The ultimate beginner's guide to trading NEO
Why Should You Buy NEO?
To most investors, the market value is the primary determinant of whether a coin is worth buying or not. In 2017, the coins were extremely cheap, sitting at one cent per coin. In December 2018, the price of the currency had grown and stabilised at $170. Very few cryptocurrencies have made such a leap in price over the same duration, especially when looking at more established coins.
Overall, both Ethereum
and NEO serve the same purpose. They provide a platform for smart contracts, decentralised applications, and Initial Coin Offerings (ICOs). The three appear to be the next big thing in the financial technology industry and NEO & Ethereum are the market leaders, consequently the biggest rivals. However, they differ at their core.
Ethereum is responding to the current need for decentralised apps (DApps). However, NEO is focusings on building a product that caters for a smart economy. Therefore, while one focuses on the present, NEO is working on future relevance.
Pros and Cons of Buying NEO
- Future proof: NEO’s technical approach makes it a currency that answers to the future needs of the market. It may not do well at meeting the current market demands, but its smart economy solution sets it up as leading crypto in the future.
- Market potential: Even though China banned cryptocurrencies, the country may open up the doors to its coin, as it did to WeChat. NEO will take the cryptocurrency world with a storm when this happens.
- Partnerships: NEO has support from several leading companies, including Microsoft China. It is also the first Chinese cryptocurrency network to join Hyperledger. Hyperledger works on projects that aim to integrate blockchain systems to businesses.
- No mining: The biggest downside is that NEO is not minable, so crypto miners cannot invest in them. According to the developers, 100 million coins were pre-mined before launching. Developers and the rest who use their computers to maintain the network, however, receive rewards in the form of a token called GAS. It is another coin that the NEO foundation uses to distribute its NEO coins.
What are the Best Payment Methods to Buy NEO?
Here are some of the different payment methods you may be able to use when buying NEO;
- Buying NEO coin with PayPal: You cannot use your PayPal account to buy NEO coins because of conflicting PayPal and cryptocurrency policies. Besides, PayPal’s buyer protection policy makes it a perfect tool for scammers. To top this off, China is really not a big fan of PayPal, meaning NEO is very difficult to purchase via PayPal.
- Buying NEO coins with cash: It is only possible if you find a friend, family member, or someone you trust trading NEO coins for cash. It is, however, not among the most common ways of buying cryptocurrencies, nor the safest.
- Buying NEO coins with a credit card: There are some exchanges out there that will allow you to buy coins directly with a credit card. However, banks have a habit of blocking any cryptocurrency transactions due to the lack of regulation.
- Other payment methods: The best way to buy NEO coins is through crypto to crypto exchange. You can deposit money to the exchange of your choice using credit, debit card, or wire transfer and purchase ETH or BTC. You then exchange the ETH or BTC for NEO in any of the reputable exchanges.
Buying NEO in Your Country
In spite of its massive growth in the past few years, cryptocurrency still does not have worldwide acceptance. Regulations by different authorities make its full adoption almost impossible. Certain countries, including China, have banned ownership as well as trading in cryptocurrencies. Other countries that have banned cryptocurrency activity include Egypt, Morocco, Ecuador and Columbia.
Another limitation when buying NEO in your country is specifically exchange based. Even though most popular exchanges and CFD trading platforms are available in most countries, some of them are only available to a select amount of nationalities and jurisdictions.
Banks and credit card providers also may hinder buying NEO coins in your country. Some credit card and debit cards may consider payment to a cryptocurrency exchange as a foreign purchase, which will lead to increased purchase charges,
Again, it is essential to choose an exchange that uses a language you understand. Just because it is a Chinese coin does not mean you have to trade on platform coded in Mandarin. Fortunately, most NEO exchanges are English-based.
Is There a Difference Between Buying and Trading NEO?
Yes. Buying NEO grants you ownership of these coins and unlimited freedom on what you can do with them. You can keep them in a wallet or exchange them for another cryptocurrency. Trading, on the other hand, is the act of making a profit by predicting the future prices of a coin and using a trading platform to execute this trade. When you trade, you might buy the currency, but you do not own them.
Each option has advantages over the other. The main merit of trading is that financial bodies such as the FCA and others properly regulate the sector. Exchanges, on the other hand, are under no regulation whatsoever. Consequently, investment in trading is safer than in buying.
However, trading does not allow you to own the coins and use them in any way you wish. You can only convert them to fiat currency. As a result, those who own NEO on trading platforms do not enjoy the benefits real NEO owners have such as GAS tokens.
The other difference between the two is that trading provides access to multiple profit making options to the trader, which are impossible with buying and holding. However, it also exposes the trader to the risk of high losses. Therefore, it requires skill to successfully invest in trading cryptocurrencies, even NEO.
What are the Fees Involved in Buying NEO?
As per most cryptocurrency purchases and transactions, there are fees associated with buying and selling NEO. We’ve outlined the core fee types below;
- Transaction fees: These fees are prevalent across nearly all exchanges and broker platforms. Every single transaction that is made has a small fee associated with it, which is taken from the sender and recipient.
- Deposit fees: When you deposit money from your SEPA, credit card, or any other payment method to the exchange, you’ll sometimes be required to pay a deposit fee. Most trusted and reputable exchanges and broker platforms don’t have deposit fees.
- Withdrawal fees: When you want to take your cryptocurrency out of an exchange or brokerage, some charge fixed withdrawal fees while others have fluctuating charges. It also varies with the payment method, especially when you are withdrawing in fiat currency.
- Spreads and commission: These apply in trading platforms and brokerages. Spread and commission are ways for brokers to make a margin on top of every trade – these are essentially the transaction fees for the trading and broker world.
Broker Fees vs. Exchange Fees:
Broker platforms offer both small, quick trades on NEO prices, but also have unlimited purchase amounts, giving you the opportunity to buy in bulk. This flexibility means that certain brokerages charge a higher amount to invest in NEO than some exchanges.