How To Buy Altcoins in USA
Alright, so you want to buy some altcoins. First things first, a quick crash course on buying crypto in general.
Cryptocurrencies are bought through exchanges. Once you’ve signed up with one, you can log in, and use your preferred payment method to buy and trade cryptocurrencies on the crypto exchange.
Our favourite exchange is Coinbase, it’s easy to sign up and they have an incredible app which makes trading a breeze.
How To Buy Altcoins
- Register for an account with Coinbase.
- Verify your identity/account.
- Choose a payment method.
- Click the “Trade” button.
- Enter the amount USD you want to trade for your favorite coin.
- Review the details.
- Click “Buy X coin”
How To Get Started With Coinbase
Setup Your Account
As mentioned above, Coinbase is our go-to for trading cryptocurrencies in the USA, definitely if you're starting out. It's the most trustworthy exchange available and it makes trading buying and selling coins incredibly easy.
Verify Your Account
Before you do anything on Coinbase you'll have to verify your account. It has the fastest verification process we've tested so it won't take long.
Click on "Verify your account"
You'll have to verify your email, mobile number and identity to begin trading.
You will then have to fill in all of your personal information including documents, don't be alarmed uploading this information, every exchange requires it. It's to ensure your safety and make everyone on the platform accountable.
Add a payment method
You'll first need to add a payment method so you can buy an sell cryptocurrency. You can also deposit Bitcoin straight into the platform if you already have some and would prefer trading with that.
Click on "Add payment method" or the Trade button in the top right which will take you there as well.
Once your account is verified and you've added a payment method, you can start buying and selling cryptocurrency.
Click on the blue Trade button in the top right
Then you can click on the coin name to see all the possible cryptocurrencies you can buy/sell.
Once you've decided what you want to buy you can indicate how much USD you want to buy.
Easy as that! You now have bought some cryptocurrency.
Where To Buy Altcoins
We highly suggest using Coinbase to buy and sell Cryptocurrency. We've done a comparison of the top 10 exchanges in the world for the US to use and Coinbase clearly deserves the top spot.
What Are Altcoins?
Even though Bitcoin is the most popular digital coin, it is by no means the only one on the market. There are many alternatives to Bitcoin, and these other cryptocurrencies are called “altcoins”. This isn’t the name of one particular coin but rather an umbrella term for all Bitcoin alternatives.
Altcoins are built in pretty much the same way as Bitcoin and take advantage of the same technology. The individuals, teams, or companies behind these coins usually create a new blockchain and a separate network for the expansion of their altcoins. Sometimes, however, these coins can be built on top of other coins (more on that later). These networks have their own validating nodes and miners. Some of them include their own digital wallets too.
Even if most of their features are more or less the same, i.e. they provide a more efficient and less costly way of making online transactions, each of them has some additional properties and specifications that set it apart from the others.
Why Do We Need Altcoins?
According to CoinMarketCap, there are more than 5,100 cryptocurrencies in circulation at the moment! You’re probably wondering why do we need so many digital coins on the market? Isn’t Bitcoin enough for the purpose of online payments? Not really, or at least, not anymore.
The constant advances in technology and certain flaws and limitations of Bitcoin are the main reasons for the emergence of altcoins.
Bitcoin and blockchain technology were launched in 2009 by Satoshi Nakamoto who created the Bitcoin protocol and applied his own rules to the electronic payment system.
For example, it takes around 10 minutes for a new block of data to be mined on the Bitcoin blockchain, and the network is only able to process 7 transactions per second. As a result of Bitcoin’s popularity across the world, the mining difficulty has been increased and Bitcoin miners now have to use more expensive mining gear such as ASICs to generate enough computing power. This means that mining Bitcoins is becoming less accessible to the average trader.
Nakamoto also decided to set the upper limit for Bitcoin at 21 million coins in order to prevent inflation and ensure scarcity. This is why the mining reward is being halved every four years and why the blockchain updates the mining difficulty, making it impossible for users to mine all bitcoins at once.
Unfortunately, the software development team is not prone to make a lot of changes to the original Bitcoin protocol. Bitcoin already has an impressive market capitalization and has been accepted by a lot of businesses that will be affected by such changes. Instead, altcoins have taken upon themselves to improve on Bitcoin’s shortcomings.
A common misconception about altcoins is that they’re short-lived and unsuccessful in the long run. Litecoin is here to prove the exact opposite! As one of the most popular altcoins, this cryptocurrency has got the name “Bitcoin’s silver”.
In the past, gold was kept as a store of value while silver was used for day to day purchases. The same thing can be said for Bitcoin and Litecoin. Bitcoin is often seen as a long-term investment, whereas Litecoin is better suited for small everyday transactions, like buying yourself breakfast or doing some grocery shopping.
Litecoin has a larger supply than Bitcoin with 84 million coins in total. It uses a completely different hashing algorithm for mining coins and verifying transactions, called script algorithm. This allows the blockchain to process up to 56 transactions per second! That’s why transactions are faster in general and incur lower fees.
Another popular cryptocurrency is Ether, better known under the name of its platform, Ethereum. It’s the second-largest cryptocurrency by market capitalization. Vitalik Buterin, Ethereum’s founder, was one of the earliest developers to see the immense potential of the blockchain technology and create an infrastructure that would support a native currency but also be used for building new altcoins on top of it.
Ethereum made it possible for users to create smart contracts and decentralized applications (DApps) fueled by its native token, Ether. It showed that digital coins can be more than just electronic money. Vitalik’s example was followed by other coins, most notably by NEO, a China-based digital asset that took over the Far East market and developed the use of smart contracts even further.
Pros and Cons
The main disadvantage of altcoins is they tend to be volatile and have low market capitalization at the start. This allows more experienced traders to manipulate the novices by running up the price of the altcoin. This method or scheme is known as “pump and dump”.
A group of investors, known in the crypto community as “whales”, i.e. wealthy traders, start purchasing large amounts of a certain altcoin with a low market cap because that way it’s easier to manipulate its price. Then, they start convincing newbies that there’s a way for them to get rich easily by investing in that particular altcoin. Because of the low trading volume, even a small amount of buying power can inflate the coin price.
Once the price has been pumped up significantly, the whales sell all their coins and dump the price leaving the hoodwinked traders at a loss. In regular financial markets, this thing is punishable, but the crypto market still remains heavily unregulated.
However, speculating on the price of a new coin and making small investments can also be fun and enjoyable. As long as you’re careful not to put all your savings into such a risky asset, you might make great profits in the long run. Think about the initial Bitcoin investors who bought the coin when it was worth just a few pennies. Those who decided to hold on to their coins made great money after a couple of years when Bitcoin’s price skyrocketed to $1,000 and more.
But this is just one of the many uses we’re yet to discover and apply to digital coins. Among you, there might be developers who see altcoins as fuel for other projects that would transform our economy into a “smart economy”, such as smart contracts and decentralized applications.
Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.