.
  • Guaranteed execution at a fixed price, without having to wait for another trader to agree to a buy or a sell transaction.
  • Allowance of credit or debit cards, a service generally not allowed on Cryptocurrency trading exchanges.
  • Allowance to trade 10 or more cryptocurrency CFDs, including Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and IOTA.
  • Free real-time quotes and 24/7 trading availability
  • “1-to-10” leverage – meaning brokerage customers can use leverage to trade large positions but only deploying a small amount of capital.
  • Intuitive charting tools

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

Any trade is a risk and Cryptocurrencies are a volatile commodity. When you’re considering how to buy Cryptocurrency CFDs you need to keep in mind that even using a regulated broker like Plus500 you can still lose all your capital. If the market turns against you it is possible some, or all, of your initial capital.

Trading in Cryptocurrency CFDs is the same as any other instrument. Make sure that you follow the golden rule. Only spend what you can afford to lose. If you stick to this and use a regulated broker to protect yourself then your Cryptocurrency CFD trades will be off to a good start.

Start Trading Cryptocurrency CFDs today

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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