General Process
First, let’s go through the main 3 approaches for buying cryptocurrency. As with many things in life, you’ll pay a little bit more for ease and convenience.
- Changelly and ShapeShift allow you to buy Bitcoin and quickly convert to other cryptocurrencies without have to go to different exchanges. It will cost you a little more but it may be worth it for the convenience factor. Here’s a great article that compares these two.
- With Robinhood and Uphold, you can buy, trade, and convert stocks and cryptocurrency. They both have mobile apps and are quickly adding cryptos to their offerings. At the time of this writing, Robinhood is just now starting to sell Bitcoin and Ethereum in a few states with 14 more cryptos to be added soon. They have a waiting list of 1.4 million users but they boast zero transaction fees so is probably worth signing up. Also, if you use this link, we both get a free stock: https://share.robinhood.com/aarond700. Uphold on the other hand, is already trading with low transaction costs but only offers 7 cryptocurrencies so far.
- Lastly, you can deposit your money and then transfer your funds to an actual cryptocurrency exchange to make trades for the altcoins you’re interested in. This can be the cheapest approach and gives you access to all the altcoins available. It is a bit more involved though, hence this article.
Basics: How to Purchase from an Cryptocurrency Exchange
Let’s first go over the basic process to cheaply buy altcoins and then we’ll go into it step-by-step. For this example, we’ll be buying the altcoin ‘Ripple’ from the Binance exchange.
- Buy Litecoin on Coinbase.
- Deposit Litecoin into GDAX
- Transfer Litecoin to Binance
- Convert Litecoin to Bitcoin
- Purchase Ripple
Now, let’s cover each of these in more detail, with additional notes at the end.
1. Buy Litecoin on Coinbase
If you don’t have a Coinbase account yet, create an account now. You can go to Coinbase.com or download the mobile app. Coinbase makes it easy to hook up your bank account and to purchase cryptocurrencies. Use this link to sign up and get $10 off your first $100 investment: https://www.coinbase.com/join/593c1d771291e9145b799089.
To fund your account, you’ll need to verify your identity and connect it to a funding source, usually your bank account. Please note that when you make your first purchase, it can take 5-7 days to complete. After you’ve been with them a while though, the funding time will become faster.
Currently, you can purchase Bitcoin, Ethereum, Litecoin, and Bitcoin Cash on Coinbase. Purchase Litecoin since it has lower fees to transfer.
2. Deposit Litecoin into GDAX
GDAX (at GDAX.com) is actually the same company as Coinbase so when you create an account at GDAX, you just need to login with your Coinbase account. Next, login and deposit Litecoin from your Coinbase wallet.
3. Transfer Litecoin to Binance
If you haven’t already created an account at Binance, you can do so now at this link: https://www.binance.com/?ref=12205803
Each cryptocurrency in your Binance account has its own wallet, which you can think of as an account number. In order to transfer to Binance, you’ll need the Litecoin wallet address within Binance. Click on your account and then click on Estimate Value. This will display all the cryptocurrencies. Look for LTC and click on the Deposit button for that line. Copy the LTC Deposit Address.
Now, go back to GDAX, go to the LTC/USD pairing, and click on Withdrawal. Click on the LTC address, enter your Litecoin wallet address at Binance and enter the amount you want to transfer.
After you submit, it’ll take 5-30 minutes to fully transfer to Binance.
4. Convert Litecoin to Bitcoin.
You should now have Litecoin on Binance. Most cryptocurrencies on Binance can only be purchased with Bitcoin (BTC) so you’ll need to sell your Litecoin for Binance. To do this, click on Exchange and then Basic. Make sure you have the BTC market selected on the right and then select the LTC/BTC pairing. Binance will automatically select the best current price for you. So keep with their default and sell all the Litecoin (LTC) you just transferred. You’ll now have a fraction of Bitcoin. You’ve just made your first crypto trade! Oh, and be patient - sometimes orders are not instant. Usually it’ll go right through since you’re taking up a seller on their offer. Sometimes though, it may remain as an “open order” for a while before the trade completes and shows up in your order history.
5. Purchase Ripple
You’ll now want to repeat that process but this time, you’ll purchase Ripple with Bitcoin. Select the XRP/BTC pairing. Again, keep with their default and purchase as much Ripple as you can with your recently acquired Bitcoin. You’re now a proud owner of Ripple! (or whatever coin you’re going for)
6. Transfer Ripple to Personal Wallet (Optional but recommended)
Most cryptocurrencies will have a personal wallet that you can install on your computer, as a mobile app, or have an online option. It’s always more safe to store your altcoins in your own wallet long-term since exchanges have been hacked in the past. I personally use the Toast wallet.
Other Exchanges and Other Coins
There are plenty of other exchanges and lots of different coins. I personally have accounts with 8 different exchanges since some coins can only be found on specific exchanges. As you do your research into which altcoins you’re interested in, check at CoinMarketCap.com or a similar site to see which exchanges trade your coin. For example, I personally like Electroneum but it’s only traded on a handful of exchanges, my favorite being Kucoin.
Last Word
Hopefully this helps you down the path of happy investing with crypto! Remember, only invest what you can afford and do your research. This is truly an exciting time where we can get in at the ground floor for these emerging blockchain solutions and decentralized markets.