The recent surge in the value of various cryptocurrencies has caused many to wonder how they can get into the cryptocurrency market. We hope that this article can serve as a guide for those looking to purchase Bitcoin, Ethereum and other altcoins. We must point out that investing in cryptocurrencies has its own set of risks. Cryptocurrencies are also extremely volatile. Price swings of 20-30% per day are extremely common.
Let us first take a look at the major cryptocurrencies. When we mention major, we are basing this on the total market capitalisation of the cryptocurrency. These values are correct as of writing (9th January 2018).
This is the cryptocurrency that started it all. To date, it is the largest cryptocurrency in terms of market capitalisation of about USD$257 billion. The second largest cryptocurrency is not even half the market cap of Bitcoin. It is currently trading at around USD$15,300 per Bitcoin.
Ether or Ethereum (ETH)
Ethereum is the name of the network and Ether is the digital token. Ether briefly lost second place to Ripple but regained it in recent days. The Ethereum network is more flexible and many applications can be built on top of it. Many cryptocurrency investors view Ether as something more applicable and eventually more valuable than Bitcoin. It is currently trading at around USD$1,250 per Ether.
Its recent meteoric rise in value pushed it up to the second spot briefly. Ripple as a technology aids current banking transactions. Prices shot up because of many people’s perspective that Ripple will eventually be adopted into the financial sector. It is currently trading at around USD$2.40 per Ripple.
Other notable mentions:
Bitcoin Cash (BCH), Litecoin (LTC), Monero (XMR)
So now let us look at how you can start to trade cryptocurrencies.
Step One: Open a Coinbase account
Coinbase is perhaps the largest exchange out there. The interface is extremely user-friendly and fast. You can fund your Coinbase account through internet bank transfer or through your credit card. You will have an exchange wallet. This is different from a private wallet which will be explained in a later blog post. There are only four cryptocurrencies which are traded on Coinbase, Bitcoin, Ether, Litecoin and Bitcoin Cash.
You can open a Coinbase account here.
If you are fine with purchasing just Bitcoin, Ether, Litecoin or Bitcoin cash, then a Coinbase account will be sufficient for you. The downside about Coinbase is that the transaction charges are a little high. However, this is perhaps the easiest place to get started with cryptocurrencies.
So what if you decide that you want to purchase other cryptocurrencies like Ripple or Monero? There are other exchanges out there whereby you can gain exposure to such altcoins. If you are keen, then proceed to step two.
Step Two: Open a Binance account
Binance is another exchange with a lot more altcoins. You can trade altcoins like Ripple, Cardano, Tron, Neo, Monero and many others. The verification process is similar to the one at Coinbase. The thing about Binance is that you cannot fund your account with fiat money. You will therefore need to fund your Coinbase account with fiat money, purchase Bitcoin or Ether with that money and transfer your Bitcoin or Ether into your Binance exchange wallet.
You can open a Binance account here.
As you can see, Binance has trading pairs for their own Binance tokens, Bitcoins, Ether and the US Dollar. This means that you will have to have Bitcoins or Ether to purchase other coins on Binance. The percentage change you see is in relation to the cryptocurrency in question. In the image, you will see that XRP/ETH dropped 12.95%. This means that Ripple dropped 12.95% against Ether.
If you want to buy an altcoin like Ripple, you will need to make a purchase of Ether on Coinbase. Once the Ether is in your Coinbase exchange wallet, you can head back to Binance and click on Funds > Deposits Withdrawals which will bring you to this page.
Here, you will need to click on Deposit next to the cryptocurrency which you want to deposit. For example, if you have Ether in Coinbase and want to transfer it into Binance, you should click on the Deposit button next to ETH. An ETH Deposit Address will appear. You should go back to Coinbase and go to your accounts page and hit the send button next to your ETH Wallet. If you are sending Bitcoin out from your Coinbase exchange wallet then you will need to hit the send button next to your BTC wallet. Enter the address which you copied from Binance into the popup box.
The transfer should take real soon. The monies should be in your Binance account pretty quickly. When the Bitcoins or Ethers are in, you can use them to buy other cryptocurrencies. Here we see the trading pair of Ripple versus Ether. There is a more than 11% drop in Ripple as compared to Ether. Thus if you are holding on to Ether, you may be considering purchasing Ripple. Just place your bid price, order amount and hit buy.
So there you go! Happy trading!