How to Buy Altcoins Like It’s 2017

I first published this back in the summer of 2017 in the first altcoin cycle. It’s now updated for 2025.

What Are Altcoins?

Altcoins represent all cryptocurrencies other than Bitcoin. Bitcoin’s dominance in the market makes its alternative counterparts particularly intriguing. Over 5,000 altcoin options exist today, creating diverse opportunities for investors. For instance, Ethereum stands out as the largest altcoin, comprising nearly 20% of the total cryptocurrency market cap.

Many altcoins evolve to enhance or offer different features compared to Bitcoin. Specific projects focus on unique functionalities, while others aim to solve existing problems. Examples include Ripple, which facilitates fast, low-cost international payments for financial institutions, or Litecoin, known for quicker transaction times and a distinctive hashing algorithm.

Besides, altcoins provide various use cases, appealing to a broad spectrum of investors. Some prioritize privacy, while others focus on scalability or community engagement. Each project exhibits different levels of adoption and network effects, contributing to a vibrant world within the crypto market.

Understanding Altcoin Exchanges

Altcoin exchanges serve as gateways for buying, selling, and trading alternative cryptocurrencies. Familiarizing myself with different types of exchanges enhances my trading experience considerably.

Centralized vs. Decentralized Exchanges

Centralized exchanges (CEXs) operate under the management of companies, featuring robust customer support and easy-to-navigate interfaces. Beginners find security and speed as advantages of using CEXs, which execute trades quickly with high liquidity. Users relinquish control of their funds to these platforms, which can introduce security risks, including hacking or regulatory scrutiny. In contrast, decentralized exchanges (DEXs) allow direct trading among users, giving full control over funds and private keys. Although DEXs offer higher privacy and security, they often disrupt the user experience due to lower liquidity and complexity.

Types of Exchanges for Altcoins

Several types of exchanges cater to specific trading preferences and needs. I can differentiate among centralized exchanges, decentralized exchanges, and peer-to-peer (P2P) platforms.

1. Centralized Exchanges (CEXs): These platforms, such as Binance or Coinbase, provide features like fiat currency conversion and structured fees. High liquidity characterizes CEXs, enabling fast executions of trades.
2. Decentralized Exchanges (DEXs): Platforms like Uniswap enable trading directly through smart contracts. Users retain possession of their private keys, enhancing security while reducing reliance on third-party intermediaries.
3. Peer-to-Peer (P2P) Exchanges: These exchanges help direct trading between buyers and sellers. Individuals can negotiate terms and payment methods, offering flexibility, but risks may arise if counterparties lack trustworthiness.

Understanding these exchanges empowers me to make informed decisions while trading altcoins.

How to Buy Altcoins

Buying altcoins is a structured process that involves several essential steps. Follow these steps for a smooth purchasing experience.

Step 1: Choose a Suitable Exchange

Selecting the right exchange is crucial. Look for exchanges with high liquidity, as this allows for quicker buying and selling at predictable prices. Security also matters, so choose platforms with robust measures like two-factor authentication and encryption. Consider reputable exchanges known for their compliance with regulations, such as Binance, eToro, and Coinbase, to ensure a safe trading environment.

Step 2: Create and Verify Your Account

Creating an account involves providing personal information. Complete the registration process by confirming your email address and setting a strong password. Verification typically requires documents like a government ID and proof of address. Completing this step increases security and ensures compliance with regulations.

Step 3: Fund Your Account

Funding the account can be done through various methods. Deposit options might include bank transfers, credit cards, or cryptocurrencies. Check the available funding methods on the exchange to choose the most convenient one for your situation. Transaction fees can vary, so consider these when selecting your funding method.

Step 4: Select Your Desired Altcoin

After funding your account, it’s time to browse through altcoin options. Use the exchange’s search bar to find specific altcoins like Ethereum, Litecoin, or Cardano. Analyze each altcoin’s price history and performance to make informed decisions. Understanding potential use cases enhances your ability to pick an altcoin that aligns with your investment strategy.

Step 5: Execute the Purchase

Executing the purchase involves placing an order for the selected altcoin. You can choose between a market order for immediate buying or a limit order to purchase at a specific price. Review your order details thoroughly before confirming. Once the transaction processes, the altcoins will be credited to your exchange wallet.

Step 6: Keep Your Altcoins Secure

Securing your altcoins is essential for long-term investment. You can choose to keep them in the exchange wallet for easier trading or transfer them to a personal wallet for added security. Hardware wallets provide the highest level of security for long-term holding. Regularly update your security measures to protect your investments from potential risks.

Key Considerations When Buying Altcoins

Several important factors impact altcoin purchases. These considerations play a significant role in making informed investment decisions.

Researching the Altcoin Project

Understanding the altcoin project is crucial. I focus on the use case, which reveals the specific problem the project addresses. A compelling use case often indicates a strong potential for success. Next, I examine the tokenomics, including the distribution and supply limits. Knowing how the tokens are allocated between the founders and the community helps me assess their potential value appreciation. I also check the lock-up period for the founders’ tokens, as a longer lock-up period signals their commitment to the project. Finally, I research the founding team’s background and reliability. An experienced team with a good reputation adds to my confidence in the altcoin’s future.

Understanding Market Trends

Market trends greatly influence altcoin prices. I analyze broader cryptocurrency market behavior, noting that altcoins tend to perform better when the overall market is bullish. Many altcoins experience significant volatility, especially those with smaller market caps. Tracking news and developments is essential, as hype can lead to dramatic price fluctuations. A single tweet or trending topic can shift investor sentiment rapidly. Staying informed allows me to make timely decisions based on current trends and sentiment.

Assessing Risks and Rewards

Assessing the associated risks helps me gauge potential rewards. Many altcoins present opportunities for substantial returns, but higher reward potential often comes with increased risk. I evaluate the market behavior of my chosen altcoins, considering how they perform in varying market conditions. Diversifying my portfolio mitigates some risks, as different altcoins can react differently to market shifts. Understanding the project’s long-term sustainability further informs my investment strategy. Balancing potential rewards with corresponding risks is key to making successful altcoin investments.

Conclusion

Exploring the altcoin market can be an exciting journey filled with opportunities. By understanding the different types of altcoins and the exchanges available, I’m better equipped to make informed investment choices.

Researching each altcoin’s project and market trends is essential for maximizing potential returns while minimizing risks. I’ve learned that diversification is key to a balanced portfolio in this dynamic world. As I continue to explore and invest in altcoins, staying updated on security practices and market developments will help me safeguard my investments and seize new opportunities.

Frequently Asked Questions

What are altcoins?

Altcoins are cryptocurrencies other than Bitcoin. They offer unique features and functionalities and include over 5,000 options available for trading. Popular altcoins include Ethereum, which is the largest, and others like Dogecoin and Ripple, catering to diverse investment needs and enhancing portfolio diversification.

What are the main types of exchanges for buying altcoins?

There are three main types of exchanges: centralized exchanges (CEXs), decentralized exchanges (DEXs), and peer-to-peer (P2P) exchanges. CEXs, like Binance, are user-friendly but may have security risks. DEXs, such as Uniswap, offer privacy and security but are more complex. P2P exchanges facilitate direct trades between individuals.

How do I buy altcoins?

To buy altcoins, choose a suitable exchange with high liquidity, create and verify your account, and fund it. Research and select your desired altcoin based on price history, then execute the purchase using market or limit orders. Store your altcoins in secure wallets, preferably hardware wallets for long-term holding.

Why should I invest in altcoins?

Investing in altcoins can diversify your portfolio beyond Bitcoin, potentially enhancing returns. Many altcoins focus on different use cases, such as privacy or scalability, and can perform well in bullish market conditions. However, it’s essential to research and assess associated risks before investing.

How do I choose the best altcoins for investment?

To choose the best altcoins, consider their market capitalization, project fundamentals, and performance history. Research the altcoin’s use case, tokenomics, and the background of its founding team. Evaluating the broader market trends can also help identify promising altcoins for investment.

Disclaimer: Nothing here is financial advice, it is for informational purposes only.