Since launching 12 years ago, Bankless Times has brought unbiased news and leading comparison in the crypto & financial markets. Our articles and guides are based on high quality, fact checked research with our readers best interests at heart, and we seek to apply our vigorous journalistic standards to all of our efforts.
BanklessTimes.com is dedicated to helping customers learn more about trading, investing and the future of finance. We accept commission from some of the providers on our site, and this may affect where they are positioned on our lists. This affiliate advertising model allows us to continue providing content to our readers for free. Our reviews are not influenced by this and are impartial. You can find out more about our business model here.
Invest in Altcoins in 2024
If you are planning to invest in cryptocurrency, you should know there are many of them. Altcoins are alternative cryptocurrency tokens to Bitcoin.
Bitcoin was the only cryptocurrency token when it was released, but after a few years of market domination, several rivals started to pop up.
This guide will explain what are altcoins, how to invest in altcoins, and how altcoins work. Also, we will show how different ways to buy altcoins.
Best Ways to Invest in Altcoins in 2024
There are numerous ways to invest in altcoins in 2024. To make things easier for you, we have hand-picked a list of the best providers. If you would like to learn more, check out our guide on the best cryptocurrency brokers.
What Are Altcoins
An altcoin or “Altcoin” is a combination of the two words “alternative” and “coin” and refers to any cryptocurrency token that is specifically not Bitcoin. Today, there are thousands of new cryptocurrencies popping up almost on a daily basis, many of which leverage blockchain technology to solve some kind of real-world problem. However, this has remained and is the true definition of what altcoins are.
Bitcoin is still the largest cryptocurrency token in terms of market capitalization; however, it paved the way for altcoins to be introduced to the cryptocurrency market.
Pros and Cons of Investing in Altcoins
- Altcoins offer high potential returns, especially if you get to them at an early point in the project’s development. There is a large selection of altcoins, all of which have their own unique properties as well as competitive advantages.
- Altcoins have significantly higher levels of risk, and some of them historically have even been scams. Many altcoins can also be difficult to purchase due to the fact that they are available on very specific crypto exchanges.
How Do Altcoins Work
Altcoins typically have the same premise as Bitcoin, and this is to take advantage of blockchain technology. This allows and records a transaction only when there is consensus that the transaction in question is truly legitimate. Many altcoins have taken this and have brought it to the next level by achieving different goals, and others have become layers that work on top of pre-existing blockchains with the goal of improving their functionality.
Ethereum, for example, is the second-largest cryptocurrency token in terms of market capitalization. Instead of just recording transactions on the blockchain, Ethereum records agreements which are introduced in the form of smart contracts.
This means that Ethereum leverages these smart contracts, which are essentially computer programs that execute automatically when predetermined conditions are met. Smart contracts are able to replace intermediaries like middlemen in insurance, banking, and other types of management.
That being said, there are a lot of different altcoins, many of which solve different issues. But they can be categorized as native cryptocurrencies, tokens, stablecoins, and forks.
Native cryptocurrencies are the coins that were created to run on a specific blockchain network. For example, Ethereum is a native token.
A token is a unit of value, and it is used to operate an existing blockchain that can be used for specific purposes within that ecosystem or environment. Most of these are mining-based altcoins, which use Proof-of-Work (PoW), a method in which systems generate new coins by solving difficult problems, to create blocks.
Stablecoins, on the other hand, are altcoins that are developed to offer advantages of cryptocurrencies without the price volatility associated with them. These are typically pegged 1:1 to the U.S. dollar. Tether is a notable example here, as 1 Tether will always equal 1 USD. These are not intended to help you as an investor earn a profit through price appreciation. However, they can easily transfer money on a global scale without losing money due to volatility throughout the transfer process.
Forks can happen when the nodes within a cryptocurrency network decide not to upgrade to the latest version of the code. This is due to the fact that groups of recorded transactions are organized into blocks, and each block is connected to the next through a complex level of cryptography. For a new block to be added to the existing chain, all previous transactions must be verified, leading to consensus. When a group decides to change the rules, they can validate a split in the chain, which is a fork. This way, a new chain emerges and starts logging the transactions under the new rules. Think of projects such as Ethereum and Ethereum Classic.
Ways to Buy Altcoins
There are numerous ways through which you can buy altcoins. While not all of them will be available on every cryptocurrency exchange or brokerage out there, a lot of them will be made available for you. All you really have to do is find a method that supports the specific cryptocurrency token you have in mind for purchasing.
You can use cryptocurrency exchanges, CFD brokers, P2P marketplaces, or in-person trading.
CFD Brokers:
-
The CFD broker is the intermediary between you, the investor, and the cryptocurrency market and provides you with a trading platform that offers you access to the altcoins that you require and conducts the process of trading the coin in question that you are targeting.
Cryptocurrency Exchanges:
-
Cryptocurrency exchanges allow you to trade cryptocurrencies and give you access to charting tools and other features. Keep in mind that not all of them will have access to the token you require.
P2P Marketplaces:
-
P2P cryptocurrency marketplaces allow you to buy or sell directly with another user. Keep in mind that you need to have a cryptocurrency wallet that supports the altcoin you are interested in purchasing.
In-Person Trading:
-
This is the type of trading where you meet the person you are trading with in person. Both parties would need to have a cryptocurrency wallet that supports the token standard through which the altcoin you desire is built on.
Here is everything you need to know about buying altcoins online.
Step 1: Create an Account and Verify It
First, start by creating and verifying your account at a cryptocurrency exchange or brokerage.
Step 2: Deposit Funds
Second, deposit some funds, either through FIAT methods or if you already own a different type of cryptocurrency, use that instead.
Step 3: Buy Altcoin
Third, search for the altcoin you require, buy it, and you should see it transferred to your account balance.
How To Invest in Altcoins
There is a multitude of ways to invest in Altcoins:
Altcoin Brokers:
-
You can use altcoin brokerages that connect you to the market where the altcoin in question is offered. You will need to create an account with a brokerage, find the altcoin you are looking for, and purchase it. The brokerage in question sets the price for the altcoin you are looking for.
Altcoin Exchanges:
-
Exchanges allow you to invest in altcoins. Keep in mind that within these altcoin exchanges, the market determines the prices of the specific altcoin that you are looking for. You will have to create an account, connect your wallet and buy the altcoin.
Altcoin ETFs:
-
ETF funds which give you access to a diversified portfolio of altcoins tokens that you can trade with— usually at a higher level of transparency and liquidity.
Altcoin Index Funds:
-
You can buy a share of the specific altcoins through index funds instead of investing in the token directly, after which, experts will determine how to invest your tokens.
Altcoin Mutual Funds:
-
You can also invest in altcoins through a mutual fund if you do not want to own the token directly. You can add additional cryptocurrencies and professionally manage them.
Altcoin Trusts:
-
Altcoin trusts essentially hold the altcoins for you and allow you to trade a share of these altcoins through a brokerage or an exchange.
Altcoin Debit Cards:
-
You can purchase altcoins through the usage of a debit card. Connect the card to the exchange or brokerage that you will be using, and you are good to go.
Altcoin Apps:
-
Many cryptocurrency exchanges or brokerages will have their own native mobile application that you can download and install on your mobile device.
Altcoin Wallets:
-
You need to ensure that you have a cryptocurrency wallet that supports the specific altcoin you are interested in. For example, an Ethereum wallet will support the Ethereum token standard.
What Are the Different Ways to Pay for Altcoins?
There are numerous ways you can purchase altcoins, all of which have their pros and cons:
Buy Altcoins with PayPal:
-
As an online wallet, PayPal can be used to deposit, transfer, and withdraw funds to various sites, including exchanges. PayPal primarily deals in fiat currencies, which means this method is only compatible with fiat currency-to-cryptocurrency exchanges and online brokers. However, it has recently taken steps into the cryptocurrency market, opening the door to crypto-to-crypto trading via PayPal.
Buy Altcoins with Bank Transfer:
-
Unfortunately, some countries make it difficult to use your credit card on crypto exchanges and trading platforms. However, bank transfers are another viable option. For example, if you trade with an online broker or exchange, you can send funds from your bank account using the bank’s more convenient payment method. In short, your deposits should be processed within seconds.
Buy Altcoins with Digital Tokens:
-
You can also use the original crypto exchange payment option. Digital tokens are the only available way to purchase other altcoins if you are on a crypto-only form.
Buy Altcoins with Credit Card or Debit Card:
-
Credit and debit cards are the most popular payment methods for exchanges and brokers, allowing you to send funds directly from your bank account.
How to Deposit and Withdraw Via Credit Card
Deposit
To deposit funds into a cryptocurrency broker or exchange, you’ll need to open their dedicated payments section. Then select ‘credit card’ as your preferred payment method and input your details. Afterward, write the amount you want to deposit and click make payment.
Withdraw
Withdrawing fiat currency from your broker or exchange account is a straightforward process because the platform will save your previously used details. Therefore, you can quickly click ‘credit card’ as the withdrawal method, and the platform will send funds to the card you used earlier.
However, if you’re using a different credit card, write your details in the required sections. After, click withdraw, and the money will reach your account within 1-2 days, depending on the platform’s transfer speeds.
What Should I Look for in a Credit Card Altcoin Broker
Fee charges:
-
Some cryptocurrency platforms allow you to purchase altcoins directly with your credit card but apply a transaction fee. Most often, you’ll find that depositing money first and then using the platform’s trading interface results in significantly fewer fees.
Altcoin variety:
-
Those interested in buying altcoins are likely to diversify their portfolio to minimize risk. Therefore, the crypto broker should have a great range of low and high-market cap coins.
Ease of use:
-
The crypto broker should be straightforward to use and provide new investors with informational resources on how to navigate the platform. Also, the site should have easy-to-find features, making your investment journey effortless.
Broker reputation:
-
Established brokers have been in the industry for years, creating a respectable reputation for providing great services. Therefore, you can trust them more compared to other platforms since they have a track record of keeping clients happy.
Security:
-
Perhaps the most important factor is the protection provided by the broker because you want to leave money on the platform knowing it’s safe. Take note of all the security technologies they implement to keep clients’ funds safe. At the very least, they should allow 2-step authentication and incorporate SSL encryption.
What to Consider when Buying Altcoins with Credit Card?
When you make a purchase in a foreign currency, most credit cards charge a foreign transaction fee. For example, if you use US dollars to buy altcoins on an exchange, your credit card company may charge a foreign transaction fee. However, purchasing altcoins with a credit card is still relatively cheap compared to other payment methods.
If you buy altcoins with a credit card, you may also incur a service fee. This cost can vary depending on the type of card you use.
What to Consider When Buying Altcoins?
When buying altcoins, you need to consider a few factors. These include:
Deposit Fees:
-
Different platforms will offer different deposit fees. You should compare deposit fees before creating an account with an exchange or broker. Your payment method may also affect how much deposit fees you have to pay.
Trading Fees:
-
Some platforms will add trading fees. Therefore, you should check the trading fees of your chosen platform (as well as any fees to do with your payment method) before deciding on a platform to buy altcoins.
Volatility:
-
The cryptocurrency market is highly volatile. The value of altcoins will always fluctuate. As such, you are just as likely to make a loss on your investment as you are a profit. However, you can use this volatility to your advantage. Many people purchase altcoins when they are very cheap and hold them until prices are high enough to sell again.
Regulations:
-
If you buy your altcoins through a broker or an exchange, you will want to ensure the platform has been regulated by the country’s relevant authorities. When a trading platform is regulated, they follow certain procedures to minimise the security and safety risks of its users’ funds.
Long-term Holding:
-
This involves purchasing crypto and waiting for its value to rise over time. This can yield significant profit but can also lead to significant losses if the price plummets.
Short-term Holding:
-
You may want to consider short-term holding, which involves purchasing altcoins and selling them within one year. Keep in mind that you will have to pay tax if you profit over a certain amount.
Is It Safe to Invest In Altcoins Right Now?
Cryptocurrencies have a high level of risk because they are highly volatile currencies.
In general, it is safe to buy altcoins, as long as you are security conscious and aware of the potential risks.
You should avoid storing a substantial amount of crypto in your exchange wallet. If the exchange is fraudulent or is targeted by hackers, you’ll lose those funds. Instead, you should opt for a personal wallet which gives you additional security. You may want to purchase a hardware wallet, which can be unplugged from your device and kept securely in your home or a safe.
That being said, many exchanges will use two-factor authentication to limit fraud and protect their users.
Altcoins have additional risk because they are newer projects that are unproven, and some of them could be scams. That said, investing in altcoins like stablecoins has become a lot more secure as numerous regulated cryptocurrency brokerages and exchanges support proven altcoins.
If you would like to find out more, our guide “how to invest in cryptocurrency today” will show you all the different ways to invest in cryptocurrency and discuss its pros and cons.
How to Store Altcoins?
If you are planning on trading your altcoins in the near future, you can usually store your coins in your exchange wallet. However, as aforementioned, if you intend to hold onto those funds for a long time (if you have a long-term holding strategy), you will want to invest in a personal wallet. This can be an online service or even a hardware wallet, both of which add additional security to your altcoin investment.
How to Sell Altcoins?
If you want to sell altcoins, you can usually do so on the same service you bought them in the first place. However, there are numerous methods available. These include:
-
Exchanges
-
Crypto ATMs
-
Brokers
-
P2P services
-
Sell for cash
Do some research and figure out which selling method works for you. You should also be aware that most platforms will charge a small seller’s fee.
Is It Worth Buying Altcoins Right Now?
This depends on your goals. If you want to purchase altcoins to use and spend them, you can do this whenever you like as long as you can afford them. However, if you’re going to make a profit either in the short or long term, there are more things to keep in mind. For example, you want to look at how those coins have performed. As such, you should keep up to date with the latest news and analysis regarding various altcoin markets.
Final Thoughts
There are numerous ways to purchase altcoins and many things to consider when choosing your currency or platform. Exchanges are the most convenient way to purchase altcoins, but that does not mean you should rule out other methods that may work better for you. Remember to do enough research on altcoins to understand the right time to buy and come up with a buying and selling strategy that helps you save money and manage risk effectively.
Related Altcoin Guides
Contributors
