In this part of the training we will show you how to buy your first altcoin.
Having Bitcoin - with which we will make all our purchases in order to increase its quantity, we decide to trade in cheaper instruments. Hoping at the same time for their increases against the main currency. Every percentage increase in a given instrument will allow us to increase the amount of Bitcoins we have. This works the same as trading cash or other valued goods against the currency.
Assuming that we have the amount of PLN 1,000 that we want to invest in the financial instrument of our choice - for example the dollar - in order to increase the amount of zlotys we decide to buy it at a low exchange rate and we calmly wait for its increase for sale at a high exchange rate. By buying USD at a rate of PLN 3 per piece, you will receive approximately 333 one-dollar banknotes. While waiting for increases, we store our banknotes in a safe place for us, and when the dollar reaches the amount of interest - let's assume PLN 4 - we sell it. At this point, we have increased our investment budget by PLN 332. This is how Bitcoin trading works. Altcoins are valued at satoshi - a fractional part of Bitcoin. Let's imagine the situation that we are buying the currency X whose price is 0.005 BTC, and we dedicate 1 BTC to buy it. After the transaction we will receive 200 pieces of currency X which is currently worth exactly 1 BTC. The increase in the amount of Bitcoins we have will occur when the price of Coin X rises above 0.005 BTC, and the decrease in quantity will occur when the price drops below 0.005 BTC.
Let's assume that after 1 month coin X increased by 10% - its current price is therefore 0.0055 BTC and when selling all coins our capital will increase by 0.1 BTC. The principle is the same for both increases and decreases, which is why it is worth determining the moment when profit is satisfying and we should sell our "position" and place where we should limit losses and accept that we were wrong. </ Br >
When choosing the altcoin in which we intend to invest, you should think about whether it will be a short, medium or long-term investment. We must remember that some projects may be at present before or are in the process of correcting the current price, but have the potential for significant increases in the long run - this is a very good offer for a long-term deposit. For example, if our analysis tells us that a given coin may be widely used around the world in a few years, we should place it in our long-term investment portfolio.
In the case of short-term investment, you should choose a coin that has growth ahead of you - it usually results from the analysis of the stock exchange rate chart of a given cryptocurrency. An additional factor that may intensify the increases are the upcoming interesting events related to the project.
Before investing in a given project, particular attention should be paid to:
White Paper - this is the most important document in every cryptocurrency. His analysis will tell us exactly what a given cryptocurrency is, what are the development plans of the project and what technology it uses. Whitepaper are usually complex, technical documents, but their thorough understanding will give us an information advantage over other, less attentive investors.
Usability - it is also worth considering whether this project brings something new to the market and whether it is, in its own way, innovative.
Marketing - we must check whether the creators of the project deal with its advertising and promotion. It is known that selling any material good without its promotion is extremely difficult, and with the current competition on the market it may even be impossible.
Development team - one of the most important issues - it is necessary to check the credibility of people creating a given project. It depends only on them whether it will be developed in the planned manner and in accordance with the assumed schedule.
** Number of coins produced / distribution method** (so-called coin supply):
- How many cryptocurrencies does the team own?
- How many coins are currently available on the market - the quantity extracted and put into circulation.
- Speed of extraction / entry into circulation.
By deciding to invest your bitcoins (BTC) in altcoin, you can buy them on one of the cryptocurrency exchanges or invest in projects that are in the ICO phase - the equivalent of IPO in the world of cryptocurrency. Buying altcoin on a proven stock exchange gives us confidence that it is somewhat proven and investors are interested in it. Investment in ICO carries the risk that, at some point, the project may unfortunately be abandoned, and thus our invested funds will become worthless.
In summary, investing in an ICO is more risky but offers potentially higher investment returns. It's like taking part in the Apple pre-sale. The whole problem is that for every Apple there are hundreds of companies that have gone bankrupt. Therefore, at the very beginning of your adventure with cryptocurrencies, we recommend focusing on altcoins available on the world's largest stock exchanges - e.g. Binance or Coinbase. If you are interested in the subject of ICO, read the article discussing in detail the procedures related to such an investment.
Purchase of the first altcoin on the stock exchange
When our funds are already available on your account, it is worth analyzing the market situation and decide in which altcoin we want to invest.
(NOTE - it is best to divide your funds into several projects instead of putting everything in one bag!)
Let's start shopping the second largest cryptocurrency - Ethereum (ETH)
In the search engine on the right, enter the abbreviation of the currency of interest to us - in this case, Ethereum is ETH. To go to the currency chart and the possibilities of buying and selling it, just click on the name of the currency pair - ETH / BTC.
A screen showing the current purchase and sale orders will appear here. In addition, we see the current cryptocurrency chart, transactions made and fields of interest marked with a yellow arrow to buy (buy) or sell (sell). To make your first ETH purchase, enter the price at which you want to buy the currency and quantity in the "price" field. This is usually the current market price, but we can "set" our purchase orders at a lower rate if our analysis tells us that the price of a given cryptocurrency will be falling. Binance came to the rescue here - using the 25%, 50%, 75% or 100% buttons we can specify exactly how much bitcoins we want to exchange for a given currency.
It is worth noting that there are two types of buy and sell orders. The first is Limit (buy / sell). With its help, we add our order to ordebook, which is a set of all orders on a given pair of currencies. The order will be processed when someone buys or sells from us at the price we have determined (depending on which side of the market we set our order on). This type of order increases market liquidity, thanks to which we pay a lower commission for a Limit order. If you have a problem imagining this, think about the list on which several people write at what price they would like to buy or sell a basket of apples.
The second type of orders are Market (buy / sell) orders. With their help, we buy altcoin at the current market price. We do not issue orders but carry them out from someone. We pay a higher commission for this, but we don't have to worry about whether our offer will be realized. Referring to our simple analogy, it's as if another person took our list of apples and looking at the prices at which the rest of the traders would like to sell or buy a given item, pointed to one of the orders and said that at this price he is able to, e.g. buy basket of apples.
After clicking on any of these buttons, the system will automatically calculate the amount of ETH that can be purchased at the current market price and provide us with the amount we will pay. When we decide on the price and quantity we want to buy, we confirm it by clicking the green Buy button. Well done - you just bought Ethereum!
Transfer of purchased ETH to wallet
After purchasing ETH on the stock exchange, we must decide whether we want to keep them on the stock exchange or send and secure them in our private wallet. If we trade every day and anticipate an increase in the purchased cryptocurrency within a few days, we can of course leave it on the stock exchange for sale, but if we want to hold the item for a longer period of time, it's worth deciding to send it to your private wallet. </ br >
We return to the Atomic application, which also supports ETH.
To get the ethereum wallet address, click "Receive".
And we copy the wallet address that was displayed.
Then go to the site Binance and click on "Wallet" and "Withdraw".
Here, select the coin you are interested in from the list or enter its abbreviation.
After choosing Ethereum, a window will appear in which you should:
Paste the copied address from the Atomic application - Ethereum wallet address. (remember to check that after pasting the address the correctness of the address displayed in the Atomic wallet!).
Enter the amount you want to send to this address - you can choose the entire amount or send only a part of our Ethereum. Currently, the minimum amount we can send is 0.02ETH.
When approving the transaction, the system will ask you to enter the 2FA code once again for security reasons and we will receive an email in which you will need to confirm the transaction.
Ethereum is one of the currencies that "travels" between addresses at a very fast pace, so after a moment of sending should be in our private wallet.