Before you go, check out these stories!

0
Hackernoon logoHow to Buy Altcoins by@devins

How to Buy Altcoins

Author profile picture

@devinsDevin Soni

Safely buying altcoins with the least fees using Coinbase, GDAX, and Binance

Look at how many altcoins he’s getting. That could be you.

Introduction

With so many promising blockchain projects out there, you are doing yourself a disservice by only investing in the Coinbase coins. By buying high-quality altcoins (alternative coins) such as Genesis Vision, ChainLink, and BAT instead, you are able to invest in thousands of early stage companies working on revolutionary technology ranging from advertising, to cloud computing, to artificial intelligence. The potential reward on these smaller coins is often significantly higher than that of a large established coin like Bitcoin, so it is recommended that you buy altcoins, rather than large blue-chip coins, in a small portfolio. In this article I will show you how to safely buy altcoins on a trustworthy, popular exchange with a step-by-step explanation of the process.

General Safety Tips

Throughout this process you will visit several websites and make several accounts. In order to keep yourself safe, there are severals things that I recommend doing. First, do not do this on a public computer or public wifi network (such as in a restaurant). You do not know what private information you are revealing by using a public gateway. Next, when going to a website, be sure that the URL is exactly the one you are looking for; there are many scammers who have very similar domains to the real ones who will steal your information.

Notice the dots under the “n” characters in this fake Binance site.

Finally, when making accounts, be sure to enable 2FA (two factor authentication). This adds an extra level of security to your account beyond the password, often in the form of a text message code or a Google Authenticator code. These help keep your account secure in the event that an attacker obtains your password, as they will not be able to obtain either of those two things because it would require physical access to a device of yours. Be sure to safely note the Authenticator backup code incase you need to reset it or you lose your device.

Step 1: Coinbase Wallet

First, you need some way for your fiat currency to enter the market. As I will explain, the easiest way to do this is to first deposit your fiat from a bank account into the Coinbase USD wallet. If you do not have a Coinbase account already, feel free to use my referral link to sign up (we both get $10 for free if you use it!): https://www.coinbase.com/join/5a241be35d022f0121b103c8.

I recommend connecting a bank account (and not a credit card) as Coinbase has had some issues dealing with card payments. The Coinbase USD wallet is effectively a savings account with no interest, and is FDIC insured. It is therefore viable to leave money in this wallet for medium-long periods of time if you want to be able to quickly act on market movements. Bank transfers take about a week to show up in your wallet, so you will not be able to buy until the money has been transferred. This method is recommended if you believe the price will remain stable or go down in the near future.

Alternatively, if you want to be able to lock in your coins at the current price, such as during the bottom of a dip, you can just buy directly from Coinbase. It charges a 1.5% fee for buying directly like this, but if you believe the price now is significantly lower than what it will be a week from now, you are better off going with this route. You will not have access to your coins for a few days after you make the purchase, but the price will be locked in at what it was when you initiated the purchase. This method is therefore recommended if you believe the price is at a long-term low and will go up in the near future.

If you want a more detailed explanation of the sign-up process, check out my article on how to use Coinbase.

Step 2: GDAX Purchase

Once your fiat arrives in your USD wallet, or you receive your coins if you bought directly, you can then transfer this into GDAX (gdax.com) by using the “Deposit” tab and selecting the Coinbase USD wallet for fiat and the Coinbase [coin] wallet for coins. GDAX is the back-end to Coinbase’s crypto transactions, and is a relatively simple trading interface with a few indicators and a visible order book (depth chart). We use GDAX instead of Coinbase because unlike Coinbase, GDAX does not charge any transaction fees to buy/sell if you use limit orders, and covers any network transaction fees when withdrawing. To buy a coin using your fiat, make a limit buy order somewhere close to (under) the current market price, and wait for it to be filled. Limit orders differ from market orders in that they are not executed immediately; you have to wait until a seller’s order matches your buy order’s price. In practice, if you pick a price close to the market price, this should happen fairly quickly (and if it doesn’t, just close the order and make a new one at a closer price).

Step 3: Transfer to Alternative Exchange (Binance)

Once you have purchased your coins on GDAX, you now need to transfer it to an exchange that has the altcoins you want. There are two main types of exchange: centralized and decentralized. Centralized exchanges, like Binance, are ran like a typical company and often have the coins with larger volume. Decentralized exchanges, like IDEX, are ran using blockchain infrastructure such as Ethereum’s network, and often house a wide variety of small cap coins. Decentralized exchanges are usually more difficult to use and are not recommended for a beginner’s first time buying altcoins, so I will use Binance as the example going forward.

First, make an account on Binance.com (using my referral link https://www.binance.com/?ref=15025598). On Binance, under the “Funds” tab, there is a “Deposits” tab. In that part of the site, you can find your Binance deposit address for whichever coin you are transferring in. Click on “withdraw” on GDAX and enter that address in the “[coin] address” tab. Make sure you copied it correctly (use copy-and-paste) and that you used the right coin’s address — if you have a typo or use the wrong address, you will lose your coins and there is no way to reverse this.

Step 3a: Buy Exchange Token

Once your coins are on Binance, there is an optional step to take before buying altcoins. Exchanges often have their own coins — such as Binance’s BNB — that allows you to save money on fees on that exchange. Binance’s fee, when using BNB, is reduced from the normal 0.1% to 0.05%. To use BNB, just buy a small amount (a few dollars worth) on the market (which I will show in the general case in Step 4) and toggle the button below under your “Account” tab. It will automatically be deducted when you make trades.

Step 4: Buy Altcoins

Finally, you can buy your altcoins. Since very few altcoins have fiat pairings, you will be using the coins you transferred in to buy these coins. On the front page of Binance you will see the following under the heading:

Click on the one for the coin that you want to buy. I will use the LINK/BTC pairing as an example (LINK is an important component to real-world smart contract use, and thus has great upside potential, so I highly recommend buying some). LINK/BTC specifically means that you are going to enter the market in which LINK is traded with BTC. Make sure the second coin in the pairing (BTC in this case) matches up with the coin that you transferred in from GDAX. Once you click on one of these pairings, you will see the following:

To make your purchase, enter the quantity of the altcoin that you want to buy. For each coin, you will pay the price specified on the left (the 0.00006266 number) in BTC (or whichever pairing you are using) and the price on the top ($0.65) in USD. If you do not use BNB, the fees will be taken out of the paired coin used in the transaction.

Step 5: Store in Wallet (recommended)

Once you have bought your altcoin, it will be stored in a wallet in Binance, which can you see by going under the “Funds” tab then the “Balances” tab.

Some people just leave their coins here and end the process, which is safe only if you assume that the exchange will never be hacked (which is certainly possible for a high-quality exchange like Binance). For those who want to be safer and take more control of their coins, you can click on the “Withdrawal” tab and enter the address of your personal wallet that you want to keep your coins in. Keep in mind that Binance will charge a (sometimes hefty) fee for withdrawing your coins. Make sure that you are using the correct type of wallet — if you use a wallet for the wrong platform, you will irreversibly lose your coins. A common choice for an Ethereum wallet, which will hold the majority of coins, is Metamask.

Conclusion

Now you have the necessary knowledge to safely buy promising altcoins with minimal fees. For advice on which coins to buy, I recommend reading a previous article of mine highlighting my top picks for the year. Be sure to always do your own research and invest wisely. With the right picks, the altcoin market can generate extremely high returns even with minimal starting capital. TLDR: Coinbase → GDAX → Binance → BNB → Altcoin → Withdrawal.

Make sure you give this post 50 claps and my blog a follow if you enjoyed this post and want to see more.

To sign up to Coinbase, feel free to use my referral link (we both get $10 for free if you use it!): https://www.coinbase.com/join/5a241be35d022f0121b103c8

To sign up to Binance, feel free to use my referral link: https://www.binance.com/?ref=15025598

Tags

Join Hacker Noon

Create your free account to unlock your custom reading experience.