NEO is more than a cryptocurrency. It’s actually an ecosystem or the foundation for a smart economy, as NEO puts it. What does all of that mean exactly and how do you invest NEO? Remember, investing in cryptocurrency is inherently risky. Before you consider investing in NEO or any other cryptocurrency, make sure that you fully understand the risks and know how the system works before you commit any capital.
What is an IRA?
An individual retirement account (IRA) allows you to save money for retirement in a tax-advantaged way.
An IRA is an account set up at a financial institution that allows an individual to save for retirement with tax-free growth or on a tax-deferred basis. The 3 main types of IRAs each have different advantages:
- Traditional IRA – You make contributions with money you may be able to deduct on your tax return, and any earnings can potentially grow tax-deferred until you withdraw them in retirement. Many retirees find themselves in a lower tax bracket than they were in pre-retirement, so the tax-deferral means the money may be taxed at a lower rate.
- Roth IRA – You make contributions with money you’ve already paid taxes on (after-tax), and your money may potentially grow tax-free, with tax-free withdrawals in retirement, provided that certain conditions are met.
- Rollover IRA – You contribute money “rolled over” from a qualified retirement plan into this traditional IRA. Rollovers involve moving eligible assets from an employer-sponsored plan, such as a 401(k) or 403(b), into an IRA.
Whether you choose a traditional or Roth IRA, the tax benefits allow your savings to potentially grow, or compound, more quickly than in a taxable account.
Why Invest in an IRA?
Many financial experts estimate that you may need up to 85% of your pre-retirement income in retirement. An employer-sponsored savings plan, such as a 401(k), might not be enough to accumulate the savings you need. Fortunately, you can contribute to both a 401(k) and an IRA. A Fidelity IRA can help you:
- Supplement your current savings in your employer-sponsored retirement plan.
- Gain access to a potentially wider range of investment choices than your employer-sponsored plan.
- Take advantage of potential tax-deferred or tax-free growth.
You should try to contribute the maximum amount to your IRA each year to get the most out of these savings. Be sure to monitor your investments and make adjustments as needed, especially as retirement nears and your goals change.
What is NEO?
NEO was founded by Da Hongfei. It is a Chinese cryptocurrency. Depending on what China does with restrictions on cryptocurrencies, this could give NEO and edge over the competition. As mentioned above and by NEO, it is “An Open Network For Smart Economy.” To make that work, NEO has a complementary token called GAS. Alright, before this all gets too confusing, let’s break it down.
Many have described NEO as the Ethereum of China. Speaking of Ethereum, it also has a token called Ether. Ethereum is the network and Ether is used for smart contracts and transactions. It’s similar with NEO. NEO is the network and GAS is the token for executing contracts and transactions. NEO has gained popular and that has even led some exchanges to use NEO as a base coin, just as BTC and ETH are base coins at many exchanges.
How is NEO Different?
The way NEO is setup, NEO provides stake (i.e., ownership) or voting rights. NEO is for ownership and GAS is for operations. Also, GAS is a dividend of NEO. GAS is deployed to pay and run smart contracts. The fee is proportional to the computing resources consumed by the contract.
NEO and GAS transactions are cheap. Coin transactions take around 24 seconds, compared with a 1/2 hour for Bitcoin BTC. NEO can handle higher transaction volumes than BTC and ETH. When comparing transactions per second:
NEO = 1000 TPS
ETH = 20 TPS
BTC= 7 TPS
Cryptocurrency Transaction Speeds Compared:
Apparently, Ripple still has the crypto lead, but NEO isn’t far behind, especially compared to others like Bitcoin Cash, Litecoin, and Dash. One of the main reasons NEO is faster is because it uses DBFT, which stands for “Delegated Byzantine Fault Tolerance.” BTC and ETH use proof of work by mining. DBFT is great for financial transactions. When you get a confirmation, it is confirmed within a few seconds. If you’d like a visual overview of the process, stateofneo.com has a great infographic outlining it.
How To Invest In NEO
You can’t buy NEO directly. Instead, there is a round about way to purchase NEO. The flow looks like this: Buy BTC through Coinbase then transfer to Cryptopia, where you can buy NEO with your BTC.
Let’s walk through the process in detail:
1) Create A Cryptopia Account
The first thing you need to do is setup a Cryptopia account. Cryptopia is a popular choice because it allows crypto-to-crypto transactions from companies like Coinbase. It’s important to note that you can’t send money to Cryptopia. You have to go to Coinbase -> Exchange (Cryptopia) -> NEO.
So, you’ll always need two accounts:
Cryptopia: which you can signup for here
Coinbase: Coinbase gives you $10 in free Bitcoin when you signup and deposit $100 or more
Hopefully, this changes soon, but that’s how it goes today.
2) Buy Bitcoin or Ether on Coinbase
Once you have a Cryptopia account setup, you need to buy Bitcoin or Ether on Coinbase. It’s very easy to do once you have a Coinbase account setup. You simply go to the Buy/Sell page and enter your information. Then, your Bitcoin will be in your wallet and you can move to step
3) Transfer Your Bitcoin To Cryptopia
Once you have your Bitcoin or Ether in your Coinbase account, you can transfer it over to Cryptopia. This is also fairly easy to do. In your Cryptopia account, go to your balances then wallets and you can see all the different coins you can hold in your account.
In our case, we’re transferring over Bitcoin, so click on Bitcoin, and you’ll see a Wallet Address generate. Here’s what most look like:
BTC
Once you have that address, you go back to Coinbase, choose “Accounts”, and then “Send.”
4) Buy NEO
Once you have your Bitcoin in your account at Cryptopia, you can finally buy ETN. In your Cryptopia account, execute the NEO/BTC (or NEO/ETH) exchange. Once you place your trade, it will show up in your Cryptopia account.
Why is NEO Soaring So High?
The NEO cryptocurrency traded 17.2% higher on Monday morning, according to a reading from Coinmarketcap at 11 AM EST. On a day when most of the major digital currencies were up no more than 7%, that’s a significant jump. So what’s going on with this large, but not terribly well-known, e-currency today?
Statistics and NEO
NEO is the sixth-largest cryptocurrency currently, sporting a $8.7 billion market cap. The tokens are worth $135 each as of this writing, up from $0.11 a year ago. That’s a 1,200% return over 52 weeks. It’s safe to say that NEO caught the broader market’s cryptocurrency fever in 2017.
The digital coin’s design is closer to Ethereum than Bitcoin. NEO’s stated goal is to create a smart economy based on a decentralized network of blockchain contracts and digital assets. In other words, NEO isn’t meant to replace traditional currencies as much as it intends to modernize how money flows through the global economy. In particular, the support for smart contracts is the basis of a programming platform that lets developers build applications with direct support for NEO coins and their digital contracts.
Diving just one level deeper, a smart contract lets buyers and sellers set up specific terms that must be met before transferring money from one side to the the other. For example, a billing system with smart contracts could be set up to release payments when both the buyer and seller have confirmed that the gizmo in question has been shipped and received.
Bitcoin doesn’t support anything more complicated than a simple send-and-receive system, though the sender can include a note with each transaction. Ethereum and NEO, on the other hand, provide oodles of computer-based processing of more complicated contracts. If you can program a set of conditions, it can be built into transactions on these platforms.
The biggest difference between Ethereum and NEO is their intended target audiences. Ethereum is a worldwide effort, started in Russia and managed out of offices in Switzerland at the moment. NEO, on the other hand, was created by a Chinese group for the Chinese market. The currency is managed by a local team, with just a handful of China-based servers processing NEO’s blockchain and its transactions.
This makes NEO more centralized than Ethereum or bitcoin, though founder Da Hongfei hopes to change it into a more distributed model someday soon. For now, a more close-knit operation lets NEO process transactions very quickly without opening security holes, but at the cost of staying at arm’s length from the ideal of a decentralized system.
What’s Going on With NEO Today?
The Ethereum of China just received a fantastic grade from investment ratings bureau Weiss Ratings. The firm, which has been grading everything from insurance plans to financial services since 1971, is perhaps the most respected authority on the quality of individual cryptocurrency models today. (See Ethereum World News Article: “XRP, IOTA, NEO and Cardano are ‘Absolute Steals,’ Weiss Ratings Say”)
At the end of January, Weiss gave NEO a respectable B- grade. In a world where Ethereum had to settle for a B and market leader bitcoin only gets a C+, that’s a pretty strong rating.
But in the latest report, Weiss gave NEO it’s first-ever rating above B+, more specifically an A-. The grade was issued a few days ago, but many cryptocurrency enthusiasts are only now catching wind of this development.
Weiss specializes in separating financially stable investments from risky gambles, placing a premium on high-quality operations and a long-term view. For example, Bitcoin’s low grade comes from a less sophisticated technology and high speculation risks. NEO is seen as a more advanced platform with much less speculation going on.
That’s why NEO is rising on a generally muted day on the cryptocurrency markets.
So it’s time to buy NEO coins by the boatload, right?
NEO is the first coin to get an “excellent” grade from Weiss, rising above the “good” and “fair” ratings of its better-known rivals or alternatives. A few digital coins do have to settle for a D rating these days, translating into a “weak” investment according to Weiss’ criteria. The only major name in this category is Bitcoin Gold, a recently forked bitcoin version meant to let high-speed graphics cards from AMD and NVIDIA get into the cryptocurrency mining game again.
That’s good news for NEO buyers, but even Weiss concedes that there is no such thing as a completely safe cryptocurrency today.
The Weiss Ratings Team
NEO’s grade can also drop again for many reasons, since the cryptocurrency market is prone to quick and unexpected changes.
Buying NEO today is a bet on smart contracts gaining ground in China. It’s the frontrunner in this specific market right now, but could be overtaken by Ethereum or a newer alternative somewhere down the road.
So the strong Weiss grade is not a signal to back up the truck and start shoveling your life’s savings into NEO coins. Rather, it’s one bullish opinion from a respected source — in a rapidly changing market that just isn’t set up for betting the entire farm on any particular currency. That might come later (but we don’t even know that much yet) and NEO may or may not be among the winners in the end.
Please invest accordingly, in small batches that you can afford to lose if something goes wrong. This goes for NEO and all other cryptocurrencies, and really for any type of investment at all.
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Final Thoughts
NEO is an advanced cryptocurrency, providing a network for identification of digital assets, smart contracts and a way to transact via the GAS token. It’s essentially like the second generation of Ethereum.
NEO is also a Chinese cryptocurrency, which could provide it an advantage should the Chinese government decide to restrict cryptocurrencies. Who knows what’s going to happen in the cryptocurrency space. Investing in NEO is very risky, and you should be aware of that. However, it could also be very lucrative if there is widespread adoption.
For those interested in investing in cryptocurrency for the long-haul, our best recommendation is to store them in a self-directed individual retirement account as outlined in the beginning of the article. (Read Page: Best Cryptocurrency IRA Options). If you are ready to choose the best company to work with, we highly suggest you read through our List of Best Cryptocurrency IRA Companies before making your choice.
Do you have any further questions about investing in NEO for Your IRA? Ask below!
