How To Buy Altcoins In The UK
Nowadays, it’s harder to find someone who hasn’t heard anything about Bitcoin than it was two or three years ago. Especially people aged between 18 and 34, as a recent study shows. This is due to the fact that Bitcoin has reached widespread popularity and it’s slowly making its way towards mainstream usage.
However, things are less encouraging when it comes to the knowledge and awareness people have for cryptocurrencies other than Bitcoin. These cryptos are called altcoins, a term coined from Bitcoin’s “alternatives” and “coins”.
Just like Bitcoin, they can be bought online, using the right crypto exchange. Usually, reliable exchanges tend to list only the most popular cryptocurrencies, but you can also find a trustworthy one with a decent list of supported altcoins. For UK customers, we recommend using Binance.
Where to Buy Altcoins?
Binance was launched in 2017 by Changpeng Zhao, or CZ for short, and headquartered in China. By 2018, the platform was already the largest one in the world in terms of trading volume. Due to regulatory problems, CZ relocated the company to crypto-friendly Malta.
So, why do we recommend Binance? First of all, the exchange supports an extensive number of altcoins, from popular ones to lesser-known ones. Binance is a fiat to crypto exchange, meaning that you can deposit British Pounds to your account to purchase altcoins. In case you want to exchange BTC for other digital coins, you can do that too.
Another advantage of Binance is that it charges low transaction fees, the average being 0.1%. The exchange has a native BNB token that you can buy to get up to 50% discount.
What makes this platform secure for money transfers and trading are its top-notch security methods. They include two-factor authentication, cold storage or offline wallets, and most importantly, SAFU. SAFU is short for Secure Asset Fund for Users, a fund to which Binance allocates 10% of all its trading fees. If the exchange gets hacked and users lose money, SAFU would cover for those losses.
What Are Altcoins?
Okay, by now you know that by “altcoins” we mean any other currency that’s not Bitcoin. But how are these currencies designed and for what purpose?
In 2009, when Bitcoin was first launched, the world was also introduced to a revolutionary technology known as blockchain technology. A “blockchain” is a digital ledger consisting of (you’ve guessed it) a chain of blocks. These blocks contain data that are immutable, irreversible, and protected with cryptographic proof.
Altcoins are built using this same technology. They either use Bitcoin’s blockchain with some minor changes or, by performing a “hard fork”, software developers create a completely new blockchain and determine the mining mechanism, hash rate, processing power, and decide whether the coin supply will be hard-capped or not.
When you make payments using these coins, just like with Bitcoin, you do it faster and cheaper than you would with regular transactions, and you manage to maintain your privacy. Although they have similar underlying mechanisms and ideology, altcoins serve different purposes.
Why Do We Need Altcoins?
When it comes to technology, things are never sluggish. What seemed like a farfetched idea only yesterday, has become old news today. When blockchain technology first appeared, developers only applied it to online payments and changed our financial system from the core. As the years went by, they’ve realized the full potential of the technology is beyond what they had imagined.
That’s when altcoins came around and gave developers another chance to improve Bitcoin’s shortcomings. Instead of Bitcoin’s processing power of just 7 transactions per second, now we have blockchains that can process four times more. Instead of waiting for ten minutes to get your transaction verified by one miner, some altcoins only need 2.5 minutes to do the same job.
This comes in handy when you want to purchase something and pay in cryptocurrency. Merchants usually ask for at least 4 confirmations before they accept your transaction as trustworthy and process your payment forward. Why wait for 40 minutes (at least) with Bitcoin, when you can be done in less than 10 minutes if you use a different coin.
Moreover, Bitcoin is designed in such a way that its mining difficulty increases based on the number of transactions waiting to be validated. Since the beginning of 2018, there has been an incredible surge in Bitcoin’s hash rate, as a result of a large number of users overwhelming the network. This is the reason why Bitcoin’s miners have started using ASICs instead of GPUs, which are cheaper but generate less power.
Some of the most popular alternatives to Bitcoin are Ethereum, Litecoin, Monero, Ripple, NEO, etc. The teams of experts working behind them have leveraged blockchain technology and demonstrated how both the technology and the coins can be used for more than just decentralized money transfers.
Litecoin was launched in 2011 by Charlie Lee. He’s an ex-employee at Google, who became interested in the crypto world and found a way to create a digital coin that would be primarily used for small transactions and purchases. Lee sees Bitcoin as a long-term investment, in the way that gold was used in the past, which is why Litecoin is referred to as “Bitcoin’s silver”.
What motivates crypto enthusiasts to turn to Litecoin instead are the lower fees and faster execution when making transactions. This is possible thanks to Litecoin’s improved hashing algorithm for mining coins. Its blockchain can process up to 56 transactions per second!
On the other hand, we also have altcoins that apart from serving as stores of value, can also be used in fueling various blockchain-based network services. Take Ethereum, for example, the second most popular digital coin. Even though it can be traded like any other coin, its main role is quite different.
Users pay with Ethereum to build smart contracts and decentralized applications on the platform’s blockchain. Similarly, NEO, another cryptocurrency and blockchain platform, allows users to digitalize physical assets and build smart contracts that are easier to manage and cost even less. The team behind the altcoin hopes to transform our economy into a “smart economy”.
The Pump and Dump Scheme
Whenever you’re dealing with altcoins, make sure to avoid any “scam coins”. These cryptos are usually launched by experienced traders (“whales” is their notorious nickname) who think they can trick newbies into purchasing their coin and inflating their price.
What they do is they create a coin and then pre-mine it, saving half of the supply for themselves. Then they promote the coin on popular crypto forums to attract traders and create a great deal of hype by speculating that the altcoin’s price is going to go up in the days to come. If you’re a beginner, you’ll most certainly fall for the trap.
Because they’re new, these altcoins have low market capitalization and trading volume so it’s super easy to drive their price up, i.e. to pump them. That’s when these “whales” sell all of their coins and make a profit. This is followed by a heavy price “dump”, leaving whoever held onto these coins at a great loss.
How to Make the Right Choice
The number one rule for anyone involved in the crypto industry is to research the market, analyze its current trends, and read a lot of user reviews. Don’t believe anything you hear or read, and don’t fall for cheap tricks like the one mentioned above.
A publicly stated name of the altcoin’s developer is a good indicator of that coin’s credibility. If someone’s doing things by the book, he or she won’t mind if their name is disclosed. Visit the official site to check the company’s background, as well as their project’s mission. Getting to know where a coin’s headed is very important for anyone interested in investing.