If you’re new to cryptocurrency trading, you may be surprised to learn that there are other coins that you can buy and sell beyond Bitcoin, Litecoin and Ethereum. In fact, there are currently thousands of so-called “altcoins” (coins that aren’t Bitcoin and that don’t have a consistently stable price) available on the market. Savvy cryptocurrency traders constantly compare the values of each coin in an attempt to find the next coin.
One relatively new offering that began to gain attention in 2018 is IOTA. IOTA has consistently raised in price since its initial offering and how holds the 17th largest coin with over $1.1 billion market capitalization. There’s over 2.7 billion IOTA in circulating supply. This puts IOTA above the range of other coins, including longtime standbys like Ethereum Classic and Cosmos as well as new and up-and-coming coins like Chainlink and Basic Attention Token.
But what exactly makes IOTA special and how can you invest in it? Today, we’re going to take a look at the IOTA coin, learn more about its features and show you a few exchanges you can use to buy it.
Quick Look: The Best IOTA Exchanges
- Best overall: Voyager – Earn a $25 bitcoin credit just for signing up
- Huobi Global
What is IOTA?
IOTA (sometimes listed on exchanges as “MIOTA”) is a type of digital currency postulated as money that you can use on the “Internet of Things” (IoT). The main principle behind IoT dictates that any type of electronic device can, in theory, be synced with any other electronic device. In other words, the idea behind using cryptocurrency in the IoT is to use a digital currency as a method of communicating with enabled electronic devices.
Why would you use a cryptocurrency for this instead of a credit card? Credit cards usually charge retailers high fees in order to process transactions. For example, if you use a credit card to buy a soda from a vending machine, your Visa or Mastercard would charge Coke or Pepsi a dollar or so to process the transaction.
Depending on the size of the purchase, this can completely wipe out any profit made by the merchant. Large corporations and chains might make enough money to cover the cost of credit card fees, but smaller mom-and-pop shops often can’t. These fees are why you might see a “$5 minimum credit card charge” when you visit your favorite deli or gas station.
IOTA bucks the traditional blockchain model of cryptocurrencies to lower fees by operating on its own network, called Tangle. Most cryptocurrencies like Bitcoin use a series of blocks and miner to verify and record transactions.
Unfortunately, the approvals needed to send a Bitcoin take some time and a percentage of the Bitcoin being sent is lost to transaction fees. This also means that, as more and more users send bitcoins, transactions take longer due to a lack of available blocks to verify the transactions.
Tangle uses a mathematical concept called “directed acyclic graphs” (DAG) to verify and complete its own transactions. By operating on its own nodes instead of outside miners owned by third parties, IOTA claims to have solved some of the most common problems associated with sending Bitcoin, like network delays and congestion. IOTA also claims to not charge any kind of fee to send or receive a transaction, which makes it much more affordable than both Bitcoin and credit card transactions.
Does this sound too sci-fi to be useful? Let’s look at a potential use case for IOTA. Say that you arrive at a bar and the venue owner tells you that you can’t bring your laptop inside. He offers you a locker enabled with IOTA technology that allows you to store your things for 10 IOTA per half an hour. The locker would be more secure (because it can only be accessed with your unique code) and fees would be eliminated for the merchant. This means that even tiny retailers can allow IOTA purchases without worrying about fees.
How Do You Trade IOTA?
If you’ve spent any time learning how to trade cryptocurrency, you’ll have a very easy time buying and selling IOTA. IOTA trades like a standard cryptocurrency on exchanges. An exchange is a hub where you can buy, sell and trade cryptocurrencies. When you sign in on an exchange, you’ll need to provide a bit of personal information to open an account. This is to prevent fraud and keep your account secure.
To make a trade on an exchange, you need some kind of capital. The most common type of capital on exchanges is Bitcoin. Though some exchanges allow you to buy cryptocurrencies by linking your bank account or credit card, most of these exchanges aren’t yet hosting IOTA because it’s so new. Thus, you may need more than one exchange account if you want to buy IOTA.
The easiest way to do this is by opening an account on an exchange that allows you to buy major cryptocurrencies using a wire transfer or card (like Coinbase or Kraken) and buying a bit of Bitcoin. Then, transfer your Bitcoin from your exchange wallet to the wallet of an exchange that supports IOTA. Once you’ve exchanged your Bitcoin for IOTA, it’s a good idea to move your currencies into an exterior wallet. This is because international, large-scale exchanges are often the target of hackers and scammers.
What Exchanges Trade IOTA?
Because IOTA is a relatively new offering, you won’t have as many options when it comes to choosing which exchange you want to use. Almost no U.S.-based exchanges host IOTA, which means that it’s virtually impossible to buy IOTA directly using a credit card or bank transfer.
When you choose an exchange, the first thing you need to look at is its coin offerings list. Make sure that the exchange supports both IOTA and your transition currency you’ll use to buy it. Most exchanges offer a list of every coin pairing that they support, so it’s not difficult to figure out if the exchange allows you to trade IOTA.
Next, look for security features. Due to the decentralized nature of cryptocurrency, it’s very important to make sure that your cryptos are held in a safe and secure exchange. Read each exchange’s list of security features and look for ones that offer things like two-factor authentication and multi-layer encryption to prevent hacks.
Finally, you need to choose an exchange that allows you to create an account in your area. The legality of cryptocurrencies is hotly contested and not every exchange is allowed to operate in every country. A few of the exchanges that host IOTA only operate in South Korea or require a Korean bank account. Be careful and make sure your exchange is region-specific before you create an account.
Our Top Picks for the Best IOTA Exchanges
Now that you understand what you should look for in an exchange and how you can buy IOTA, it’s time to start trading. We’re giving you a crash course in a few of the most popular exchanges currently hosting the IOTA token.
If you prefer to trade your cryptocurrencies on an app, you’ll love Voyager’s platform. Voyager is one of the only U.S.-based exchanges that hosts IOTA, which can make it a top choice for traders who are particularly concerned about tax implications and security.
Voyager is also the only platform we found that allows users to directly fund their accounts with USD and buy IOTA in a single app. If you’re very new to cryptocurrencies and you’re still getting the hang of using trading tools, Voyager’s easy-to-understand platform can be a powerful asset.
Voyager uses a technology called a “smart order router” to give you access to trades on international exchanges from a domestic platform. Voyager’s advanced charting tools are intuitive yet powerful, making them equally as useful to a new trader as they are to a veteran. Voyager has recently expanded its operations, allowing traders from any state to access the app with the exception of New York. Though international trading is currently unavailable, the company has plans to expand beyond the U.S. in late 2019.
By far one of the most popular cryptocurrency exchanges in the world, using Binance is currently the best way to trade IOTA. Binance supports almost every altcoin imaginable and features over 100 cryptocurrencies and a wide range of pairs. Binance’s platform is easy to use and reliable, servicing over 1.4 million transactions per second. To complete a trade on Binance, simply locate the coin you want, click “buy” or “sell” and your transition currency, put in the order and Binance will take care of the rest. A global exchange, Binance is available to users in almost every country on Earth.
In addition to a solid platform, Binance also offers a number of intuitive charting options. You can adjust candlestick timelines with a single click, which allows you to adjust individual candles from one minute to one week. Binance also offers a comprehensive mobile app that mirrors the full functionality of the desktop platform.
Unfortunately, Binance doesn’t currently support direct cryptocurrency purchases — you’ll need to transfer in your Bitcoin or other transition currency to buy IOTA. Though Binance has had security issues in the past, the exchange has introduced new encryption measures and two-factor authentication to offer traders a more secure experience. A solid, powerful and simple-to-master exchange, Binance is the best platform currently hosting IOTA.
Huobi Global is the international edition of Huobi, a major Chinese exchange. Huobi Global offers traders a whopping 190 cryptocurrency pairs to trade, including IOTA. What makes Huobi Global stand out among other international exchanges is the number of IOTA-supported pairs you can use. Instead of simply allowing you to convert Bitcoin to IOTA and back again, Huobi Global supports trades between IOTA and Tether (USDT) and Ethereum (ETH) as well. This can be an especially useful feature for frequent or professional traders, especially now that Bitcoin is especially volatile.
Huobi Global offers traders a professional-level platform. Don’t be intimidated by the number of facts and figures you see on the screen — Huobi is especially easy to use. You can view real-time data on every cryptocurrency as well as quickly switch your candlesticks to change the view over time.
Creating the Perfect Crypto Portfolio
A diverse portfolio can increase the gains you see over time. However, altcoins may fluctuate in value much more quickly than the already-volatile Bitcoin. If you decide to invest in cryptocurrency, it’s important to remember that the frontier of the market is still unregulated. It’s possible that your portfolio can triple in value overnight — but it’s also possible that you can lose everything in a matter of hours. Be smart and only invest what you can afford to lose.