Want to skip straight to the answer? You can buy all the altcoins on this list on Coinbase!
Although you can buy any small fraction of Bitcoin or Ethereum, there’s something special about owning several coins of a cryptocurrency. If you don’t have thousands of dollars to invest in crypto with, then you won’t be able to own full coins cryptocurrencies like Bitcoin and Ethereum. Luckily, there are thousands of cryptocurrencies on the market, and there are plenty of cryptocurrencies under $5 that have massive growth potential!
What Are Altcoins?
If you’ve been involved in cryptocurrency at all, you’ve probably heard the term altcoin. The term altcoin refers to any cryptocurrency other than Bitcoin, with few exceptions. Stablecoins are cryptocurrencies pegged to other assets like the U.S dollar, and they’re typically referred to as stablecoins, not altcoins. Also, Ethereum is usually just referred to as ETH or Ether, as its mass adoption and robust ecosystem put it in a category of its own.
Altcoins Versus Bitcoin
There are some important differences between altcoins and Bitcoin that you should be aware of before investing in altcoins. Generally speaking, altcoins are higher risk investments when compared to Bitcoin. Bitcoin has seen mass adoption from governments, institutions and retail investors alike, giving it a wide user base and robust decentralized network.
Also, many altcoins don’t have a maximum supply. While there can only be 21 million bitcoin ever created, many altcoins have a set inflation schedule to facilitate the project’s growth. It’s important to know a token’s inflation rate before investing, as this can affect the altcoin’s price.
Cryptocurrency Market Capitalization
Before buying a cryptocurrency because of its seemingly low price, you need to make sure the price is low because it’s market capitalization is low. Cryptocurrencies like Dogecoin have an enormous market capitalization, as there are over 100 billion tokens in circulation. What’s more, 10,000 Dogecoin are mined every minute, effectively decreasing the value of DOGE on a per token basis.
Let’s take a look at how token supply, market capitalization and token price are related. Let’s look at 2 cryptocurrencies: Dogecoin and Yearn.finance.
- Dogecoin has a circulating supply of 130 billion tokens. Each token is worth about 25 cents, and its market capitalization is $33 billion (token supply x token price).
- Yearn.finance has a circulating supply of just 36,000 tokens, and each token trades for over $28,000. Due to the low supply, the market cap of YFI is just over $1 billion.
So even though Dogecoin has a much lower price, it’s much harder to make a large percentage gain from investing in DOGE. While a $1 billion influx of capital to yearn.finance may double the price of the token, a $1 billion influx of capital into DOGE may only raise the price by a few percent.
Best Cryptocurrencies Under $5
- Cardano (ADA) is among the top competitors to Ethereum. Its proof-of-stake network allows for higher transaction throughput and inexpensive fees. The founder, Charles Hoskinson, also helped create Ethereum. Cardano has the highest market cap of the coins on this list at $40 billion. The token is currently trading at $1.28, down from it’s all time high of over $2 per coin.
- 1inch (1INCH) is an aggregator for decentralized exchanges like Uniswap and SushiSwap. The platform allows investors to get the best price possible for the crypto they want to invest in, and the platform has over $40 million locked in its smart contracts. 1inch is trading at less than 50% of its price in May, coming in at just $2.40 per token. It’s market cap is also surprisingly low at just $414 million. If you believe in the DeFi industry, then 1inch may be a good investment for you.
- Terra (LUNA) uses fiat-pegged stablecoins to facilitate a global payment system. The protocol uses its native token LUNA to collateralize payments on its network. While the token is currently trading at $5.16, you may be able to pick some up under $5 if you’re able to buy the coin while it’s down. The project has a market cap of $2.2 billion, ranking it the 43rd most valuable cryptocurrency by market cap.
- Celo (CELO) aims to make cryptocurrency more accessible to the masses. Instead of using a long string of numbers and letters for users’ public keys, the project uses investors’ phone numbers as their public keys. This makes it easy to send and receive crypto from users’ contacts. The token is currently trading at $2.96, and it holds a market cap of $734 million.
- Curve DAO (CRV) is the backbone of many decentralized finance (DeFi) services on Ethereum. The platform focuses its exchange on stablecoin trading, giving users the best price possible for fiat-pegged stablecoins. The token is currently trading at just $1.50, and it’s market capitalization is a modest $540 million.
Where To Buy Altcoins
While major cryptocurrencies like Bitcoin and Ethereum can be bought on any cryptocurrency exchange, certain altcoins are only available on specific exchanges. Luckily, all of the altcoins on this list are available on Coinbase. Coinbase is the largest U.S based crypto exchange. It’s a publicly traded company, so you can rest easy knowing that your funds are in good hands.
If you’re looking for more variety, then consider Binance as your exchange of choice. The platform offers plenty of altcoins to invest in, and it’s the largest crypto exchange in the world. However, most investors would consider Coinbase more secure than Binance, as Coinbase stores the majority of investors’ funds in cold storage.
Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.
Cryptocurrency is offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.
Are Cheap Cryptocurrencies Worth It?
Inexpensive cryptocurrencies can be enticing due to their large growth potential, but they aren’t for everyone. Altcoins are more risky than Bitcoin or Ethereum, which are volatile assets themselves. Generally speaking, the smaller the market cap a coin has, the more risky the investment is.
This being said, altcoins typically provide higher returns than Bitcoin during a bull market. Conversely, altcoins depreciate faster in bear markets, so make sure to only invest money you’re able to lose.
How To Store Cryptocurrency Safely
Once you make your purchase on an exchange, you should consider where you’ll store your crypto. It’s not recommended to store your funds on an exchange. This is because crypto exchanges hold custody of all their users’ funds, making them large targets for hackers.
Instead, you should opt for a hardware or software cryptocurrency wallet to store your crypto. This way, you own the keys to your crypto, allowing you to control your coins yourself. While software wallets usually suffice, hardware wallets (cold storage) is the most secure way to store cryptocurrency.
- ERC-20 tokens
Best Hardware Wallet: Ledger Nano S
Cryptocurrency investors have trusted Ledger to store their cryptocurrencies since 2014. The hardware wallet manufacturer sells 2 wallets: the Ledger Nano S and Ledger Nano X. Both wallets serve the same function, but the Nano X has a few premium features and a higher price point.
Both wallets are multicurrency wallets, meaning you can hold a variety of different cryptos on the same wallet. The device stores your cryptocurrency offline, making it impossible for online hackers to access your cryptocurrency investments.
- Active Crypto Traders
Best Software Wallet: Coinbase Wallet
If you aren’t looking to shell out the money for a hardware wallet, then you should consider a software wallet. Most software wallets on the market are free, and they offer a secure storage solution for crypto.
Coinbase Wallet is especially convenient if you use Coinbase, as you can send and receive crypto from Coinbase extremely easily. Plus, you can store plenty of different cryptos on Coinbase Wallet, so you won’t need to have several crypto wallets.
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