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NEO is often considered China's response to Ethereum. Its goal is to create a smarter economy by bridging the gap between digital and traditional assets. NEO is a blockchain platform that facilitates the development of digital assets and smart contracts. The platform uses two different tokens – the first is also called NEO, the second is GAS. Both tokens have specific uses on the NEO platform, as we'll see in this guide.
Where to trade NEO How does it work?
NEO is a blockchain platform that facilitates the development of digital assets and smart contracts. The platform uses two different tokens (similar to Ethereum): the first is also called NEO, the second is GAS. Both tokens have specific uses on the NEO platform, as we’ll see in this guide.
The primary aim of NEO is to become a digital, decentralised and distributed platform for non-digital assets, through the use of smart contracts (see below for a more detailed look at smart contracts). This means that its goal is to become a digital alternative for asset transfers that are currently non-digital. An example would be paying rent using a smart contract that triggers automatically once a month, instead of setting up a bank payment.
The NEO platform, with its system of NEO and GAS tokens is different from bitcoin and many other cryptocurrencies. Three of the unique differences that set it apart are:
Exchanges are currently trying to figure a way around the problem of NEO being indivisible. The answer they have might not be the best one but it’s the best we have: You'll be allowed to trade fractions of NEO as long as you keep them inside your exchange wallet. If you transfer them to your NEO wallet, those fractions will remain on the exchange and won't be moved to your private wallet.
For example, you are not technically allowed to own 5.32 NEO. You either have 5 NEO or 6. But exchanges will let you exchange BTC for 5.32 NEO without issue. If you keep those 5.32 NEO in your exchange wallet, you should have no problem exchanging them for another cryptocurrency. However, if you transfer the 5.32 NEO you own to your actual NEO wallet, you will end up with 5 NEO, and the 0.32 NEO will stay on the exchange.
This is similar to Ethereum, but very different from mining in bitcoin in that the value of GAS is decoupled from the value of NEO. This is in contrast to bitcoin, where the value of a bitcoin mined is the same as the value of a bitcoin purchased.
GAS is used to pay for transaction fees on the NEO network.
In order to get a wallet and start generating GAS, you can buy NEO and hold it in a compatible wallet. This is essentially the same as holding a stake or shares and being paid dividends. On a handful of exchanges, you can buy it directly with fiat currency like US dollars. However, you can also buy NEO with bitcoin, Ether, Litecoin (LTC) and other cryptocurrencies.
To get started, review the following list of exchanges and decide which one you would like to use. You can also check out our guide to buying NEO for more information.
Smart Contracts are the digital equivalent of holding money in escrow with a third party, with the intention of releasing the funds some time in the future. Suppose I have to pay you 0.002 BTC in three months' time.A contract is created and entered into the blockchain that triggers in three months' time, as long as I’ve deposited the0.002 BTC required. Once the contract executes, the money is transferred from my wallet to yours and is automatically witnessed and verified by regulators on the blockchain. However, it's worth noting that, at the time of writing, the fee for deploying a smart contract on the NEO network was 500 GAS.
Cryptocurrency exchanges allow you to keep your coins in an online wallet attached to your trading account. This wallet looks and works the same as a wallet installed on your computer, but the main difference is in the underlying structure of how it works.
It's important to be aware that your exchange wallet does not technically have an address. The exchange has its own wallet, a part of which it’s reserving for you, but the wallet belongs to the exchange and is never really yours. So, in situations like this where keeping NEO in a wallet gives you some sort of bonus, it’s the exchange that will get that GAS. With this in mind, it's worth moving your tokens to a wallet that you own, whether that is a hardware, desktop, mobile or web wallet.
As a concept, NEO is relatively complex for most users, especially those new to the world of cryptocurrency. This is one factor which might hamper the adoption of the platform, while there are also other considerations:
As interesting a concept as NEO is, there's only one certainty in the future of NEO: no-one knows exactly where it’s going. Many speculate its value will be high in 2018, but others are not so certain. After all, while the sudden growth in NEO to above $40 in August 2017 was impressive, it’s still very much a mirror of the explosive growth of bitcoin, and NEO tumbled back down to around $23 by September 2017.
It turned around in early 2018, and peaked to a new high of over $80 at the start of the year.
One advantage of NEO is that the Chinese government has embraced the platform, while simultaneously distancing itself from other cryptocurrencies like Ethereum and bitcoin. This has the potential to both legitimise the NEO platform and alienate it from the western world.
The future of NEO is still very much in flux, and a lot remains to be seen.
Image sources: Shutterstock
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