Alternative coins or altcoins include all cryptocurrencies other than Bitcoin and tokens such as Ethereum, Litecoin, Dogecoin, and thousands of other cryptocurrencies.

You need an account with a cryptocurrency exchange to get started. Some exchanges allow you to trade altcoin-bitcoin pairs, which means you can buy and sell altcoins using bitcoin. Trading altcoins for bitcoin is a great choice if you want to increase the amount of bitcoin in your portfolio.

Most crypto exchanges support at least some altcoins. Depending on the exchange you choose, the types of altcoins you can buy differ. Some crypto exchanges offer financial derivatives, interest-bearing accounts, and even pre-approved loans.

Check out our list of the 6 best exchanges for altcoins.

Commissions

Depends on security and leverage

Account minimum

$ 50 for the US and Australia; $ 200 everywhere else

Best for active investors: eToro

eToro is a great choice if you want to be actively involved in cryptocurrencies. eToro has a unique social media platform on its exchange and enables users to communicate trading ideas with one another.

eToro is a great place for beginners to learn about crypto as it has this built-in platform. Many beginners find eToro’s simple user interface easy to learn. Also, eToro has a unique feature called CopyTrader that allows users to allocate a portion of their money to mimick the portfolios of popular traders.

Commissions

. 25% or less

Account minimum

0.00001 BTC

Best for mobile users: Gemini

Gemini, a cryptocurrency exchange, is a great choice for mobile users. It offers a sleek mobile app for iOS and Android that you can use to manage your crypto on the go. Gemini currently offers Bitcoin and 25 different altcoins.

You can also purchase an insured wallet from Gemini that will protect you from online security breaches. You can refer to several crypto hacks over the years, so it’s good to have an extra layer of security like insurance. Buy a hardware wallet if you don’t have insurance.

Commissions

0.50% for salt

Best for beginners: Coinbase

If you are a beginner looking to invest in cryptocurrencies, check out Coinbase. Coinbase offers around 40 different altcoins to choose from and a unique feature that allows you to automatically convert any altcoin to another altcoin when exchanging. Coinbase can do this because it is a crypto broker, not an exchange. The 2 altcoins are not traded against each other. Coinbase will only credit your account with the correct tokens.

Coinbase offers a website and a mobile app for iOS and Android. To top up your account, you can connect to your bank by wire transfer or credit card. Alternatively, you can send cryptocurrency to your Coinbase wallet to fund your account.

Account minimum

Depends on the asset

Best for derivatives: octopuses

Kraken is a great choice for any cryptocurrency investor. The exchange has crypto guides that you can refer to to learn how the exchange works and how different cryptocurrencies work.

Kraken also supports crypto derivatives trading on its platform. You can buy cryptocurrency futures and trade them with a margin of up to 5x. Be aware that margin trading is high risk and you have a chance of getting liquidated.

Best for Ethereum: Argent

Argent is technically an Ethereum wallet, not an exchange. You can exchange altcoins directly in the mobile app. That is why it is included in this list. Argent is an Ethereum wallet so you can store any Ethereum based token. Some examples of tokens on Ethereum’s blockchain are ChainLink, Uniswap, Binance Coin, and WBTC.

Argent also allows you to interact with several decentrally funded (DeFi) applications based on Ethereum. This is probably Argent’s best feature as it allows you to earn interest on your cryptocurrency investments. Interest rates on these platforms can reach up to 50% annual return depending on the cryptocurrency you have in your account.

Best for Altcoin Variety: Binance

Binance, a leading cryptocurrency exchange with several built-in features, gives you the ability to trade against Bitcoin, US Dollar or USDT trading pairs. (USDT is a stable coin that is pegged to the US dollar and has a 1: 1 ratio to the US dollar.) Binance also has its own token, the Binance Coin (BNB), which you use to pay transaction fees can.

Depending on your location, Binance may also offer financial derivatives. Binance offers margin trading in some regions and allows you to leverage your crypto positions.

Crypto Exchange vs. Broker

Crypto Brokerages and Crypto Exchange have the same function, but they work differently. Crypto brokers like Coinbase set the price for altcoins in line with the market. Alternatively, crypto exchanges use order books, which consist of buy and sell orders, to set the price of their altcoins. Binance is an example of a cryptocurrency exchange.

Which exchange has the most altcoins?

Of the exchanges listed above, Binance has the largest selection of altcoins. Binance supports 184 different cryptocurrencies and over 500 trading pairs. Other exchanges still support most of the large cap altcoins, and both Coinbase and Gemini support dozens of altcoins.

Argent technically supports more tokens than these exchanges. You will use less variety as Argent only supports Ethereum-based tokens. Most investors place more value on the quality of the altcoins supported on an exchange than on the number of altcoins offered on an exchange.

Altcoin watchlist

You can choose from many altcoins on the market. Decentralized financial tokens (DeFi) are enjoying increasing popularity with investors. The aim is to replace centralized banking functions with code in the blockchain. DeFi tokens are usually built in the form of ERC-20 tokens on Ethereum’s blockchain.

Other altcoins that work with their own blockchain can offer significant advantages over using Ethereum. ERC-20 tokens are often limited by scalability issues in the Ethereum network. These scalability issues should be addressed later this year as the Eth 2.0 upgrade is slated to be released in November 2021.

Consider adding these altcoins to your watchlist:

  1. Ethereum (ETH): Ethereum is trading at $ 1,720 and has a market capitalization of $ 196 billion. It is the largest altcoin by market cap. Ethereum offers developers a platform to build decentralized applications with their own native tokens.
  2. Polkadot (DOT): Polkadot is trading at $ 22.87 and has a market capitalization of $ 20.7 billion. It is the fourth largest altcoin by market capitalization.
  3. Uniswap (UNI): Uniswap is currently trading at $ 19.23 per token. With a market capitalization of $ 5.8 billion, UNI is the 14th largest altcoin. The UNI token is an ERC-20 token that is unique to the Uniswap platform. With Uniswap’s platform, users can exchange Eth tokens and ERC-20 tokens through smart contracts. Uniswap also pays its users to provide liquidity on its platform as liquidity is required for decentralized exchanges like Uniswap to function.
  4. Yearn.Finance (YFI): Yearn.Finance trades at $ 33,460 per token and a market cap of $ 1.2 billion. That makes Yearn.Finance the smallest market cap coin on this list. Yearn.Finance, a decentralized financial protocol based on Ethereum’s blockchain, piques user interest by optimizing lending through smart contracts. These loans have no risk of default as repayment is guaranteed by collateral in the smart contract.
  5. Stellar (XLM): Stellar is currently trading at $ 0.39 and has a market cap of $ 8.7 billion. Stellar focuses on bank transfers of money between countries. It uses blockchain technology to transfer value across borders and then transfer it from cryptocurrency to the region’s fiat currency. The SEC recently filed a lawsuit against Ripple, Stellar’s largest competitor. Since then, Stellar’s price has risen dramatically.

Should you invest in altcoins?

Only invest in volatile altcoins if you are risk tolerant. More established altcoin projects like Ethereum are generally less risky than small cap coins, but offer lower returns. Before you invest in an altcoin, do your research:

  • What problem does this altcoin solve? Can’t figure out what problem an altcoin solves? Chances are the project isn’t adding much value to the market. Some coins that solve trivial problems may still be appreciated in the short term, but you should question the long term sustainability of the project.
  • Why does decentralization help solve this problem? Using blockchains that don’t require decentralization often leads to inefficiencies. Blockchains are slow, energy-intensive, and difficult to use. Before investing in an altcoin, ask yourself if decentralization is required on a blockchain for the project to run. If it doesn’t, then the company has likely spent its altcoin an easy way to raise capital. This was extremely common in the 2017 bull market when the first coin offering (ICO) madness took place.
  • Who developed this project? Knowing the main developers and founders of the altcoin project you want to invest in will give you some insight into how to manage the project. If a project doesn’t show any team members on its website, it’s a red flag. Altcoins developed anonymously are fraudulent. It’s also a good idea to check out the founders / developers on outside websites so you can see their past experiences and verify their identities.
  • How many coins are minted / are on offer? The price of an altcoin has little to do with its growth potential. Just because a cryptocurrency is cheap doesn’t mean it has more room to grow than a more expensive coin. You should also know the maximum supply of coins and how many coins are currently in circulation as this will greatly affect the price of the altcoin.

Investing in the right altcoin projects can generate huge returns. In the 2017 bull market, it wasn’t uncommon for investors to get 10 or even 100 times their return on altcoins they had held during the market cycle.

Gemini develops crypto products that you can use to buy, sell and store bitcoin and cryptocurrency. You can buy bitcoin and crypto instantly and have a clear, attractive interface with all the tools you need to understand and invest in the crypto market. The Gemini Crypto Platform offers great options for account management. You can manage your account at a glance, view your account balance 24-hour changes and percentage changes. Get started with Gemini now.