How to Purchase Altcoins
There is no doubt about it, bitcoin is the first cryptocurrency most of you will have heard about. But after you’ve whet your appetite on this “blue chip” coin, you may wish to expand your horizons into other coins.
An altcoin, or alternative cryptocurrency, is any coin other than bitcoin. In terms of market capitalization, bitcoin has a total value of $143.9 billion, which is much larger than any of the other cryptocurrencies. At the same time, you have other cryptocurrencies like Ethereum or Ripple that have market capitalization of $66.6 and $26.1 billion, respectively. Those numbers are no laughing matter.
What Makes Purchasing Them Different
The big difference when it comes to purchasing altcoins is the fact that you generally need to use a different exchange than you started off with. Most users are drawn to big, well-known exchanges like Coinbase, because of their ease of use and the quality of their reputation. But Coinbase only allows for the purchase of a few other currencies (Litecoin, Ethereum, and bitcoin cash at the time of publishing). So for any other coins, it is necessary to use a different exchange in order to purchase them.
Getting into these projects early is the equivalent of investing like a venture capitalist, which is exactly why many people are so interested in them. Ethereum went through massive price increases in 2017, and although many projects may end up being worthless, they also have the potential to achieve unicorn status.
How To Perform the Purchase
To go about making your purchase of whatever altcoin you are interested in investing in, first you must choose an exchange that lists the cryptocurrency in question. Binance is known as one of the best and most trustworthy, so for the purposes of this article, we will assume you are going to use their services.
The only way to get money into Binance is by transferring in Bitcoin, as they don’t allow for fiat deposits. Once you sign up for an account with them, look for your deposit address and use it to withdraw from the exchange you purchased your Bitcoin on. The money should show up right away, and you are now set up to trade on Binance.
The purchase process is easy from here. Find the cryptocurrency pair you wish to trade (BTC/XRP, for example), select it, and enter the amount of money you wish to invest with them. One tip with Binance: you can save money by purchasing some of their proprietary coin, BNB, and applying that towards your transaction fees. This generally results in a 50% discount on the fees, which can add up over time.
Finally, best practices for security are to withdraw your coins to your own wallet. However, you must make sure that the coins are compatible with your wallet, otherwise they will disappear and be non-recoverable.
Diversification is Healthy
The strongest case for purchasing an altcoin is that you need to diversify out of holding only Bitcoin in the cryptocurrency space. The potential percentage gains are much higher than they are for Bitcoin because of the relatively low exposure the rest of world has had to them. Most investors have heard of Bitcoin, but altcoins are still a very fringe topic.
By taking some of the steps outlined above, you can easily obtain your own altcoins, and increase the potential returns of your portfolio. One last thing: if you really want to get into an altcoin early, you should stay up to date on new ICO’s, since these are likely the lowest prices you will be able to purchase the cryptocurrencies at.
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