How to buy Altcoins?
If you are just starting out and have ZERO knowledge on how to buy cryptocurrencies, then READ HERE first.
What are altcoins?
Altcoins are alternative cryptocurrencies, launched after the success of Bitcoin. Unlike a major stock exchange where you can purchase all sorts of stocks, there is no single exchange that has all the different altcoin cryptocurrencies. Each exchange lists its own coins, so some coins may be available on numerous exchange, while some lesser known coins can be found only on one or two exchanges. To find out what exchanges they are listed on, simply check on Coinmarketcap.
1. Choose your coin and exchange
Select a coin you want to buy and check it at Coinmarketcap. Check the available pairs and which exchange (Some only have BTC, some only ETH, some both). You do need to have an account on those exchanges, so ensure you already have registered one and have verified if required. Or if you want something more user-friendly, just use Coinscanner.
2. Buy a ‘core’ coin that can be used to trade for the altcoin
At a fiat-to-crypto exchange: Use money to buy a ‘core’ coin, like Bitcoin, Ethereum, or Litecoin. These are the common coins that would allow you to buy other altcoins usually. Eg, spend $500 on BTC/USD to get $500 worth of BTC. Send the the BTC to the other exchange which lists the altcoin before you go to the next step.
3. Use the ‘core’ coins you just bought to buy your altcoin
At a crypto-to-crypto exchange: Use the BTC you just bought and sent over, and exchange it with the coin of your choice. Eg, XRP/BTC
4. Safekeeping (Optional)
Transfer the coin out from the exchange to a private wallet.
That’s about it in a nutshell. If you want to cash out, you would have to do the same thing but reverse. Change your XRP to BTC, send the BTC to the fiat-to-crypto exchange, then change your BTC to USD (selling it).
Okay this is really confusing.. Can you break it down for me?
Let me give a detailed example.
1. Choosing my exchange
First, I check the exchanges for XRP in coinmarketcap; I see quite a few options for me. There’s a way to directly buy XRP with fiat as I see some XRP/USD pairs. These pairs are listed on Bitfinex, Bitstamp, Kraken etc. However, let’s say I don’t have verified accounts on any of those exchanges, or I’m still waiting to be approved. I only have Coinbase and Binance for now.
There’s no Coinbase listing there, but there are Binance ones. I see 2 pairs under Binance: XRP/BTC and XRP/ETH.
Now between the two, I would choose to use Ethereum and buy XRP/ETH as it has faster transaction times and lower transaction costs. So now I got to get some ETH first.
2. Buying my ‘core’ coin – ETH
I go to Coinbase to buy some ETH. Assuming I have already deposited funds inside, I just go to BUY tab and buy ETH/USD. Remember that there will be some fees incurred, so don’t expect the full amount in coins. The new ETH should be in your funds/wallet. Go over there to check the balance.
3. Sending the ‘core’ coin to the altcoin exchange
We now need to send ETH to Binance because we want to buy XRP there with our ETH. In your Coinbase wallet/funds, you will see a send/receive option.
The address for you to deposit the coins in (in this case, this address is for ETH ONLY. EVERY ADDRESS IS FOR ONE SINGLE TYPE OF COIN ONLY! Read here for more info). So if you want to send coins from elsewhere to your Coinbase wallet, this is what you should use. The below is my ETH address, so don’t put that in (unless you want to donate some to me, which is very welcome :))
Over here, YOU put in the address that you want to send the coins to (hence, withdrawing out from this wallet). Think of it as you are sending your friend a letter, so you need to enter your friend’s home address. Well, so what address do we put here?
We know we want to buy XRP using ETH in Binance, so this means we need to send the ETH from Coinbase to Binance first. So we have to log in our Binance account, go to Funds > Deposit, search for ETH coin, and copy the ETH address. This is where our ETH will end up in!
Go ahead and paste this address in Coinbase > Send.
Be very very very sure you have got the right addresses, and that those addresses are for the correct coins, otherwise your coins might be lost forever!
These transactions are not instant, and might take awhile to complete, especially with Bitcoin. But at the very least you should be able to see the transaction on Binance, showing an incoming ETH amount. Now all you have to do is wait for the network to confirm your transaction. With ETH, it’s usually about 5 minutes, but can be longer at times due to congestion.
4. Buying the altcoin
Alright, now we have ETH in our Binance account! The next step is fairly simple. Similar to how we bought ETH/USD, we shall now buy XRP/ETH. Go to the ETH tab under markets and search for XRP, and find XRP/ETH. Either do a market order or limit order, and buy XRP with your ETH.
Once the order is filled, you should see your new XRP coins in your wallet! Yayyyy! From here, you can choose to leave it here in Binance (not recommended), or transfer it out to hot/cold storage. Read here for more info on storage.
*This article is intended as educational material and not as professional financial advice. As always, do your due diligence and research. Remember, only invest what you can afford to lose!