From exchanges to wallets to NEP-5 tokens
Source Photo by Alex wong on Unsplash.
In a previous article, I extolled the many benefits of NEO as an alternative to Ethereum. As of this writing, Ethereum has a market cap that is 16 times greater than NEO ($110 billion vs. $6.6 billion). Another upstart “smart contract” blockchain project, Cardano, has not even fully launched, but has a market cap of $26 billion, nearly 4 times that of NEO.
If you think NEO represents a great value, forge ahead and learn more about how to acquire and maintain it.
Create a NEO Wallet
The first step is to create a NEO wallet that you will control. The best NEO wallet is NEON, which was created by City of Zeon, independent NEO developers. Go to that site, download and install the wallet for your particular computer operating system (Mac, Windows, or Linux).
Download the NEON wallet.
If you are on a Mac, after you download the software, you will get a warning about the app being from an “untrusted developer”. You can trust them. :) After downloading, go to your System Preferences > Security Tab and click the box to allow opening the app.
Once you open the application, you will see this main menu:
Opening Screen For NEON
Choose the “Create a new wallet” option and then you will see this screen:
Set a passphrase before you generate the keys to your wallet.
Set a unique passphrase that will be used to encrypt your wallet’s private key. Click on the “Generate keys” button.
You’ll then see this page:
It’s very important that you save everything printed on this page. It is all of the information associated with your wallet and if you lose it you will not be able to access/recover your wallet. The “Public Address” is the address you will share with others when you want to send or receive payments. Never share your Passphrase, Encrypted Key, or Private Key information with others, however. Thus, keep this info in a very safe place. If you lose it, you may not be able to access your wallet in the future.
Give your wallet a name and then “Save Account”.
When you are done saving/printing, click on the “Back” button to return to the main menu. In the future, you will access you wallet from this menu.
Now, let’s actually get some NEO to put in our new wallet…
Acquiring NEO
You’ll need to acquire NEO via a cryptocurrency exchange. However, the most popular and easiest to use exchange, Coinbase, only supports four cryptocurrencies currently, and NEO is not one of them.
What this means is that you will need to have some crypto (preferably Bitcoin or Ethereum) in order to acquire NEO coins.
If you have no crypto currently, I suggest registering an account at Coinbase first to purchase some Bitcoin or Ethereum. Purchase however much you intend to invest in NEO, since you will be using that Bitcoin/Ethereum to purchase your NEO on another exchange. I wrote another article about how to purchase crypto for the first time, that may help you in this regard. (If you use that as a reference, just stop after Step 1 and return back to this article.)
You can see a list of all exchanges a particular cryptocurecy is listed on via the CoinMarketCap.com site. On that site, search for NEO and then click on the Markets tab on its summary page so see all of the exchanges that currently support NEO, as shown below.
Crypto Exchanges That Support NEO (Per CoinMarketCap.com)
If you are a crypto veteran, look for an exchange you know and trust and use that to purchase your NEO coins. I recommend Binance. It currently has the largest market for NEO, and it has some of the lowest transaction fees in the business. Other good exchange options: Bittrex and Kucoin. I won’t go into the nuances of purchasing from an exchange, because the process varies for each one; it involves depositing (transferring) Bitcoin or Ethereum to your exchange account, and then using that to purchase NEO, at the current market rate.
However, if you are not experienced with these exchanges, a far simpler way to acquire NEO is to use Shapeshift.io.
Shapeshift is a middleman that allows you to exchange one crypto for another, without having to register with an exchange. In general, your net exchange rate will be a little worse going through Shapeshift (compared to going directly to an exchange), but not appreciably, and it is a convenient service that can make a lot of sense, especially if you just want a very quick conversion. (A similar service, called Changelly, is also worth looking at in general, but they do not currently support NEO, so we can rule them out for this exercise.)
Let’s walk through the Shapeshift experience.
When you go to Shapeshift.io, you’ll see this:
You’ll want to choose the deposit currency that you will use to pay for your NEO. We’ll assume Ethereum in our example. Choose NEO as the “Receive” currency and then press “Continue”.
On the next screen, you’ll be asked to provide the address of the Ethereum wallet where you currently have your Ethereum, as well as the address for the NEO wallet you created earlier (use the Public Address for your wallet).
The trickiest thing about this screen is that you must provide the amount of NEO that you want to receive, which will then calculate how much Ethereum you need to send. If you enter an Ethereum amount first, you will receive an error. They handle it this way because NEO is not available in fractions (unlike most other cryptocurrency). Thus, you can only purchase whole number increments of NEO.
After you “Start Transaction”, you’ll be taken to a screen like this:
Shapeshift Instructions.
On this screen, you are given instructions about where to send your Ethereum. You’ll want to go to your Ethereum Wallet and and send the amount of Ethereum listed on the page to the address listed.
Here’s an example “Send” screen for MyEtherWallet:
Send ETH to the address provided By ShapeShift.
Once you send your ETH, Shapeshift will basically work to exchange your ETH for NEO (by getting the best price available from the various exchanges it partners with). You can track the status of the process on your Shapeshift page.
Once completed, you will see your newly purchased NEO sitting in your NEON wallet!
You’ll notice that there are two currencies listed- NEO and GAS. Below them, a “Claim” button with a GAS value is visible.
One of the cool things about NEO is that all holders receive recurring dividends, paid in GAS. You will be constantly earning more GAS, with the exact amount depending on your NEO balance (the more NEO you have, the more GAS you earn). You can learn more this on the excellent NeoToGas.com site. You can see what the expected dividend payout will be for your NEO balance, and learn more about the GAS dividend in general.
You should periodically hit the “Claim” button to have your earned GAS apply to your wallet. It will not show up in your GAS balance until you claim it. You are under no time constraint to claim it though, so don’t worry about losing your unclaimed GAS if it’s been awhile since you last claimed. I try to claim once per week, myself, but you may want to do it more or less often.
Of note… if you keep your NEO on an exchange, you probably will not earn any GAS dividends (current exception: Binance), so it’s always advisable to move your NEO to your NEON wallet as soon as possible.
That’s it… we’ve purchased some NEO and have it safely stored in our NEON wallet, earning GAS on a recurring basis.
NEO vs. GAS
So what is the difference between NEO and GAS and why does NEO have two different currencies?
NEO is designed to represent “ownership” of the network. An excellent blog post by Blockknight summarizes some of the differences, but the key takeaway is that NEO conveys voting rights, while NEO is an operational currency.
GAS is more than just a dividend you receive for owning NEO. It actually has a major utility. It is used to pay certain fees on the NEO network. Amazingly, there are no transaction fees for NEO (though it is possible that that may change in the future); however, there are defined system fees for which GAS is required. These system fees are for smart contract related functions.
Compare this to Ethereum (and nearly every other cryptocurrency), which charges a fee for each transaction.
One other important note: NEO coins can not be divided. There are no partial NEO coins (that means you will only have whole number values for your NEO coins in your wallet). GAS, on the other hand can be divided. Keep this in mind when dealing with exchanges, who will display NEO in fractional units (for trading purposes). If you try to withdraw 5.95 NEO from an exchange, you’ll only realize 5.0 in your wallet. Thus, try to get your totals as close to a whole number as possible, without going under, when working with an exchange, especially when withdrawing.
NEP-5 Tokens
Nearly every ICO project over the past couple of years has been conducted on the Ethereum platform, using Ethereum’s ERC-20 standard.
But NEO now also supports tokens on its platform, via its own NEP-5 standard. These are early days for NEO-based token projects, but there have already been a couple of very successful ones — Red Pulse and DeepBrain Chain.
While I expect the number of token projects developed on NEO to increase quite a bit, it is doubtful we will ever see the same numbers as Ethereum for one very simple reason… NEO actually charges a fee to launch a new token on its platform, and it’s not chump change. The fee is currently 500 GAS (or around US$25,000).
By having a substantial fee, the barrier to entry for creating a new token project is obviously much higher than with Ethereum. This also should lead to higher quality projects on NEO, compared to NEO, on average… or, at the very least, fewer low quality projects. :)
You can store NEP-5 Tokens in your NEON wallet, as well. If you acquire a NEP-5 token, you can just send/deposit it in your existing NEON NEO wallet. Any tokens you have on your account, will appear below your NEO and GAS balances, like so:
NEP-5 Token Balances
In the example above, you can see that DBC (Deepbrain Chain) and RPX (Red Pulse) token balances are clearly visible on the main wallet balance page.
Sending and Receiving NEO
You can easily send and receive NEO and GAS (and NEP-5 tokens) from your NEON wallet.
Sending NEO using NEON.
To send, click on the “Send” button, enter the amount you wish to send, the type of asset (NEO, GAS, or a NEP-5 token you own) and the NEO address of the recipient.
Again, unlike other cryptocurrencies, you will not have to worry about transaction fees. There are none (at least for now… subject to change in the future).
To receive NEO, GAS, or a NEP-5 token from someone, click on your “Receive” button and copy your Public NEO Address and give that to the person/entity that is wishing to pay you.
Receiving NEO.
You’ll find that most transactions are processed quite quickly.
Tracking NEO Transactions
If you’ve used other cryptocurrencies, you’re probably familiar with blockchain explorers that allow you to search for transactions on the network.
You can do the same thing with NEO via NEOTracker.io. Search by public address or by specific transaction.
This is a great way to see the status of a recent transaction or to verify activity in your own wallet.
Hardware Wallet
Finally, a recent development is that Ledger, the outstanding hardware wallet, now supports NEO, GAS, and NEP-5 Tokens. You can set up a Ledger wallet to connect via NEON, giving you all of NEON’s features plus the added security of a hardware wallet, a physical device that must be used to confirm all transactions.
Ledger Nano S
Summary
As you can see, getting set up with NEO, GAS, and NEP-5 tokens is quite simple. The NEON wallet is easy to set up and use and can handle all NEO asset types… and now you can even secure your account using a Ledger device. More and more exchanges are supporting NEO and if you are intimidated by exchanges in general, Shapeshift makes it very easy to covert to NEO from most other major cryptocurrencies.
When you own NEO, you automatically earn GAS (so long as you control your wallet or you are using a NEO friendly exchange, like Binance), which is a great dividend to accrue and is visible/accessible in your NEON wallet at all times.
NEP-5 tokens will become more commonplace and will likely become part of your portfolio as you involve yourself more in the NEO environment and they are now easily managed using NEON, as well.
Best of all, currently you do not have to worry about paying transaction fees when you send NEO, a huge advantage over other cryptocurrencies.
Of course, please do your own due diligence before investing in NEO yourself. This article should not be construed as investment advice; rather, it is my attempt to help those of you that have already decided you want to take the plunge with NEO.
Please consider supporting the new project I am working on, Narrative. Our goal with Narrative is to create the world’s first true content economy, giving users autonomy over the content on the network. 85% of all revenue generated by the Narrative Network is returned to its members.
Narrative White Paper: https://assets.narrative.network/documents/narrative-network.pdf
Narrative Token Sale: https://tokensale.narrative.network