Dear Readers,
I was recently asked by a client to write this brief how-to on cryptocurrency. While I am not an expert, I do feel this could be helpful for someone new to the crypto market.
With a wave of new investors in the cryptocurrency market some newbies are wondering how to purchase Altcoins, or coins that are an alternative to Bitcoin (BTC), and/or Ether (ETH). ETH is technically an Altcoin too, but it is used as widely as Bitcoin to purchase other Altcoins.
Currently, many Americans are using Coinbase as a gateway into the cryptocurrency market. In fact, cointelegraph.com reports that the big exchanges, like Coinbase, are adding 100K plus users per day, so you're not alone.
Why Coinbase, you may ask? Unfortunately it is not very convenient to convert fiat currency, like the US dollar, to a cryptocurrency like Bitcoin or Ether. Coinbase is the exception, because of their US regulation compliance.
If you are not American, no worries, there is always a platform that will accept your fiat currency.
In the near future, US investors will have more options. For example, Blockchain Wallet and Bittrex exchange have both recently announced plans to accept the US Dollar. For now, Coinbase is the easiest way for Americans to participate in cryptocurrency.
Once you sign up for a Coinbase account, you will then have to connect either a credit card or a bank account to your account. A credit card is faster. However, faster is not always better. Remember, with a credit card, you are borrowing money to speculate on a highly volatile market. Recently, many major credit cards have actually blocked cryptocurrency purchases.
The slower route is to link your bank account, it takes about 7 business days.
While you are waiting for your bank account to link to your Coinbase account, it’s a good idea to set up an exchange account. There are many exchanges out there, just find one or more that work for you. There is an approval process that can take days, that’s why I suggest you do this at the beginning with your bank transfer.
Once you have your fiat account (bank or credit card) attached to your Coinbase account, you can purchase Bitcoin, Ether, Litecoin and Bitcoin Cash only. Coinbase started as a Bitcoin wallet, evolved into a highbred wallet/exchange, and has been slowly adding coins. Their most recent, Bitcoin Cash, was added in December 2017.
Today we are going to buy Ether to, eventually, purchase an Altcoin, but as I said before, you can just as easily use Bitcoin. Some exchanges also use other coins such as Litecoin or Bitcoin Cash. I’ve chosen Ether for my purchase, because the transfer fees are currently lower than Bitcoin.
Once you’ve made your purchase of Ether, you will see it in your “Ether Wallet” on “Your Accounts” screen, this can take a few minutes. You will not be able to “Send” your Ether anywhere until the transaction is confirmed. Once confirmed you can send it to any wallet that accepts Ether.
With your purchase of Ether complete, you are ready to send. Click “Accounts”, then click “Send” in your ETH wallet. Enter the wallet address from the previously approved exchange. All exchanges are set up a little differently, but you should find the address in whichever screen shows “Deposits”.
Enter the amount of Ether you want to send and click continue. The transfer can take a little while depending on the volume currently being added to the blockchain.
Once you have Ether in your ETH exchange wallet, click on “Exchange”. Today we are going to buy a popular coin called Ripple (XRP) as an our example, but the steps can be used to purchase any Altcoin.
Most exchanges have a Bitcoin and Ether exchange, but as I mentioned before, there are others as well. For instance, Binance uses their own BNB token in addition to ETH and BTC.
Search for the trade pair you want, so in this case, ETH/XRP. Click on the pair, fill in the amount of Ripple you want to buy with your Ether. If you want to make the purchase now, then the price is the “Ask” price, or the current market price. Click “buy” or “continue”.
The order can take a few minutes or longer depending on the coin. Once the process is complete, you will see your ETH balance is lower, and your XRP balance will reflect the purchase amount you entered, minus transaction fees.
The only recommendation that I would add, is to use Gdaxx to do the transfer. This way the transfer to the exchange is free.
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