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Altcoins: the A-Z Beginners Guide to Altcoins
What is an Altcoin?
Copy link to sectionAn ‘altcoin’ is any cryptocurrency apart from Bitcoin. It’s typically used as a way to refer to the rest of the crypto market.
Use this guide to learn what an altcoin is, and what distinguishes an altcoin from Bitcoin.
The most well-known altcoin is Ethereum, which has been around since 2015, and thousands more have been released since then.
How Do Altcoins Work?
Copy link to sectionIt depends on what the purpose of the coin or token is.
All cryptocurrencies use an online public ledger known as a blockchain to track and store its transactions. Beyond that, they can work in many different ways and each coin is usually released along with a white paper that explains the specifics in detail.
The key point behind the development of all these altcoins is decentralization.
They all offer alternatives to the traditional online framework where a central body, which might be a bank or a tech company like Google, can act as the gatekeeper.
A blockchain is not owned by any one entity and it usually isn’t all hosted in one place. Instead, the power and responsibility is spread out between everyone that uses it.
Many coins confer voting rights on their holders, who can help to shape its future. Meanwhile each blockchain is hosted by many different computers in different places around the world, so it’s very difficult to attack or change it.
Ways to Invest in Altcoins
Copy link to sectionTo invest in an altcoin you first need to sign up to one of the best altcoin exchange platforms.
They allow you to buy, sell, or trade altcoins coins, and the best choice depends on which altcoins you want to own and how long you intend to hold them for.
Here’s a list of articles that may help you choose an altcoin investment that suits you:
Alternatively, you can learn more about what the best altcoins to buy are, and how to invest in each different altcoin by reading through the guides below. For each altcoin, it explains what it is, the best exchanges to buy it on, and a step-by-step guide for beginners:
A-Z list of cryptocurrency buying guides
Copy link to sectionThe Different Ways to Invest in Altcoins
Copy link to sectionYour investing options depend on the coin you want to own. The term ‘altcoin’ covers such a huge range of coins that the options for the leaders of the pack are very different to those at the bottom. Here are all the different ways to invest, but keep in mind that not all are available for every coin.
- Broker platforms. Crypto brokers are the easiest way to get cryptocurrency as they let you buy or sell coins instantly at a set price. The trade-off for convenience is cost: usually, that price is the market rate with an extra fee or commission added on. Brokers also usually only offer top of the range coins. So while this is the best option for coins like Litecoin, XRP, and Dogecoin, it isn’t for the vast majority of altcoins.
- Centralized exchanges. Crypto exchanges are places where you can buy and sell coins at the market rate. They act like marketplaces that match orders together and have a constantly updating live price for each coin. There are more options to buy larger amounts and far more ways to pay for each altcoin, either with other cryptocurrencies or a fiat currency (like GBP or USD).
- Decentralized exchanges. Otherwise known as ‘DEXs’, these are platforms that are built on the blockchain themselves and where there is no third party running the platform. Like centralized exchanges, decentralized exchanges match your buy or sell order with someone on the opposite side of the trade. You have to have a cryptocurrency wallet in order to use them, and they aren’t as polished and user-friendly as centralized platforms but let you trade virtually every coin in existence.
- Crypto ETFs. There are a handful of exchange-traded funds which own cryptocurrency. These are passive funds that simply track the performance of an asset and are a way of investing in crypto in a more regulated way. ETFs have to be approved by the financial authorities and trade on the stock market. However, crypto ETFs focus almost exclusively on Bitcoin at the moment. There are one or two that own Ethereum but it might take some time before this option is more widely available.
