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How to Buy Altcoins: Investing in Blockchain Technologies - Efficiency Info

If you're one of those individuals who think that blockchain technology is revolutionary, you've doubtlessly pondered how to buy altcoins (or alt coins as they're often misspelled, in which case you might have searched "how to buy alt coins" and hit upon the same results).

You might be onto something. After all, Bitcoin, the "King of cryptocurrency," has some significant flaws. Besides, not everyone has thousands of dollars to spare, which is how much one bitcoin costs (as of this writing).

Most altcoins that exist today will more than likely fail. But the survivors have the potential to disrupt the status quo and threaten major industries.

If that happens, you'll be glad that you took the time out of your day to look up how to buy altcoins.

What's the Deal with Altcoins?

different coins or cryptocurrencies

image via: pixabay

You want to know the answer to how to buy altcoins. But do you know much about them? And how are they connected to Bitcoin?

Let's take a look.

Bitcoin is an innovative digital currency (i.e., cryptocurrency). It was created in 2009 by a mysterious person or persons known as Satoshi Nakamoto.

Similar to credit cards, Bitcoin can be used to buy things electronically, as long as both parties have agreed to do so.

However, unlike fiat money (traditional currency), Bitcoin is decentralized, which means that no single institution is in control of the Bitcoin network.

Additionally, Bitcoin is also:

  • Irreversible: Once you send someone a bitcoin, you can't get it back without their permission.
  • Transparent: The blockchain is like a public​​​​ ledger that records every transaction.
  • Pseudonymous: No one will know who you are as long as they don't link your address to your identity.

So, what are altcoins?

The word "altcoin" is the combination of "alt" and "coin." The "alt" is short for "alternative" and coin denotes, in this specific context, "cryptocurrency."

Thus, altcoins are alternative cryptocurrencies launched after the success of Bitcoin. Simply put, an altcoin is any cryptocurrency that isn't Bitcoin.

Most altcoins are modeled after Bitcoin. Thus, they're usually:

  • Decentralized (i.e., peer-to-peer)
  • Involve "miners" (individuals who secure and extend the blockchain)
  • Provide efficient ways to carry out transactions

Bitcoin might have been the first cryptocurrency — and it's still one of the most popular ones — but it's by no means the best. Indeed, many altcoins attempt to improve on Bitcoin's limitations.

How to Buy Altcoins

When you're purchasing altcoins, you're not necessarily buying a form of currency.

Most altcoins act more like tokens. These tokens have a plethora of different roles, such as security, reward, and access.

In general, when most people buy altcoins, they do so for one of two reasons:

  • To access the service/platform/app that the company has created
  • To make a profit (if they feel that the company will grow, the price of the coin will go up too)

You're probably seeking an answer to how to buy altcoins for the second reason (as are most people).

Newbie traders are every hacker's dream

Before we take a look at how to buy altcoins, let's talk safety.

Firstly, public gateways are unsafe. So, never buy cryptocurrencies on a public Wi-Fi network (such as your local cafe) or a public computer.

Secondly, when you go onto a cryptocurrency exchange website, make sure that the site you land on is legitimate. Scammers often take advantage of newbie traders.

Luckily, making sure that the site you're on is legit is pretty straightforward. All you have to do is keep an eye out for a green "https" tag that comes before a site's URL. A green "secure" (or a lock symbol) should accompany it. Can't find it? Then it's likely that the site you're on doesn't have proper certification.

However, some ingenious scammers have found ways to obtain a security certificate. Before you log in and potentially lose all your cryptocurrencies (and in some cases even your stored USD funds), make sure that the web address checks out.

Sometimes the difference is minor, such as small dots under the letter "n" in "Binance" (a popular cryptocurrency exchange site).

Scammers often leave links to their sites on social media, forums, and sometimes even Google. Avoid getting scammed by manually typing in the URL address of the site you want to visit.

Finally, when you're creating an account on a cryptocurrency exchange, go the extra mile and enable two-factor authentication (2FA) for an added level of security.

That way, instead of just typing in your password to access your account, you'll also need to provide a Google Authenticator code or a text message code. Be sure to note down your authenticator backup code in case you lose your device.

All right, now that you know how to keep your data safe, you're ready for step-by-step instructions on how to buy altcoins!

There's no way around purchasing bitcoin

How to buy altcoins? Well, the first step is to get your hands on bitcoin.

At the moment, there aren't many altcoins that you can purchase with your local currency. As such, you first need to buy bitcoin.

You could also buy another cryptocurrency such as Ethereum. However, most altcoins are paired with bitcoin. Once you buy bitcoin, you'll be able to trade it for any altcoin that you want.

To purchase bitcoin, you need to register on a cryptocurrency exchange that allows you to use fiat money. The most popular exchange is Coinbase.

Once you open up a Coinbase account, you'll be able to purchase bitcoin with your credit card instantly.

Not every exchange will have the coin you want

cryptocurrency blockchain

Image by WorldSpectrum from Pixabay

Now that you're a proud owner of bitcoin (or more likely, a fraction of a bitcoin), it's time to find a cryptocurrency-to-cryptocurrency exchange that allows you to trade it for the altcoins of your choice. Anyone who has any knowledge of how to buy altcoins will mention Binance, Bittrex, Kucoin, and Hitbtc as some of the best exchanges out there.

However, before you sign up to an exchange, head over to CoinMarketCap, a site that tracks the current value of Bitcoin as well as the value of most altcoins. Go ahead and search for an altcoin that interests you. Then, click on "markets" to see which exchanges have it.

For example, if you're looking to exchange bitcoin for Tron, you're looking for the pairing TRX/BTC. It's not a bad idea to memorize different ticker symbols. The very last thing you want to do is confuse them. Cryptocurrency trading is all fun and games until you buy Bitconnect (BCC) instead of Bitcoin Cash (BCH) or NEOS (NeosCoin) instead of NEO.

This step is less complicated than it seems at a first glance

Once you sign up with an exchange that carries your desired altcoin, you can then send your bitcoin to that exchange.

Every exchange is slightly different but here's how you'd go about transferring bitcoin from your Coinbase account to your Binance account:

  1. 1
    Sign into Binance. Click on "Funds" and then "Deposits Withdrawals."
  2. 2
    Search for the coin of your choice (more than likely bitcoin). Select it and then copy the deposit address. Be extra careful when completing this step. Make sure that you click on the right currency; otherwise, you risk losing your coins.
  3. 3
    Head to Coinbase and click on "Accounts." Find the cryptocurrency you want to send to your Binance account and click "Send."
  4. 4
    Paste the address you copied earlier into the "Recipient" field and choose an amount to send.
  5. 5
    Depending on how busy Binance and Coinbase are, you might need to wait mere minutes for the transfer to go through. But you could also be waiting for hours.

If you want to be extra careful, you can test the system with a small transfer first. As soon as you're familiar with how things work, you can transfer a more substantial amount.

Finally, it's time to make a trade

Once you're on the exchange (such as Binance), select the currency that you bought earlier (such as Bitcoin). Then, type in the name of the altcoin that you want to purchase in the search box. The simplest way to make a purchase is to opt for the "Market" trade. All you have to do is type in the number of coins that you want to purchase (in other words, the number of altcoins that you want to trade your bitcoin for) and press 'Buy Market' to place your trade.

A market order allows you to buy altcoins immediately at the best average market price. The convenience of a market order comes at a cost, though.

The biggest downside of the market trade is potential slippage. The price might dip above or below your desired rate, meaning that you can end up with less than you anticipated when your order fills. Moreover, because your order gets filled straight away when you make a market trade, you also have to pay something that's known as taker fees.

Alternatively, you can place a limit order (also known as a bid) which allows you to buy altcoins at your preferred price (or indeed at an even better price).

However, your order will only be filled when (and if) the market reaches the specified price. With limit orders, you're not a taker but a maker. Therefore, you pay a smaller fee (and sometimes no fee at all).

And there you have it. Now you know how to buy altcoins.

Keep your coins safe


Image by MichaelWuensch from Pixabay

Knowing how to buy altcoins is not enough. You also need to know how to store them safely, especially if you're in it for the long haul.

Keeping your coins on an exchange wallet is the number one mistake that you can make as a new trader. Exchanges are convenient, but they're not exactly safe. For starters, exchange wallets are not yours. You don't own them. If anything were to happen to an exchange, you'd have no control over your coins. Your coins could end up frozen or locked away (which occurred when the founder of Canada's largest cryptocurrency exchange passed away).

Moreover, exchanges are vulnerable to hacking. And, once the coins are gone, there's usually no way of getting them back.

Furthermore, cryptocurrencies are not yet mainstream. You might have heard people compare the cryptocurrency world to the wild west. There aren't many rules, and no one is in control. Remember that no centralized entity backs cryptocurrencies. Nor are cryptocurrencies insurable. If you want to keep your coins safe, your best bet is to transfer them to a private cryptocurrency wallet, which is essentially a digital wallet used for sending, receiving, and storing digital currency. Most coins have an official wallet. Your wallet stores the public key (which allows you to receive cryptocurrencies) and the private key (which gives you access to your cryptocurrencies). Keep in mind that wallets don't actually contain any cryptocurrencies. Instead, your wallet stores information that points to your coins' location on the blockchain.

The two main types of wallets that you can choose from are software wallets and hardware wallets. Paper wallets are also an option, albeit a slightly more controversial one.

A simple software wallet will do the trick

Software wallets include desktop wallets, online wallets, and mobile wallets. Desktop wallets are wallets you install on a PC. You can only access them from a single computer. As such, they're very secure. Some say too secure. In other words, if your PC breaks down or gets a virus, you risk losing your wallet.

Online wallets run on the cloud, which means that you can access them from any device. But because a third party controls them, online wallets are more susceptible to hacking than desktop wallets. Mobile wallets are smartphone apps. They're generally more straightforward than desktop wallets.

Every serious trader will need this eventually

Cold storage is hands down the safest way to store highly valuable information, which is why you'll want to invest in a hardware wallet in the long run. Because hardware wallets allow you to store your coins offline, they increase the security of your keys. An excellent example of a hardware wallet is a USB flash drive.

However, there are other hardware device wallets on the market that might tickle your fancy. The Nano Ledger and the Trezor are two examples, but they come at a fairly steep cost (at least when compared to the price of a USB stick).

What the heck is a paper wallet?

You might have also heard of paper wallets, which involve the printing of private keys and addresses onto paper. Some say they're the safest way to keep your coins safe while others disagree and claim that they're obsolete.

You're All Set to Buy Your First Altcoin

woman holding bitcoin

Image by Icons8_team from Pixabay

Now that you know how to buy altcoins, it's time to put your knowledge into practice! There are countless altcoins for you to choose from, and while some of them are scams, most are legitimate.

Remember to do your own research. Don't follow the advice you come across on social media or forums blindly because that's a sure way to rack up useless referral links.

Instead, read up on the premise of the cryptocurrency that catches your eye. Is it solving a real problem? Is it offering a useful service?

Ideally, as the market matures, some of these innovative companies will achieve mass adoption. If that happens, at least some of the coins will be used for their specific purpose (i.e., to gain access to the company's product), thus causing an even bigger explosion in prices. A good strategy is to spread your ownership across a considerable number of altcoins. But remember: Never part with money you can't afford to lose.

Are you interested in cryptocurrency trading? Do you own any altcoins? Let us know in the comments below!

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