What is NEO - Could it be the ONE...

A Newbies guide to NEO/GAS Crypto Currencies.

I have high hopes for NEO but to understand why you need to have a look at the crypto coin landscape.

Bitcoin

Bitcoin was revolutionary, but possibly not for the reasons you think. Basically it makes it possible to run a distributed ledger (a record of who owns what) across a peer to peer network, where there is consensus (i.e. everyone is in agreement about who owns what).
It doesn't sound that complex, but when you consider many of the nodes making up the network would quite happily behave in any that would most benefit themselves (i.e. lie, hack, steal, corrupt) in order to gain an advantage (i.e. free money).
Without going into to much detail the system relies on the nodes running the network to solve a tricky problem (referred to as Proof of Work). When they find a solution, they get to add transactions to the block chain, and as a reward they get some free bitcoins, these are the bitcoin miners, they make the bitcoin network possible, they are also the reason it will eventually fail (IMHO, but more on that later).
At first Bitcoin operated amazingly well, but as it got bigger, it started to hit scalability issues. The number of transactions that can be processed per block created a bottle neck and as a result it can take a very long time to process a transaction. You can pay more to have your transaction pushed up the queue, but it now cost around $30 just to make your bitcoin transaction happen. So as a day to day currency its pretty much useless. Some of these issues have been worked around, but changes are difficult to make in a peer to peer network.

Ethereum

You can think of Ethereum as Bitcoin 2.0. It solved some of the basic problems with bitcoin; transaction volumes, processing speed, and as its piece de resistance it added the facility to add other stuff to the block chain. By this point there was almost as much interest in the block chain concept as there was in crypto currencies, but more about that in other articles, suffice to say the ability for other applications to add there own data to the block chain opened up a whole load of new potential uses.
The one thing Ethereum did wrong was keep the Proof of Work model for maintaining the block chain.

 So whats wrong with the Proof of Work model

The Proof of work model works by assuming that a bad actor can not control more than 50% of the mining power (processing power) in the system. To incentives the miners they are given a reward for performing the processing, and so as bitcoin prices have risen the number of miners has risen (its a profitable business), the problem is the more miners their are in the system, the harder the problem they are required to solve is. So to stay ahead of the game a miner needs to get more processing power. Now if processing power was free or limited this may not be to much of a problem, but the main cost of running the mining processors is the electricity. And they use a lot. Its estimated that bitcoin mining now consumes the same amount of power as Bulgaria, and costs (including hardware etc) $1,839,752,564 per year to run.

But its worse than that, because as the gap between the cost of bitcoin and the cost of mining widens there is more incentive for miners to buy more processing power (which equates to more electrical power). The following graph shows the predicted energy consumption of bitcoin. Now admittedly this is not going to happen, but you have to ask yourselves WHAT is going to prevent this.

One other interesting point will occur when the cost of mining a bitcoin is higher that the reward for mining it, with the price of bitcoin as it is this is difficult to see that happening, but if mining rises at the rates predicted to or bitcoin crashes, we could get there faster than you think.

So with Bitcoin mining basically being an environment train wreck of a transaction platform that costs $2 billion dollars a year (and rising fast) to run, with transactions taking hours/days to perform, and costing over $30 to perform, and you can start to see cracks.

Sadly Ethereum is also based on Proof of work, and may suffer the same problems, Que NEO.

NEO

You could consider NEO to be Bitcoin 3.0. It takes all the good things from Ethereum, fast, cheap transactions, an open block chain, and solves the excessive mining issues created by 'proof of work'.
NEO does not use proof of work, it uses Proof of Stake, and by that I mean instead requiring 51% of the processing power to bend the network to your evil will, you require 51% ownership of the network, and if you owned 51% of it, damaging the networks reputation in anyway would be counter productive (prices would crash and your 51% would be worthless).

Without going into detail, this is accomplished by having 2 tokens NEO & GAS. GAS is the currency the idea is you can buy and sell stuff with your GAS coins, they are also used to pay for transaction processing costs and are given as a reward for owning NEO tokens. NEO tokens are the proof of Stake, they are the bit that makes the network work, and your reward for simply owning them is 0.0005 GAS tokens per day for every NEO you own. The number of NEO & GAS tokens that will ever be created is limited and the GAS payout per NEO falls off over time.

So it seems to have all the boxes ticked, time will tell!

So should I buy GAS or NEO?

Let me have a quick peek into my crystal ball.....Who knows, logically owning GAS makes more sense, but since when has any of these crypto magic beans made sense.

A bit of balance

• Ethereum's Big Switch: The New Roadmap to Proof-of-Stake - The Ethereum team have been looking into moving to a proof of stake based system
• I Looked Into NEO's Code Base - What I Found Should Worry Any NEO Investor - maybe its not all good news for NEO!

How to buy NEO GAS - a step by step guide

How to Buy GAS Coins

If you are new to crypto currencies then the process for buying GAS can seem a little daunting, especially as at the time of writing it is not possible to buy GAS directly using your bank account or credit card. However the following simple steps will get you up and running with a minimum of effort.

Security and Due Diligence

You’re going to be sending money/coins or installing software from a number of sites. Before you use a site you not familiar with its common sense to do a bit of due diligence. Firstly check the sites certificate, then Google the site name and check that ‘scam‘ doesn’t feature highly in articles referring to it. Also check review on sites like trustpilot. Start small, don’t just send $100,000’s worth of coins to some site you’ve never used before send a trial $100, then build up as your confidence and familiarity increases.

Buying NEO/GAS

At the time of writing (Dec 2017) you can’t buy GAS directly with cash, but the following exchanges exist.

• Bitcoin (BTC) to GAS

So you need to first buy Bitcoins

Buying coins

There are a number of sites selling bitcoin, the one I use is coinbase
Free Money!
If you use the links to coinbase provided on this page then you will be given a $10 credit when you complete your first purchase (see referral program).

Complete the registration form, then check your email for the verification email (it turned up in the spam folder on my mail client).
You then need to provide a mobile number and type in the the verification code that will be texted to you.


Still a bit of messing around to go, select Buy/Sell, then Add Payment Method
You have 2 choices Bank transfer or debit card, both require you to submit photo ID.
If you choose debit card then you will be subject to a £750 per week limit, and some card handling fees.
You can provide your ID by capturing an image from your laptops webcam, or you will be texted a link to a web site where you can upload a picture fo your ID.
You will also be asked for your address (which must match the debit cards address).

I used my passport as ID, and it validated it within a minute. I’m guessing this was done automatically using the machine readable strip on the bottom, submitting other forms of ID would probably have to be checked manually and may take much longer to validate.


Your now finally ready to actually buy some Bitcoins!

Enter the amount you want to sepend and click Buy, you will notice that the fees are relitivley high for using a credit card. If your funding the account with larger amounts setup a bank transfer payment source.

If your card was accepted then you are now the proud owner of some magic beans (sorry bitcoins). You can see your balance in the accounts section. If you followed the refereal link you wall also see that you were also given a tiny fraction of a bitcoin (amounting to about $10), which is your referal bonus!

Exchanging you BTC for GAS

Now you have your BTC within coinbase, but you need to swap them for GAS. You can do this at an exchange, there are a number of exchange sites, I use Binance.
Create a Binance account, verify your email address (again the mail probably went into spam)



You will also be asked to configure 2 factor authentication (2FA) you will need this later to move GAS to your wallet (So don’t skip it).



If you are not in china this requires the Google Authenticator app installing on your phone, then simply open it and point it at the QR code, the Google authenticator app with then start spewing out validation codes, which will be asked for within Binance whenever you do anything significant.



Your account is now setup and you can transfer the BTC from coinbase into your Binance account.
Select Funds->Deposits Withdrawals



Find the type of coin you bought on coinbase (BTC), and press the deposit button, after a couple of seconds a deposit address will appear.
This is the ID of your wallet within Binance, any coins sent to this ID will appear in Binance.
IMPORTANT : make sure you have selected the correct coin type (BTC)

You can then go back to coinbase and send the coins to this address (again ensuring that you are sending from BTC to BTC).
Again if you are new to this then sending a smaller test amount first is not a bad idea (but note  Bitcoin fees can be as much as £20 per transaction).






Once the coins have been sent they should eventually show up in Binance (Bitcoin transfers can be very slow), under the Funds->History section.
They will not be accessible until they are 30 blocks deep (they have 30 confirmation), this can take quite a while.
Great, you now have your BTC in Binance, now its time to exchange them for GAS.
Open the exchange page (Exchange->basic)

Then in the top right window

• Select the coin type you want to trade (the ones you bought BTC).
• Type the coin you want to buy into the search window (GAS).
• Then select the market

Now you are ready to trade, sanity check that you in the right market (buying GAS using your BTC balance).
The easiest way to trade is to take the market value (explaining Limit’s/Stop-Limits etc is general trading stuff and not within the scope of this article).

• So select the Market Tab
• Assuming you want to trade all of your BTC for GAS select 100%, (or enter an amount as appropriate).
• Press the “Buy Neo” button.

You have now converted your BTC to GAS, you can see your new balances on the Funds->Deposits Withdrawals page.



Job Done, well almost….
You now own some GAS, you now need to decide where to keep them. You can keep them in the exchange or transfer them to your own wallet.

NEO Wallets

With regards to storing you NEO/GAS you have 2 options, leave it with the exchange where you bought it or move it into your own wallet. Setting up your own wallet has the advantage of being much more hacker proof (exchanges are a magnet for hackers, and some of the larger ones have suffered big losses).

The NEON wallet is the one I use, it’s simple and installs on Window/Mac/Linux. Its an open source project developed by city of zion the source code and binaries can be found at github.
Download and install the NEON wallet on your computer.
Run Neon

• Select “Create New Wallet”
• Give it a strong password (Note : you’ll need to type this in to access your wallet everytime you use it).
• Give the wallet a name and hit “Save Key”
• Print the page and keep it somewhere really safe, if your computer breaks and you’ve lost this, then you loose your cash

You now have an empty Neon Wallet setup.
Now lets test you actually have access it it before we send any money there!
Close Neon and re-open it, select “Logon using a Saved Wallet”), and enter the wallet Passphrase.

Transferring GAS to your wallet

If all went well we are ready to send the GAS coins from Binance, to your wallet.
Open Binance, and go to the Funds->Deposits Withdrawals page.


Take your time over this bit…

• Select the Withdrawal button on the GAS entry.
• Set the “GAS Withdrawal Address” (the destination address) to be the Neon wallet “Public Address”
  Hint: on the page you printed this is listed as the “public address” When you are logged into your NEON wallet this is also shown at the top of the page with the label “Your public Neo Address”, the button to the right copys it to the clipboard.
• Enter the number of GAS to transfer
  
• Then hit submit.

Again if this is all new to you, or your a bit nervous about the whole thing, then I suggest transferring a smaller amount first, the transfer fees are very low.



A few minutes later and the coins should be showing in your NEON wallet.

The End

Well done, you have just helped fuel the crypto currency boom/bubble, if all goes well then “this time next year Rodney…”, anyhow I hope this guide helped, and if you used the coinbase and Binance links on the page then we both got a little something back.

How to buy NEO - a step by step guide

How to Buy NEO

If you are new to crypto currencies then the process for buying NEO can seem a little daunting, especially as at the time of writing it is not possible to buy NEO directly using your bank account or credit card. However the following simple steps will get you up and running with a minimum of effort.

Security and Due Diligence

You’re going to be sending money/coins or installing software from a number of sites. Before you use a site you not familiar with its common sense to do a bit of due diligence. Firstly check the sites certificate, then Google the site name and check that ‘scam‘ doesn’t feature highly in articles referring to it. Also check review on sites like trustpilot. Start small, don’t just send $100,000’s worth of coins to some site you’ve never used before send a trial $100, then build up as your confidence and familiarity increases.

Buying NEO/GAS

At the time of writing (Dec 2017) you can’t buy NEO directly with cash, but the following exchanges exist.

• Bitcoin (BTC) to NEO
• Ethereum (ETH) to NEO

So you need to first buy Bitcoin or Ethereum, the rest of this guide assumes you will buy Ethereum, but the process is exactly the same if you bought Bitcoin.
Note : I would use Ethereum as its faster and cheaper to transact (bitcoin is slow and transaction fees can be $20 or more)

Buying coins

There are a number of sites selling Ethereum, the one I use is coinbase
Free Money!
If you use the links to coinbase provided on this page then you will be given a $10 credit when you complete your first purchase (see referral program).
Complete the registration form, then check your email for the verification email (it turned up in the spam folder on my mail client).
You then need to provide a mobile number and type in the the verification code that will be texted to you.


Still a bit of messing around to go, select Buy/Sell, then Add Payment Method
You have 2 choices Bank transfer or debit card, both require you to submit photo ID.
If you choose debit card then you will be subject to a £750 per week limit, and some card handling fees.
You can provide your ID by capturing an image from your laptops webcam, or you will be texted a link to a web site where you can upload a picture fo your ID.
You will also be asked for your address (which must match the debit cards address).
I used my passport as ID, and it validated it within a minute. I’m guessing this was done automatically using the machine readable strip on the bottom, submitting other forms of ID would probably have to be checked manually and may take much longer to validate.


Your now finally ready to actually buy some coins! Select Ethereum and enter the amount you want to buy, Note the fees are fairly high for using a card, if your transfering larger amounts configure the bank transfer funding source.





If your card was accepted then you are now the proud owner of some magic beans (sorry NEO's). You can see your balance in the accounts section. If you followed the refereal link you wall also see that you have a tiny fraction of a bitcoin (amounting to about $10), which is your referal bonus!

Exchanging you ETH for NEO

Now you have your ETH within coinbase, but you need to swap them for NEO. You can do this at an exchange, there are a number of exchange sites, but I use Binance.
Create a Binance account, verify your email address (again the mail probably went into spam)



You will also be asked to configure 2 factor authentication (2FA) you will need this later to move NEO to your wallet (So don’t skip it).



If you are not in china this requires the Google Authenticator app installing on your phone, then simply open it and point it at the QR code, the Google authenticator app with then start spewing out validation codes, which will be asked for within Binance whenever you do anything significant.



Your account is now setup and you can transfer the ETH from coinbase into your Binance account.
Select Funds->Deposits Withdrawals



Find the type of coin you bought on coinbase (ETH), and press the deposit button, after a couple of seconds a deposit address will appear.
This is the ID of your wallet within Binance, any coins sent to this ID will appear in Binance.
IMPORTANT : make sure you have selected the correct coin type (ETH)



You can then go back to coinbase and send the coins to this address (again ensuring that you are sending from ETH to ETH).
Again if you are new to this then sending a smaller test amount first is not a bad idea (Ethereum fees are just pennies).

Once the coins have been sent they should show up in around a minute within Binance, under the Funds->History section.
They will not be accessible until they are 30 blocks deep (they have 30 confirmation), this can take a few minutes.
Great, you now have your ETH in Binance, now its time to exchange them for NEO.

Open the exchange page (Exchange->basic)

Then in the top right window

• Select the coin type you want to trade (the ones you bought ETH).
• Type the coin you want to buy into the search window (NEO).
• Then select the market

Now you are ready to trade, sanity check that you in the right market (buying NEO using your ETH balance).
The easiest way to trade is to take the market value (explaining Limit’s/Stop-Limits etc is general trading stuff and not within the scope of this article).

• So select the Market Tab
• Assuming you want to trade all of your ETH for NEO select 100%, (or enter an amount as appropriate).
• Press the “Buy Neo” button.

You have now converted your ETH to NEO you can see your new balances on the Funds->Deposits Withdrawals page.



Job Done, well almost….
You now own some NEO, but we are not finished yet, you could be missing out on some free money.

NEO Wallets

With regards to storing you NEO you have 2 options, leave it with the exchange where you bought it or move it into your own wallet. Setting up your own wallet has a couple of distinct advantages

1. It’s much more hacker proof (exchanges are a magnet for hackers, and some of the larger ones have suffered big losses).
2. You get to keep the GAS that owning NEO generates, if the last bit about GAS is news to you then I suggest you read the ‘what is NEO section’.

The NEON wallet is the one I use, it’s simple and installs on Window/Mac/Linux. Its an open source project developed by city of zion the source code and binaries can be found at github.
Download and install the NEON wallet on your computer.
Run Neon

• Select “Create New Wallet”
• Give it a strong password (Note : you’ll need to type this in to access your wallet everytime you use it).
• Give the wallet a name and hit “Save Key”
• Print the page and keep it somewhere really safe, if your computer breaks and you’ve lost this, then you loose your cash

You now have an empty Neon Wallet setup.
Now lets test you actually have access it it before we send any money there!
Close Neon and re-open it, select “Logon using a Saved Wallet”), and enter the wallet Passphrase.

Transferring NEO to your wallet

If all went well we are ready to send the NEO coins from Binance, to your wallet.
Open Binance, and go to the Funds->Deposits Withdrawals page.


Take your time over this bit…

• Select the Withdrawal button on the NEO entry.
• Set the “NEO Withdrawal Address” (the destination address) to be the Neon wallet “Public Address”
  Hint: on the page you printed this is listed as the “public address” When you are logged into your NEON wallet this is also shown at the top of the page with the label “Your public Neo Address”, the button to the right copys it to the clipboard.
• Enter the number of NEO to transfer
  NOTE : NEO’s are not divisible (you have to transfer a whole number, you may own a fractional number of NEO’s in the Binance, but in the real world they are not divisible)
• Then hit submit.

Again if this is all new to you, or your a bit nervous about the whole thing, then I suggest transferring a smaller amount first, the NEO transfer fees are very low.



A few minutes later and the coins should be showing in your NEON wallet.

Claiming your FREE GAS

If you’ve bought NEO then while they are in your wallet they are generating GAS, after a few minutes you will see the ‘Claim xxx GAS’ button starts ticking up. Pressing this button transfers the GAS earned by your NEO into your wallet. At current rates this adds up to about 5% return per year.
Note: Your computer does not have to be switched on or Neon open for you to be earning GAS, so shut it all down and go and have a cuppa.

The End

Well done, you have just helped fuel the crypto currency boom/bubble, if all goes well then “this time next year Rodney…”, anyhow I hope this guide helped, and if you used the coinbase and Binance links on the page then we both got a little something back.