If you want to invest in cryptocurrencies other than Bitcoin, you may consider buying altcoins. Altcoins are different kinds of cryptocurrencies. If it is a digital currency that is not Bitcoin, then it is an altcoin. There are thousands of cryptocurrencies or altcoins on the market today. It may be challenging to know where to start. This article breaks the process of buying cryptocurrency down.
As the name suggests, altcoins work like cryptocurrencies, but they can also work like IPOs or utility tokens. For example, some digital currencies like Ethereum’s Ether is a native token or utility token. Ether funds Ethereum’s blockchain projects. So those who own Ether have stock in the Ethereum project.
Altcoin and Cryptocurrency Exchanges
Sending and receiving cryptocurrency is a lot like sending an e-transfer. To send cryptocurrency, you need a digital wallet with cryptocurrency in it and a passkey. The primary difference is that there is no need to share personal information, and the transaction is more secure than a bank e-transfer.
The real advantage of altcoins is the security and anonymity that the technology provides. For starters, if you want to buy cryptocurrency in Canada, the simplest way is to use a cryptocurrency exchange. You can also buy altcoins like Bitcoin or Ether peer-to-peer. To exchange cryptocurrencies peer-to-peer, all you need is to find a willing seller. If you are part of an online cryptocurrency community, you will easily find buyers and sellers.
However, perhaps you do not know any willing buyers because you are new to investing in cryptocurrency. Or maybe you plan on investing in cryptocurrency but cashing out in CAD or USD. In this case, it might be easier to use a cryptocurrency exchange.
Whether you buy, sell, or use cryptocurrency to shop or pay for services, you need a digital wallet. Digital wallets work a lot like banking apps and online banking, except that they are for cryptocurrencies.
Here are several important things to know about digital wallets:
- Not all cryptocurrencies or altcoins are supported by each digital wallet. You may need to have multiple wallets if you use different cryptocurrencies.
- Digital wallets store your secret keys, as the actual coin is a string of data that is stored on a blockchain. When you own cryptocurrency, you own the private key that gives you access to the information. Each time the coin changes hands, a new passkey is created.
- Many exchanges offer built-in digital wallets when you create an account. And if you already own cryptocurrency, you can use that same digital wallet to add cryptocurrency to a new exchange.
- Lastly, it is advisable to store the majority of your cryptocurrency in cold storage. Cold-storage keys keep your secret keys stored off-line on a piece of hardware. Hardware wallets are the most secure way to avoid hacks or attacks.
Here is a list of software wallets that are browser extensions:
Here is a list of hardware wallets:
- Ledger Nano X
- Ledger Nano S
- Trezor Model T
Using an Exchange
Once you have chosen an exchange and created an account, you are ready to start buying altcoins and cryptocurrencies. Here is a list of exchanges where Canadians can buy digital coins. These exchanges accept CAD, and you can fund your account with a debit or credit card.
- Binance Canada: Binance has a global exchange platform and offers the widest selection of cryptocurrencies.
- Bitbuy: Bitbuy is a growing Canadian exchange with reasonable fees and easy funding methods.
- Coinsmart: Coinsmart is Canadian also, and one great feature is users can create cryptocurrency invoices for services rendered.
- Newton: Newton is great for newbies, as they have no fees at all. However, the cryptocurrency selection is limited.
- Wealthsimple: Wealthsimple is a traditional exchange that has recently begun to offer multiple different altcoins and cryptocurrencies.
Consider Your Investment
When investing in any asset, it is important to get a good sense of the market. Cryptocurrency markets offer investors a great deal of potential, both in the long and short term. Also, cryptocurrencies, such as Bitcoin, are very volatile. Volatility has kept the coin at the top of the market for over a decade.
Here are a few questions to ask yourself when choosing which altcoins to invest in:
- Do you want to invest in the resources or something speculative? Bitcoin, like gold, only has speculative value, which means that no resource backs its value. Bitcoin continues to see its value grow. However, it can be expensive to start investing at this time.
- Would you rather invest in a project? Ethereum and Ripple are two highly valued utility tokens. ETH is used to run the Ethereum blockchain platform. And XRP is an ever-growing remittance service. Neither has seen the returns that BTC has, but both show steady growth.
- Are you committed to becoming a trader? You do not need to make crypto-trading your whole job to profit from it. Buying and holding can have steady yields. But if you are invested in the growth of decentralized finance, you may want to look to more obscure cryptocurrencies and even look into automatic and spot trading. If that is the case, start looking at larger decentralized exchanges, such as KuCoin, or Bisq.
Chris Mcdonald has been the lead news writer at complete connection. His passion for helping people in all aspects of online marketing flows through in the expert industry coverage he provides. Chris is also an author of tech blog Area19delegate. He likes spending his time with family, studying martial arts and plucking fat bass guitar strings.