With thousands of circulating cryptocurrencies, it can be hard to wrap your head around everything that is going on – what are all these coins alongside Bitcoin anyway? At the moment, there are over 2000 cryptocurrencies listed on different exchanges and growing. There is no way one could research all these projects. Yet, sooner or later, you may stumble into a great investment opportunity. So how do you buy Altcoins?
Knowing astronomical crypto returns, you may not want to pass it. However, buying lesser-known altcoins is more complicated and riskier than it appears. Fortunately, you came to the right place, as this guide shows you how to purchase altcoins safely in 2019.
Answering the Question, “What Are Altcoins?”
In 2009, Bitcoin was the first cryptocurrency to enter circulation. As of the genesis block’s inception, these were its constants:
- There can be only 21 million Bitcoins.
- New coins are produced every 10 minutes.
- Bitcoin is mined and secured by enormous quantities of computing power.
- It is designed to be means of payment.
Clearly, Bitcoin fits into a certain market with well-defined criteria and a specific use case. However, Bitcoin’s groundbreaking technology opens the door to a plethora of new possibilities. Although it is the first totally decentralized digital currency, Bitcoin also sets the path for a rich ecosystem of alternative initiatives and cryptocurrencies.
Many forward-thinking business owners and tech forefathers see thousands of ways in which distributed ledger technology (DLT) can alter the course of human history. Here’s when ‘altcoins’ come in handy.
Alternate coins, or “altcoins” for short, are a type of digital currency. Every digital currency that is not Bitcoin fits the definition of this word. Ethereum, Litecoin, Ripple, Tron, Verge, EOS, and everything else are all instances of popular altcoins.
So-called “altcoins” often consist of “forks,” or direct copies, of Bitcoin’s original open-source code. Other initiatives are little more than money grabs or unproven theories. Nevertheless, there are also numerous promising new companies, each with its own distinctive value proposition, solutions, and characteristics. You have to separate the useful information from the fluff.
Types of Coins that Are Most Common
Keeping track of the countless new cryptocurrency ventures is a daunting task. For convenience, let’s divide crypto assets into five classes:
Currency in digital form
Cryptocurrencies, digital coins, or currency tokens are a type of digital currency created to permit secure, instant payments between individuals. This includes Bitcoin and a plethora of similar cryptocurrencies. Many of them even emerged from minor tweaks to the original Bitcoin code.
Litecoin, Bitcoin Cash, Dash, Zcash, and many others are examples of alternative cryptocurrencies. Some other forms of digital currency are entirely new creations. Despite their differences in method, cryptocurrencies like Monero, Bytecoin, Ripple, Stellar, Nano, and related projects all aim to accomplish the same thing.
These tokens are used to unlock features, services, and other benefits within a platform in exchange for a fee. Coins for use in a certain app may also go by another name. Utility tokens are typically issued on a particular blockchain or DLT platform (like Ethereum) and disseminated through ICOs. To raise money for a new venture’s development, ICOs are used.
Tokens for the platform are distributed to the ICO backers. Token holders in these projects may be given the right to vote on key governance issues or the opportunity to stake their tokens for additional incentives. The Basic Attention Token (BAT), Golem (GNT), Status (SNT), Revain (R), and Augur (XAU) are all instances of utility tokens (REP).
Tokens as a Form of Security
Tokens representing a stake in a company or an interest in a business provide investors a stake in a project. Bitcoins, for example, might be seen as digital shares of a corporation and, in some situations, its holders are even eligible to receive dividend payments. However, many ICOs for security tokens were scrapped because of government oversight. But they are getting more and more popular.
Security tokens are popular among investors because of the benefits they provide, while projects can take use of the investor’s cash. Keep in mind that tokenized securities are not the same thing as security tokens. The first is a token that represents an existing asset on a blockchain, while the latter is a security that is issued on the ledger.
What what constitutes a security token has been the subject of much debate and remains something of a nebulous concept. The Howey Test is used by some regulatory agencies, including the SEC in the United States. The token is tested against the following requirements for security:
- Money is being put into it (or other assets).
- This is an investment in a joint venture.
- It is common practice to count on financial gain from other people’s efforts.
The federal government can regulate equity tokens if they are considered securities. The issuance process for security tokens is distinct, and is known as a Security Token Offering (STO). Security tokens are not traded on conventional cryptocurrency exchanges after they have been issued.
Accredited investors are the only people who can trade these tokens on the specialist security token exchanges. BCap (Blockchain Capital), Science Blockchain fund, and Lottery.com are three of the most prominent examples of tokenized equities. Polymath (POLY), Harbor, Securitize, and Swarm are just a few of the projects that aid businesses in introducing STOs.
Coins that represent assets
Commodities such as fiat cash, gold, oil, and others serve as backing for asset tokens. They represent an electronic token that is backed by real-world assets. Therefore, unlike conventional cryptocurrencies, the value of most asset-backed tokens remains rather constant. Asset tokens present a fresh application of blockchain technology, and their popularity is expected to increase in the next years.
They facilitate the acquisition of goods with reduced logistical and transportation expenses. Tether (USDT), TrueUSD (TUSD), and Digix Gold Token are all instances of asset-backed tokens that have gained popularity (DGX).
Coins as Rewards
Tokens of merit are a means by which members of an ecosystem can demonstrate their standing. As with utility tokens, they can only be used on a given platform, but rather than having to pay for them, users can earn them by activity.
In most cases, their purpose is to encourage users to carry out activities that contribute to the ecosystem’s functioning. However, they are exchangeable for other currencies. Steem (STEEM), Lympo (LYM), and BitDegree are three great instances of reward tokens (BDG).
Some tokens and coins are difficult to classify since they overlap with numerous different types. Furthermore, there is a subset of cryptocurrencies that serves no discernible function at all. Those attempts are commonly referred to as “funny coins.”
Joke coins function like currency and can even be redeemed for prizes. Even though they can be transferred between users and exchanged for real currency, the vast majority of these tokens were made for amusement only.
Not all of them are legitimate investments; some of them are just scams designed to make you rich quickly. Dogecoin (DOGE), Coinye (Kanye West), PonziCoin, and Litecoin are all examples of joke coins (PONZI).
Altcoins: The Most Common Varieties
It is simpler to acquire some alternative cryptocurrencies than others. It’s simple to obtain them because they’re traded on a variety of markets. So, Litecoin (LTC) may be bought and sold on at least 150 different exchanges. The Ripple cryptocurrency (XRP) is traded on over 110 markets. Monero (XMR), the most widely used privacy coin, is traded on more than 50 different platforms.
While some altcoins have gained significant traction, others have not. It can be a long process for new projects and their associated altcoins to get listed on major exchanges. It is significantly more difficult to acquire lesser-known coins because they are often offered on only one or two exchanges with a dubious reputation. In order to acquire certain, lesser-known altcoins, you will likely have to open accounts with various exchanges.
Method for Buying Altcoins (and Where To Buy Altcoins)
How do you decide which alternative cryptocurrency exchange is best for you?
The best approach is always conditional on your specific needs. Are you a cryptocurrency investor or do you currently own any? Do you have access to foreign currency? Step by step, let’s get you some alternative cryptocurrencies.
To begin, pick a trustworthy cryptocurrency exchange where you can convert your fiat currency.
Altcoins are typically traded against Bitcoin or Ethereum on cryptocurrency exchanges. Alternate cryptocurrencies can be purchased with these. It may be necessary to open an account with many cryptocurrency exchanges and move funds between them in order to accomplish your goals. However, it’s not hard to do, and the benefits usually justify the effort. Therefore, if you are just getting started with cryptocurrencies and don’t yet have any Bitcoins or Ether, let’s go back to square one.
Get started by signing up for a gateway service. A gateway service, often known as a fiat-to-crypto exchange, allows users to convert fiat currency into cryptocurrency. Crypto.com exchange is one of the easiest places to purchase, sell, trade, and fill your account with cryptocurrencies, in our opinion. In addition, you can use the Crypto.com app and debit card to make everyday cryptocurrency purchases.
There are a few other trustworthy and user-friendly fiat-to-crypto platforms besides Coinbase (exchange review), eToro (broker review), and Binance (exchange review).
Look for a service that matches your demands and is not blocked in your jurisdiction and pay attention to the deposit and transfer fees. Fast credit/debit card transfers may be available through certain gateway exchanges or brokers; however, these transactions typically incur higher fees than standard ones. Find out whether they have any markets for cryptocurrencies, too. Most businesses always work on listing additional coins, so if you are lucky, you might find a sought altcoin listed on an accesible fiat-to-crypto platform. If that’s the case, you should just go ahead and buy it locally.