Altcoins are the place where investors turn to try to beat the returns delivered by Bitcoin each market cycle. In 2017, an ICO boom occurred after the Ethereum smart contract standard known as ERC-20 made it easy for anyone to create a token for their startup (or rug pull). For the most part of early 2022, a lot of the weaker tokens have been shaken out, and many future world-changing blockchain projects can only be boarded via cryptocurrencies – sorry NYSE.
It goes without saying that thousands of rug-pulls are still lurking, on Ethereum and other competing blockchains like the Binance Smart Chain, so always make sure to do your own research before investing.
Understand Altcoins and the Market
While many investors no longer consider Ethereum to be an altcoin, it’s still worth mentioning in this article as the best risk-adjusted investment behind Bitcoin (maybe even better). Ethereum isn’t actually an altcoin though – that would be its native asset, ETH. A native asset is a cryptocurrency that is required to transact on a platform or application, and how you can bet on the future of the project. Should demand for the platform increase, so will demand for its native asset.
Aside from Ethereum, the third and fourth biggest cryptocurrencies by market cap are Ethereum competitors. The Binance Smart Chain’s native coin – BNB, and Ripple’s XRP, respectively. This should come as no surprise as the impact of Ethereum has been so disruptive in the global financial industry. A new financial industry has been enable by the global computer that is Ethereum’s blockchain – decentralized finance (DeFi). Smart contracts aren’t just useful for creating other decentralized currencies, they can also be used to make decentralized applications.
A developer would choose to make their application decentralized if they believe it stands to benefit from anonymity, and peer-to-peer interactions. Take the foreign exchange market for example, which employs banks all across the world to facilitate trade. While FX may seem decentralized, each of these banks are a central point of attack for hackers, or malicious insiders. Additionally, these banks require personal information to protect themselves from fraud. All of this can be solved with a simple smart contract on the blockchain. No central points of weakness, complete anonymity, and borderlessness – all thanks to the wonderful powers of the blockchain. For those curious to learn more about how this works, check out What is Blockchain or How Liquidity Provider Tokens Work for an in depth look at this example. Decentralized exchanges (DEXs) like Uniswap and SushiSwap are applications created using smart contracts, and have native assets that are some of the most promising altcoins on the market today.
How to Buy Altcoins
Here’s how you can buy the right altcoins in a few easy steps:
- Create an exchange account.
Exchanges power swaps between fiat currencies and digital currencies alike. There are plenty of great exchanges that will deliver you access to a load of altcoins. Centralized US-based exchanges will require SSN, drivers license, and other personal information for tax purposes. However, decentralized exchanges are entirely anonymous. You’ll find a list below to compare exchanges and pick the one that’s right for you.
- Optionally, buy a crypto wallet to keep your assets under your control.
Cryptocurrency wallets store the private key needed to access your funds on the blockchain. Remember, your crypto assets are associated with your wallet ID on the blockchain, and if you don’t control your private key (like on many exchange wallets) then you don’t truly own your assets. If your exchange controls your private key, that also provides a central point of attack for hackers to steal your funds.
- Study the market, and make your purchases.
The altcoin market is ripe with winners and losers. The best way to know for sure is to spend time in the markets before investing your full amount. Start small, and learn real lessons with $5 before taking a full-sized loss. Benzinga is dedicated to providing in depth crypto education, so make sure to subscribe to the weekly newsletter and watch our altcoin show Moon or Bust live on YouTube to stay up to date.
Best Crypto Exchanges
Crypto.com strives to make cryptocurrency a part of everyday life by offering a full suite of services for crypto users. The company offers a Crypto.com App, Exchange, Visa Card, DeFi swap, DeFi Wallet, DeFi Earn, Crypto.com Price, staking, crypto lending, and many other services. What really sets them apart, however, is the combination of super low fees and incredibly generous rewards programs for their users.
- Traders who want access to a secure, low-cost cryptocurrency exchange
- Passive investors who want to earn interest on their balance without frequent trading
- Mobile investors who prefer to handle all their crypto needs via their phone or tablet
- Low fees
- High security
- One-stop shop for all your crypto needs (wallet, trading, spending, and more)
- Lots of ways to earn interest, rewards, and rebates
- Low privacy
- Customer service response time could be improved
Kraken is a cryptocurrency that offers access to more than 50 supported coins and tokens, staking capabilities, futures trading and more. Kraken offers a variable maker-taker fee schedule, which often results in lower fees compared to flat-rate brokerages.
In addition to a wide range of crypto choices, Kraken offers customizable ordering platforms and mobile apps that you can use to fully refine your trading experience. There’s plenty to love about trading on Kraken. It appeals to both seasoned professionals and new investors looking to learn more about the market.
- Cryptocurrency investors looking for a wide selection of supported assets
- Crypto futures traders
- Beginner investors looking for maximum account security
- Wide selection of supported tradable assets
- Straightforward platform is easy for new users to master
- 24/7 customer service available via live chat
- Maker-taker fee schedule may confuse some users
- No option for phone or email customer service
Gemini is a cryptocurrency exchange and custodian that offers investors access to over 100 coins and tokens. Founded in the US, Gemini is expanding globally, in particular into Europe and Asia. Offerings include both major cryptocurrency projects like Bitcoin and Ethereum, and smaller altcoins like Orchid and 0x.
Gemini is 1 of the only brokers with multiple platform options based on skill level. New investors will love the streamlined interface of Gemini’s mobile and web apps, while advanced investors might appreciate all the tools that come with ActiveTrader.
In addition to a host of platform choices, Gemini users also have access to insured hot wallets to store tokens without worrying about digital asset theft. Learn more about what Gemini can do for you in our review.
- New investors looking for a simple mobile and web app
- Day traders looking to use technical analysis tools
- Users looking for a 1-stop-shop to buy, sell and store all of their cryptos
- Easy and quick signups — can get started in as little as a 5 minutes
- Multitude of platforms to accommodate traders of all skill levels
- Hot wallets include insurance to protect your from theft and hacking attempts
- Charges both a commission and a convenience fee for users buying and selling through the desktop or mobile app
Coinbase is one of the Internet’s largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs.
You can even earn cryptocurrency rewards through Coinbase’s unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.
Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.
- New cryptocurrency traders
- Cryptocurrency traders interested in major pairs
- Cryptocurrency traders interested in a simple platform
- Simple platform is easy to operate
- Comprehensive mobile app mirrors desktop functionality
- Coinbase Earn feature rewards you with crypto for learning about available coins
- Higher fees than competitors
Robinhood is the broker for traders who want a simple, easy-to-understand layout without all the bells and whistles other brokers offer. Though its trading options and account types are limited, even an absolute beginner can quickly master Robinhood’s intuitive and streamlined platform. On the other hand, more advanced traders might be frustrated by Robinhood’s lack of technical analysis tools, a feature that’s now nearly universal across other platforms.
- Fee-free trading
- Beginner crypto investors
- Doge day traders
- Commision-free trading
- Access to Dogecoin
- Limited altcoin selection
- No wallet capabilities
Best Crypto Wallet
The Proof-of-Stake (PoS) protocol allows for faster verification and block production times and therefore faster overall transaction times. Nodes verify blocks on a consensus basis and rewards are distributed in proportion to the share of currency the staker holds and for how long that share has been held. This avoids the energy usage associated with Bitcoin and other proof of work consensus algorithms. Ethereum is hard at work on upgrading to a proof of stake system.
In fact, later this year or in early 2023, Ethereum is set transition from Proof-of-Work (PoW) to PoS. At its core, the Merge to PoS will reduce network energy usage by at least 99.95%. Currently, the network has a carbon equivalent equal to the entire nation of Finland, and the core developers understand that the Ethereum network needs to improve.
Ripple and Stellar have similar proprietary processes for block production, probably because the two companies share a founder. Both XRP and XLM use a validating servers network, a process of block verification that could be called Proof-of-Correctness. Consensus is achieved and block verification completed when a supermajority (80%) of servers agree.
One major cryptocurrency pegs its value to the dollar and claims full collateralization of its digital token with U.S. dollars. Tether calls its configuration of the block verification process Proof-of-Reserve — each USDT in circulation represents one U.S. dollar held in reserve. Tether claims it can prove it has a dollar to back every Tether.
USD vs. Cryptocurrency
The U.S Dollar has value because of trust in the U.S Government. Cryptocurrencies have value because of trust in the decentralized community behind blockchain.
The dollar exists as a dominant currency because the people who use it have come to trust its value more than any other. Which cryptocurrency will gain the trust necessary to replicate the dollar? It may be the one that first gains the trust of the banks, and now may be the best time to buy it.