NEO is a rather popular cryptocurrency that attracts investors’ attention. This crypto entered the top 20 and stays there. Daily volumes are high as well as the liquidity. We are going to figure out the reasons for such popularity and cover them main aspects influencing NEO’s price in this guide.
The roots of NEO Blockchain
Nowadays, NEO is the first Chinese Blockchain with an open-source code. It was launched in August 2017. However, the history of this project started earlier, three years ago in 2014.
Da Hongfei, founder of this Blockchain established the Onchain company AntShares. This project had its own crypto ANS, which is abbreviation from AntShares.
The main task of Onchain was to create a totally new financial service, which would connect virtual and real economics. The main tools for this are smart contracts. ANS was initially designed to be a payment mean for smart contracts.
Later, developers decided to rebrand their product and have written new technical docs, changed their website and conducted an ICO. According to the developers, NEO is able to beat Ethereum.
How does it work
The main goal of the company is to create an economic model (so-called Smart Economy) including three main features:
- Platform for smart contracts execution
- Digital assets
- Digital Identification
You can digitize your real estate documents and sell them using cryptocurrency without mediators. Developers underline that NEO allows us to digitize and exchange different types of assets including gold, cars, houses, etc. The only thing you need to do is to connect them with digital assets and to make an appropriate smart contract.
NEO main advantages and disadvantages
NEO offers the following advantages to all users:
- Special Virtual Machine. It allows businesses to create complex smart contracts. The network has high speed allowing to conduct 10,000 transactions per second. However, tested speed does not exceed 1,000 TPS. Anyway, this is far faster than within the Ripple network where the speed is 70 TPS or within the Ethereum system with 30 TPS capacity.
- High-security level. NEO uses dBFT protocol, which protects the system from the majority of cyberattacks.
- Smart contracts are easy to set up. NEO supports several programming languages including Java, C#, F#, VB.Net, Go, Python. Ethereum, for example, uses a very complex language Solidity.
- Commissions free service. Those who hold NEO on their wallets are given GAS (utility token to conduct transactions) for free.
- Mining free system. There is no traditional mining within the NEO network as the system is based on Proof of Stake meaning no significant expenditures for ASICS or graphics cards are needed to earn NEO coins.
Have this system any issues? Are there any disadvantages of the project? Sure there are several. Find them below:
- ThebNEO community is disappointed with the lack of anonymity. Developers think that there should be no anonymity and all the transactions should be transparent. Onchain has direct access to transactions history. Developers control over 60 percent of all Blockchain nodes in the system.
- Lack of decentralization. The above mentioned 60 percent of all nodes controlled by the NEO team means that the system is more centralized than decentralized. NEO plans to cooperate with the Chinese government and this is the main reason why there will be no anonymity or decentralization.
How to mine NEO
Those who want to trade NEO, need to know that this coin has no mining procedure. We have already mentioned this above. The project uses Proof of Stake consensus mechanism instead. The main feature of PoS is that it requires no computational power. Users need to run nodes instead.
The total emission of NEO is 100 mln units. It is already distributed among investors and developers team. There will be no new coins but “stakers” will have an opportunity to earn. There are GAS tokens inside of the system and those who stake NEO within their wallets will be given this inner utility token.
History of NEO price changes
The first significant price growth was fixed during rebranding after transfer from ANS to NEO. The currency reached seven USD and later went upwards again and reached $30-$40. Investors were interested in NEO as developers started to cooperate with Microsoft and develop a new operational Blockchain-based system.
NEO’s capitalization reached $2 mln in August 2017 but one month later the Chinese government banned all ICOs and obliged the company to give the money back to investors. This money flow lead to price decline. NEO cost $7 per coin again.
The team worked on the project and managed to win back their previous positions. They have started cooperation with governmental bodies, listed NEO on Bitfinex and created the next generation NEO 2.0 platform, which may adopt for different services including banking payment systems.
GAS was listed at Poloniex in September 2017. This fact allowed NEO stakers to earn money on tokens that are automatically transferred to their wallets. The price of GAS was even higher than $50.
Factors affecting NEO price
One of the most important factors why several coins’ price grows is their inflation model. Limited emission will likely create a rise in demand in the future. How does this work? In time, the number of businesses will increase and this will create additional demand for NEO. The price is likely to rise in this case.
However, there are many other things that may positively or negatively influence NEO’s price. They are the following:
- The general situation in the industry. When Bitcoin goes upwards and the other cryptos follow it, we can say that the general market situation is positive.
- News and events. Positive news from the NEO team, as well as new partners, are likely to increase the coin’s price. However, bad news may lead to a controversial result and to press the currency down.
- Experts and community opinion. NEO benefited from many famous crypto industry experts in the past. Community criticize the team but remains loyal to the coin as NEO has shown a great result as compared to other projects.
- Decisions of different governments on cryptocurrencies and ICOs. The more countries will adopt them, the more the price of the coin will be.
The main differences between NEO and Ethereum
Those who want to start NEO trading need to know, that this crypto differs from Ethereum. There are several aspects including consensus mechanisms that are worth attention. The first main aspect is the protocol.
Ethereum uses Proof of Work protocol (the same consensus mechanism that is used in Bitcoin). NEO is based on Proof Stake. The main disadvantages of Proof of Work are known but we are going to refresh them again.
Experts say that Proof of Work systems “eat” too much electricity. This is true as mining rigs are huge nowadays and they consume much energy. However, Ethereum is going to transfer to Proof of Stake in the nearest future.
Another difference between Ethereum and NEO is transaction speed. NEO works on Proof of Stake, which allows to conduct more transactions per second than within the Ethereum network. NEO allows conducting 10,000 TPS as we had already mentioned previously. However, in practice, NEO users do only 1,000 TPS as compared to Ethereum’s 15 TPS.
This huge difference is the main advantage of NEO over Ethereum. However, NEO is less decentralized as Ethereum is. In addition, Buterin and his team are working on improving the network and those plans are included in the roadmap already.
Another big difference is in forks and scalability. Ethereum allows creating forks while there is no such opportunity in NEO. Onchain coin has its finality meaning the information that is written once will not be changed. This is a huge advantage for future users especially for big businesses and financial markets.
Reasons to invest in NEO
Why do traders and investors buy NEO? There are several reasons for this. They are the following:
- NEO offers innovative technologies, which allow making this platform outdated.
- This project allows users to work with smart contracts, which are treated by many experts as the future of blockchain technology.
- Among partners and investors, we can see famous companies including Alibaba, Microsoft, LegalChain, Wings. NEO is currently working on the creation of the NEST FOUND foundation, which is likely to attract even more investments in this project.
- Onchain make attempts to legalize cryptos and has all chances to become the official mean of payment in China. This is one of the hugest markets in the world.
- NEO increases its capitalization and holds its position in the top 20.
NEO trading and technical analysis
Most of the time traders who prefer NEO investments and speculative games use technical analysis in order to predict coins’ prices. Market participants often use the whole set of tools in order to find entry points.
The first thing to do when using technical analysis is to find the closest levels in order to understand where the price is likely to stop and to reverse in the nearest future.
The next step is to find trends if there is one. You can use trend line or MA’s with different periods to do this. Finally, you can use other indicators or price action patterns in order to find entry points.
A brief guide on how to start NEO trading
Now it is time, to sum up, and to give the latest recommendations before you are going to start NEO trading. There are several steps to do before placing your first order. Here they are:
- Find an exchange where you can trade NEO. Nowadays, there are several trading places where you can buy and sell the coin. You can choose between Binance, Cryptopia, Bitfinex, HitBTC, Livecoin, KuCoin, Bittrex. Before you make your final decision, pay attention to the liquidity, the security level and the fees that you will have pay when depositing or withdrawing money as well as when trading. Those figures may differ significantly.
- The second step is to make a decision. You can analyze news, pay attention to technical factors and use all your tools in order to find entry points.
- Risk and money management. Every professional trader has its own money and risk management strategy. Plan your trades in advance, protect your risks and calculate your profits.
- Choose the order type. There are several orders that one can use nowadays. The easiest one is the market order, which allows you to open trades at the current market price. However, in many cases, it is better to use limit orders, for example, in order to trade with a better price.