We have received a few questions on how to convert Bitcoin to Altcoins and vice versa; therefore, we have decided to share more information for those interested. There are over 5000 cryptocurrencies in existence as of writing. This article will help get you started in the world of cryptocurrency! If you wish to find out how to trade cryptocurrencies on exchanges, read on!
What are Altcoins?
Everyone knows Bitcoin (BTC). BTC is the digital gold in the world of cryptocurrency. The attributes of Bitcoin correlate to gold with its limited supply and difficulty in mining. Similarly, major fiats like the USD, EUR, and YEN trade against gold just like most altcoins have trading pair against the BTC.
As such, all other cryptocurrencies except Bitcoin fall into the category of altcoins. Some major altcoins are Ripple, Ethereum, and Litecoin.
Background on Altcoins
Through smart contracts, the Ethereum platform was the first to enable developers to issue their own tokens in exchange for capital to fund their business operations and growth. It is known as the initial coin offering (ICO).
ICOs resulted in an exponential growth in the number of altcoins. More altcoins are expected to be issued as public blockchain projects mature.
How to Trade Altcoin on Exchanges
There are many cryptocurrency exchanges in the market now. In this article, I will focus on Binance exchange (biggest crypto exchange by trading volume). The steps to trade cryptocurrencies are similar for different exchanges and you can use the following steps to assist you in setting up and trading cryptocurrencies.
1. Register for a Binance Account and Login.
This part is pretty straightforward. Once you are done with account registration (use this link), you can log in to your Binance account.
Once logged in, you can check your user settings. Here, you can configure some of your settings like withdrawal limits, change your password, use BNB (Binance Tokens) to pay for trading fees, 2FA and etc. You need to pass KYC to access higher withdrawal limits.
3. Deposit Bitcoin into your Binance BTC wallet
You need to be careful if you are new. When you enter your balance page, find the token BTC (ETH in the following image), that you are going to deposit and copy its address. Do not assume your wallet address will always remain the same, always double-check and confirm before sending funds into exchanges.
4. Purchase your Altcoin
Head over to the exchange section and you can find a wide variety of trading pairs in Binance. In this example, I am looking at the BTC/ETH pair. There are a few options: you can place a limit buy (set the price you wish to buy at), or just do a market order (purchase at market price).
Note: If you are purchasing a significant amount, I would recommend you to first purchase some BNB to pay for the transaction fee as it is cheaper to do so.
5. Review of Trade History
If you have placed a market order in the previous step, the trade is now completed (for limit order you have to wait for your order to be filled - you can check the order history for more detail). Go to the trade history page to review your purchase.
6. Withdraw your Altcoins to a Secure Wallet
Take note to transfer your cryptocurrencies to a secure wallet if you do not wish to trade them soon. While deposits into Binance are free, withdrawals will incur some fees. Similar to depositing funds, take extra caution when you are withdrawing your cryptocurrencies and make sure it is to your own wallet address.
It is not the best practice to store your cryptocurrencies on any exchanges as they are subjected to security loopholes and hacks. This is why I highly recommend you get your own cryptocurrency hardware wallet for offline storage. I hope you enjoyed the article and feel free to leave any comments you might have below!