Sometimes it seems like nicknames and acronyms are made up just for the sake of having a nickname. One of these it the term ‘Altcoin’ – which stands for Alternative Coin, which is really any cryptocoin that’s not Bitcoin. There are thousands of such coins, each with a tweak from Bitcoin or looking to find a certain niche. Coin for dentists? DentaCoin. Coin for adult entertainment? Spankchain. Coin for clowns? KrustyCoin. (I made that last one up, but I’m sure it’s coming at some point).
So why should you care about Altcoins? For 2017, Bitcoin’s price went up 15 times. But that was far from the most profitable cryptocoin. Verge (XVG) went up 10,000x in 2017! $100 in Verge would’ve resulted in $1M by the end of 2017. And you were excited about getting 0.9% interest from your high-yield online savings bank!
If you want to buy altcoins, you’ll need to move your coins from Coinbase to a full-fledged crypto-exchange, of which there are many to choose from. The exchange I like the most is Bittrex. In some ways, these crypto-exchanges are similar to brokerage firms, like Fidelity or Charles Schwab. Bitcoin exchanges allow you to trade your bitcoin for other cryptocoins. However, there are large differences between each bitcoin exchange and you often will have to use different exchanges for different purposes.
Bitcoin exchanges are also designed for the experienced crypt-trader. If you’re not into stock day trading (and I am not), then prepare to be overwhelmed. Unlike Coinbase, which has a simple line graph and 4 to 5 simple functions, an exchange will have analytical charts, and unfamiliar terms and a slew of cryptocoins.
If that wasn’t confusing enough, here a couple more points to keep in mind.
- Each exchange has access to different currencies. Most of the popular coins are available. But not all. For example, if you are on Bittrex and want to buy IOTA, which has one of the top ten highest market caps, sorry, you are out of luck.
- For most exchanges, you can’t by altcoins with cash. You have to exchange bitcoin with your altcoin of choice.
- Each exchange has slightly different exchange rates. For example currently, 1 BTC on Binance is $13,560, on GDAX is $13,489, and on Bittrex is $13,628. This is because there is not a uniform way to determine a common, shared price for Bitcoin, so each exchange calculates its own rate.
I found Bittrex the most user-friendly exchange, but it’s a pretty low bar. GDAX is another popular exchange. The huge advantage for GDAX is that it is owned by Coinbase and therefore is free to transfer coins and funds between Coinbase and GDAX. You can easily move your Coinbase coins to GDAX. Each exchange has a different fee structure to make trades and withdrawals.
When you are checking out a new exchange, I recommend transferring a small amount of Bitcoin into the exchange and try trading it for another cryptocoin.