How to Buy Cryptocurrencies NOT Listed on Coinbase
The fact of the matter is that by the time a cryptocurrency hits a mainstream app like Coinbase, the price will have already skyrocketed thousands of times over and most of the savvy investors have already reduced their positions to find other opportunities. While there is still significant upside in major cryptocurrencies like bitcoin and Ethereum, there is an entire universe of altcoins the majority of investors are missing out on.
While investing in any cryptocurrency carries a great deal of volatility and risk, there are definite merits to learning how to buy altcoins not currently listed on Coinbase. We decided to create this quick how-to guide for those of you who are not yet fully comfortable moving beyond the user-friendly UI of Coinbase into the uncertainty of cryptocurrency exchanges.
Here are the 5 steps for purchasing cryptocurrencies NOT listed on Coinbase.
Step 1: Purchase Your Intermediate Coin
In order for you to buy altcoins, you first need to use your fiat currency to purchase an intermediate paired coin, like bitcoin. Now, to do this you will need to create a Coinbase account, which allows you to securely link your debit card or bank account to purchase bitcoin, Bitcoin Cash, Litecoin and Ethereum directly on the app. You can do this from your web browser, iOS, or Android device. The app also functions as a highly encrypted wallet that allows you to safely store your coins in what they call the “vault”.
To purchase your intermediate coin, select the Buy/Sell tab, which will prompt you to choose your payment method and the amount you are hoping to purchase.
There are a few factors that go into the decision of which coin to choose. While you can purchase almost every altcoin on the exchanges with bitcoin, the transaction speed can be very slow and the fees high. Many investors have switched to Litecoin as the preferred transfer currency because of this. The only downside to choosing a currency other than bitcoin as your transfer coin is the slight inconvenience of switching back to bitcoin on the exchange before you can purchase your altcoins.
Please note that it is not suggested to purchase cryptocurrencies using your credit card, especially now that the charges are considered cash advances and carry significantly higher fees. Additionally, some mainstream banks are beginning to block their cardholders from buying crypto altogether.
For better or worse, the most efficient way to purchase Bitcoin currently is through Coinbase. While the upcoming release of Robinhood’s cryptocurrency platform should offer a more affordable alternative, Coinbase will likely remain the best option for the time being.
Step 2: Transfer Your Intermediate Coin to the Exchange
Now that you have purchased your intermediate coin, you need to decide which altcoins you would like to add to your portfolio, as this will inform to which exchanges you should be registered. You can find the full list of cryptocurrencies here. If you click on the coin you like and select the ‘markets’ tab, you will be able to see which exchanges you can purchase it on.
The registration process for each exchange is relatively similar and simple, and will require some degree of authentication. ALWAYS be sure to use throwaway email address not associated with your personal accounts, and add whatever extra-layer of security that the exchange offers (usually in the form of 2-factor authentication).
To help spur your research, here are the top 20 coins available on a few of the most popular exchanges in February 2018, sorted by trading volume:
To initiate the transfer, you want to first go to the relevant exchange’s account/balances page and find the proper intermediate coin in the list. Next to the coin’s name will be a ‘deposit’ symbol (see figure below for bitcoin example). Clicking that symbol will generate a unique deposit address that you will use in the next step.
Now, head back over to Coinbase and select the ‘Accounts’ tab. Once on the Accounts page, click the paper airplane symbol next to the proper coin. This will open a send portal that will allow you to input the address generated in the previous step. We recommend you send a small test amount prior to sending the full amount, to confirm the exchange address. Once you send the full amount, it can take anywhere from a few minutes to a few hours for the transfer to go through.
Step 3: Download The Wallet of Your Coin of Choice
While you wait for your intermediate coins to transfer to the new exchange, you should look to download the wallets that pertain to the coins you are interested in purchasing. Now, a general rule of thumb is that you do not want to hold any of your coins directly on an exchange, as leaving them on exchanges runs the risk of losing your entire holdings.
So, what you should do is look to download the wallet associated with your coin. Usually, these can be found for download directly on the coin’s website or GitHub page. Depending on the size of the coin’s project, there might be a few variations of wallets (i.e, web wallets, desktop wallets, etc.). Here is a good breakdown of these variations.
Generally, you want to download the desktop wallet, as it is more secure than a web wallet. However, this will require you to synchronize the entire blockchain to your system, which depending on the coin can take some time. Be patient.
For ERC20 tokens (coins that use the Ethereum blockchain), the usual go-to is MyEtherWallet. Here is their how-to guide on how to create a wallet with their system. We also recommend you follow any guides provided by the project that runs the altcoin you just purchased, these usually are found on their website or through a simple google search.
Step 4: Buy Your Altcoins
This part can be a little tricky and requires a degree of patience. Once you have your intermediate coin available for trading in your exchange wallet, you will be able to purchase the desired altcoin. If you initially purchased an intermediate coin that is not paired with your altcoin (i.e., you bought Litecoin and transferred it to the exchange to save on transaction fees), you can start by converting the intermediate to bitcoin.
Each exchanges layout is slightly different, so we recommend you take some time to get used to trading platform.
Here’s a little vocabulary to guide you:
- Bid — The bid price represents the maximum price that a buyer is willing to pay for a coin.
- Ask — The ask price represents the minimum price that a seller is willing to part with a coin.
- For coins with low trading volume, the spread between the bid and ask can be fairly substantial.
When you’re comfortable with the trading platform, set your buy order with the appropriate amount of bitcoin. Most exchanges will have a button that enables you to purchase the maximum amount of the altcoin given your current bitcoin holdings. As a general rule of thumb, never a chase an investment and set your orders strategically.
Step 5: Transfer Your Coins to their Respective Wallets
Similar to the process in Step 2 where you generated a receiving address for your transfer from Coinbase to your altcoin exchange, you will need to return to your account/balances page to initiate the transfer to your wallet. For most exchanges, there will be an icon right next to the “deposit” or “-” icon that reads “withdraw” or “+”.
Just as when you sent your coins from Coinbase, you will be prompted to add your new wallet’s address. Always send a small test amount prior to sending your entire holding to make sure you entered the address correctly. There will be a transaction fee that depends the exchange and coin being transferred.
After you initiate the transfer, you will be provided a transaction ID, which allows you to track your coins on the associated blockchain. To track your coins, simply conduct a google search for “X coin block explorer”‘, and one of the first options should be the site that allows you to enter that ID number. From there, you can see if your coins have been sent or not. Be patient, the transfer process can take some time and depends on a few factors, like exchange backlog and blockchain activity.
Please note, each exchange has different withdraw amount limitations depending on the level of account verification. Full verification usually requires the submission of your government-issued identification, and the authentication process can take up to a few weeks, so plan accordingly.
Now, sit back and enjoy watching your new coins perform!
If you found this guide helpful and would like to see a simple guide for something else, shoot us an email suggestion at email@example.com and we’d be happy to write one!
Disclaimer: This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments