Feeling like you have missed the boat with Bitcoin? Do not fear; Bitcoin is just a tip of an iceberg. Currently, there are more than 1000 cryptocurrencies referred to as altcoins, bringing their value to the market.
Newbies to the crypto arena often have questions about why are there so many types of altcoins in the cryptocurrency world, what are they, how do they work and why do they exist?
Well, these are electronic currencies with their own wallets, miners, and blockchain.
Therefore, there are different varieties of altcoins, with new ones coming onto the crypto world all the time.
Find out more as this article will tackle some of the questions above, and you can choose whether to invest in your altcoins.
What are Altcoins?
The reward on these smaller coins is often higher than that of a largely established coin like Bitcoin; therefore it is recommended that you purchase altcoins.
But what are they?
An altcoin is any digital cryptocurrency other than bitcoin. The term altcoin stand for an alternative to Bitcoin, and it is used to describe any cryptocurrency that is not a Bitcoin. They may differ from Bitcoin in every possible way such as coin distribution methods, the ability to create decentralized applications or mining mechanism.
Furthermore, there are many different altcoins, i.e., there is an altcoin that is more private, there is an altcoin that is less volatile, there is an altcoin that makes fast transactions, etc.
According to coinmarket.com, there are more than one and a half thousand altcoins on the market on this day. Therefore altcoins are playing a very crucial role by expanding the boundaries of blockchain possibilities and the scope of applications.
So, where to buy altcoin
Step 1: Buying bitcoin with fiat currency.
For you to purchase altcoins, you need to go from fiat currency to digital currency. Currently, there are few coins that you can buy directly from USD, therefore, buying bitcoin is the best way to go. To do this, you need to use coinbase.com to exchange your fiat currency for bitcoin. Coinbase is the largest bitcoin exchange. Therefore, investors recommend it as it is the best and easiest way for you to buy cryptocurrencies.
Step 2: How to trade Bitcoin
Now that you have bought your bitcoin, what can you purchase with it?
You need to find the exchange that your chosen altcoin can trade on. An excellent site to find the best exchange is the gdax.com. However, there are other alternative exchanges that you can use such as bittrex.com or binance. For more on the cryptocurrency exchanges, you can view coin market to get a full list of the exchanges.
Once you have created an account with the exchange, you will need to deposit some bitcoin to buy altcoins with it.
Step 3: Buy token.
You can now purchase your altcoin. Since few altcoins have fiat pairings, you will use the coins you deposited in to buy these coins. Therefore, inside the exchange, click on the market for the coin you want to buy. If you have BTC and want to purchase XRP cryptocurrency, then that is a BTC-XRP transaction.
Step 4: Getting your coin into an altcoin wallet.
Once you have bought your altcoin, you need to get your coin into an altcoin wallet that you control. Some people leave their coins on their exchanges which is safe only if you assume that the exchange will not suffer from hackers.
NB Each coin website recommends wallets to use. Therefore, you need to choose the wallet that is more convenient to you.
Step 5: Keeping your coins into a cold storage wallet.
However, you will need a hardware wallet where you keep your private keys such as the Trezor or Ledger Nano S. The cold storage wallet will safeguard your coin from hackers and scammers as you will be in total control of the wallet of the exchange.
Examples of biggest altcoins
• Ether: It is a cryptocurrency produced by the Ethereum platform, and this cryptocurrency is often also known as Ethereum. The Ethereum platform is a ledger technology, and other companies can build on, for instance, crypto kitties use the Ethereum platform.
• Bitcoin Cash: Bitcoin cash has initially been a part of Bitcoin. However, it is now a separate currency, despite the name. The bitcoin cash has architectural changes that lead to low fees and to fast transactions as compared to Bitcoin.
• Monero: It is designed to be untraceable, secure and private. It is different with Bitcoin, transactions on the blockchain cannot trace back to individual users.
Beware of scamcoins
You need to be careful when you decide to invest your money in these altcoins. Not all of them have such creditable goals. There have been many altcoins launched in the last years, and most of them fall into a category known as scamcoins. Scamcoins are coins intended to make a profit for their inventors.
Typically, the inventors will announce the coin on popular cryptocurrency platforms with little warning. Therefore, scamcoin inventors try to gain the people’s support for their coins, by encouraging them to use their computers to mine them.
If creators find people to begin trading their scamcoin, they then spread lots of news about their scamcoin to accelerate its value. At this point, the inventor will sell all their coins, take their money and withdraw from the market, leaving the scamcoin to dissolve, with no technical support.
Therefore, you need to be careful when you decide to invest in these altcoins.
In conclusion, the success of bitcoin as the first digital currency created a way for many to follow. However, many altcoins now target any perceived limitation that bitcoin suffers and try to come up with newer ideas with competitive advantages.