< Previous Next >
How to Buy IOTA (MIOTA): Quick Guide
DISCLAIMER: None of the following is intended to be investment advice. This is only meant to be a description of what has worked well for me so far, and my own opinions. Also, full disclosure, my links to Coinbase and Binance include referrals. It actually benefits you to use them because we will both get an extra $10 worth of BTC for free if you deposit at least $100 to Coinbase. Thanks in advance if you follow the links when you make your accounts — and even if you don’t, I hope this guide helps you out!
This guide will teach you how to buy IOTA from square one (i.e., all you have is fiat money, no cryptos). It will also work for most other cryptocurrencies, but as I’m focusing on IOTA right now, I am going to write a quick foreword about it and then we’ll get right into the details of the guide.
A Little About IOTA — Why Buy?
There is a massive subset of people who are new to the crypto-space entirely but have only heard of Bitcoin. Then they go online and they search around and figure out there are actually many, many cryptocurrencies out there with many different use cases. The basics of IOTA’s most salient use case are pretty easy to summarize without getting into technical jargon: the coin is designed to be fee-less, eliminate mining, and scale better than any other coin on the market today. In fact, IOTA is designed in such a way that it is actually scales better and faster the more people are using it.
“How could such a thing be possible?” you might ask. Well, IOTA requires you to rethink everything you think you know about cryptocurrencies. Strap in, because this review is going to require us to get into some fairly technical details to fully explain. Remember those “blockchains” you’re always hearing about? IOTA doesn’t use one. It still has a public ledger of a sort, but it is not a blockchain. Instead, they are calling it “the Tangle.” The Tangle is a directed acyclical graph, or “DAG” for short.
Depending on the number of transactions being pushed through the network at any given time, the Tangle looks something like this, whereas a traditional blockchain would look more like a straight line of boxes. In the Tangle, every user of IOTA must do the work of a “node.” The basic idea is that if you want to send a transaction, your wallet will automatically help verify two other transactions. In this way, each person who uses IOTA is helping to scale IOTA — pretty cool, right?
Now, this scaling system comes with some caveats. Without getting too technical, the Tangle doesn’t work too well when there are only a few users of the system. Enter the “Coordinator.” The Coordinator is a special node run by the Iota Foundation. This node uses special transactions called “milestones” to protect the network; without it, a large-scale attack with many GPUs could easily overwhelm the Tangle in its current state.
What this means is that IOTA is effectively centralized right now — you have to trust the Iota Foundation to transact with IOTA. This is a worrisome fact, but there are a couple reasons this isn’t as big of a deal as it seems at first glance. The first is that the Iota Foundation is strongly disincentived to do anything malicious — obviously they don’t want to mess up their own project. The second is that the coordinator and its associated centralization is eventually going away once the Tangle is big and strong enough to resist GPU attacks on its own. Personally, I think the Tangle is probably the most interesting and promising scaling solution I’ve seen in all of cryptocurrency so far. Time will tell if it works out!
IOTA’s approach to scaling is ambitious and elegant, but it’s not the only reason to be interested in this cryptocurrency. It was actually designed as a means to facilitate the Internet of Things — that is, the network of various internet-connected “smart” devices in your everyday life (phones, appliances, vehicles, etc.). Literally any physical device that can exchange data could be considered part of the Internet of Things, and due to IOTA’s fee-less approach and swiftly scaling nature, one can easily envision it being used as a sort of fungible asset that facilitates devices trading other resources like electricity, bandwidth, storage, computation, data, and so on. Thus, IOTA may become the “backbone” of the Internet of Things. Perhaps the coolest real-world example I’ve seen is the concept of your car automatically paying a parking meter after you have parked. This is the sort of thing that could be facilitated by IOTA — as you can imagine, this technology could offer scalable solutions for many such modern-day problems.
Finally, I’m going to end the review section of this article with a quick price comparison. This time I’m going to be comparing IOTA to the big daddy of market capitalization: Bitcoin. Why? Two reasons. First, unlike Bitcoin, IOTA is fee-less. Second, Bitcoin’s biggest roadblock right now is scaling, and if that’s solved, you’ve got something that’s capable of acting as a true cryptocurrency, moving quickly and easily regardless of how many people are using it.
At the time of this writing, Bitcoin has a market capitalization of $229,515,954,815. If IOTA had Bitcoin’s current market cap, it would be worth roughly 82 dollars per MIOTA. That’s almost 25 times the current price (less than $3.50). Now, IOTA doesn’t have to surpass Bitcoin’s marketshare to be valuable and useful — but in this case, I could see it as an actual possibility. If this excites you as much as it excites me, it’s time to learn how to buy some MIOTA.
A quick note about IOTA/MIOTA: I will refer to buying “IOTA,” from now on, but bear in mind that what you’re actually getting from any exchange is measured in MIOTA even though they call it IOTA. This unit represents 1,000,000 Iota, the smallest divisible unit of this currency (comparable to Bitcoin’s “satoshi”).
Buying IOTA: Basic Strategy
To date I’ve had no problems with the following basic strategy:
- Create and sign into a Coinbase account. I recommend Coinbase because they are the most straightforward exchange.
- Purchase some ETH. At the time of this writing, this currency transfers the fastest and cheapest out of anything Coinbase offers. Litecoin competes here, but will cause hiccups later in the process — more on that later.
- Create and sign in to a Binance account. I recommend Binance because they have been reliable and convenient for me and they offer many different lesser-known cryptocurrencies with trading pairs on both ETH and BTC. An added bonus is that you can withdraw up to 2 BTC/day worth of funds with no verification at all.
- Move your ETH to Binance. Once it has confirmed, you can now easily use the ETH/IOTA trading pair to buy as much or as little IOTA as you want. More on trading pairs later.
- Send your coins from Binance to a safe IOTA wallet for long term storage if you intend to hold for awhile. This is not strictly necessary but it is considered a safer option than keeping ANY coin on ANY exchange long term. I personally believe Coinomi to be the safest and most convenient wallet for many cryptocurrencies. Unfortunately, they don’t support IOTA at this time, and probably never will. More on this later — but basically, this entire step is not really an option at the time of this writing. Even highly trusted hardware wallets like the Ledger Nano S and Trezor don’t support IOTA right now.
Now, if you’re a power user or someone with some existing familiarity with cryptocurrency, you can probably stop here. The rest of this guide is just going to be a more in-depth description of the preceding steps. If you’re completely new to cryptocurrencies, you might be a little lost — that’s fine! You won’t be by the time you finish this guide. I’ll go step by step:
Starting Out On Coinbase
This is arguably the most trusted exchange currently on the market. You can think of them as the PayPal of the cryptocurrency world, with all the good and bad connotations that come along with that. There are some countries where this is not the case! For example, in Canada, one would probably want to use QuadrigaCX instead. Unfortunately, that’s outside the scope of this guide, but I may do a country-by-country guide for acquiring coins later.
All you have to do here is go to Coinbase’s website and create an account. Security is incredibly important here — remember, in cryptocurrencies you are your own bank and so it is absolutely crucial that you follow good security practices. This means your password should be strong — and it should be a password you aren’t using anywhere else (including other exchanges). Google has a pretty good guide with some tips on choosing strong passwords. Keeping security in mind, it would also behoove you to turn on two-factor authentication once your account is created.
Once you are up and running there are a number of options when it comes to actually paying for coins via Coinbase. It is possible to link your bank account to Coinbase but actually transferring coins out of Coinbase will be impossible for a few days while the funds are clearing. This is obviously not ideal if you want to move quickly, as you would now have to wait several days to move your coins to an exchange where you can trade them for IOTA (or any other coin).
Instead, I would recommend you link a credit or debit card to Coinbase. This will allow you to purchase some amount of coins immediately, and then immediately send them off wherever you want — your wallet, another exchange, etc. At the time of this writing Coinbase offers three coins: Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC).
What to Buy First?
In my opinion if you intend to buy lesser-known coins like IOTA, ETH is the best choice to buy here. Why? Well, with regards to LTC, the reason is clear: other exchanges like Binance offer direct trading pairs for BTC and ETH, but not LTC or any other currency. What this means is that you could directly exchange your ETH for IOTA, or your BTC for IOTA, but you’d have to perform another step if you wanted to trade your LTC for IOTA (and that means more fees!). Obviously we don’t want to waste even one cent if we can avoid it, so LTC is out.
With regards to BTC, at the time of this writing there have been a lot of rumblings about high transaction fees, slow transaction times, etc. Exchanges often overpay these fees as well, and that means that you are again risking missing out on more money than you need to.
ETH is therefore currently the best choice for our purposes by default — fastest transaction speed, lowest transaction cost. So, to review: create a Coinbase account, link your credit or debit card, and purchase ETH.
I Bought ETH: What Now?
Now is the time for you to make your Binance account. Follow the link and create an account using a strong password (this should be different than the one you used for Coinbase!). There are other places where you may be able to buy IOTA (Changelly, Kraken, EtherDelta, HitBTC, KuCoin, etc.). I cannot directly recommend most of these exchanges as I don’t have much experience with them at this point — however, I can say that I have used HitBTC and KuCoin and they have worked well for me. This guide focuses on Binance because my experience there has been 100% positive — I have transferred coins in and out of their system many times with no problems.
After your Binance account is made, click “Funds” at the top right, then “Deposits Withdrawals” beneath it. Find Ethereum in the list and click the “Deposit” button on the far right. You should end up with something that looks like this:
Unlike the picture, there will be an “ETH Deposit Address” listed in the box at the bottom left. This is a very long series of letters and numbers, and is the fundamental basis of most if not all cryptocurrencies. An “address” is simply the destination for funds — think of it like the account and routing numbers at the bottom of your checks. For many cryptocurrencies such as Bitcoin it is possible to have multiple “receiving addresses” which point towards the same wallet.
The address listed here is Binance’s “receiving address” for your Ethereum. To the right of it is a “copy address” button — use it to put the address into your copy/paste buffer. Then, in your Coinbase account, navigate to the Accounts tab and then to your ETH Wallet. Paste in your address. You should double check that the pasted address is the same one you saw on the deposits page in Binance — you can never be too sure when it comes to security! Once you’re sure you’re sending to the right place, input the amount of ETH you’d like to send (if you just want to buy some IOTA, you should send all of it) and click “Send.”
Optional Trick: Using GDAX To Save Money On Fees
GDAX, or “The Global Digital Asset Exchange,” is the actual exchange which backs Coinbase. You can use it to save a lot of money on fees if you’re willing to spend a few extra minutes getting verified. Follow this link and click “DEPOSIT.” Click “Coinbase Account” at the top and deposit all your ETH from Coinbase into GDAX.
Once you’ve done this, you can click “WITHDRAW” in GDAX and send your funds from GDAX to Binance. Fees are significantly reduced with this method!
I Sent ETH to Binance — Now What?
Once you click Send, you will need to wait a little while. Without getting too technical about it, exchanges want to be as secure as possible. Thus, when you make a deposit, they wait for multiple “confirmations” from the network before allowing you access to your funds. You can view the progress in your Binance account by clicking Funds and then History. Do not be alarmed if nothing shows up at first! There are many reasons there might be a slight delay. In general you should see the transaction show up within a few minutes, with the current number of “confirmations” next to the number of required “confirmations” next to it. Be patient — your IOTA is nearly in hand!
Once you have the required number of confirmations, it’s time to trade your ETH to IOTA. This is blessedly simple. In the front page of Binance, click “ETH Markets.” Search for “IOTA/ETH” in this list, and click it. Now you are on the trading page. In the bottom left under “Buy IOTA,” click “100%” below the “Amount” field.
This indicates to Binance that you’d like to trade all of your ETH for a commensurate amount of IOTA for no more than the price listed above. The price field is automatically listed based on the current market. If you like, you can change it to a different price, but like any market it’s not guaranteed that someone will buy at the price you’d like. Your order will remain open until it’s been fully filled or you cancel it. There are several options here such as Stop-Limit orders, etc., but this is outside the scope of this guide. In this case, you are simply placing a “Limit” order for some IOTA.
I Placed My Order! Am I Done?
If you want to be done now, you can be — but there are more steps if you want to be security-conscious. You may want to check under the “Orders” and “Order History” tabs that the order went through — if you placed a Limit order at the default price, it probably did. Once you have your IOTA in your Binance account, you can see them under “Funds” → “Deposits Withdrawals.” You can click “Hide 0 Balances” at the top to clean up the screen of coins you don’t own, and you can see an estimate of the overall converted BTC and USD value of your account at the top right.
For maximum security, I wouldn’t leave your coins in the exchange. I like and trust Binance, but ANY site can be hacked or experience downtime — even massively established trusted sites like PayPal. You want to have full control of your coins.
How Do I Move My Coins to a Private Wallet?
In Binance, go into the “Deposits & Withdrawals” tab, then click “Withdrawal” to the far right of the “IOTA” row. By now it should be clear what you’re looking at — fields that let you input the address to send the coins to, and how many coins to send. For your convenience, there is a “Max” button to the right of the Amount field. Note that once you click “Submit” you will need to use your two-factor authentication via Google Authenticator. I recommend picking up an inexpensive Android phone for use with Google Authenticator — as a bonus, you can use such a phone for the Coinomi wallet when dealing with other cryptocurrencies.
Hey, it says withdrawals are suspended! What’s going on?
Well, here’s the hiccup: like I mentioned earlier in the “Basic Strategy” part of this guide, withdrawing to a private wallet isn’t really feasible right now for a variety of reasons. The first is that Binance has suspended withdrawals of this currency. The reason for this is ostensibly that IOTA has been suffering some pretty nasty spam attacks lately — this is obviously going to be an issue in a fee-less system, and it’s congesting the network. Have no fear, though — if you want to move the value of your IOTA out of Binance, it’s as easy as trading your IOTA for another coin like ETH and then moving that into a private wallet. The other unfortunate reality here is that IOTA’s wallet software just isn’t at the point where I want to use it.
Obviously, these are really big problems. IOTA, like all cryptocurrencies, is in its infancy — and given that it’s going in a heretofore unexplored direction, it’s unsurprising that the system is encountering new problems. Even so, I believe the idea of the Tangle will completely revolutionize the concept of scaling if the Iota Foundation can iron the kinks out. This has lead me to be interested enough in the coin to hold some on an exchange, despite the risk involved in doing so.
If you’ve followed my guide this far, then you’re the proud owner of some IOTA. Be advised that the information here only scratches the surface on IOTA and cryptocurrencies in general. I recommend you read as much as possible. Cryptocurrencies are the future, and if you’re reading this guide you are already lightyears ahead of the curve.
Come back soon because more content like this is always coming! If my work helped you or gave you something to think about, share it with others:
Sharing helps more people find my articles, and I’d love to be able to assist as many people as possible with cryptocurrencies. Also, if you have any ideas for future articles or specific questions, I’d love to hear them. Comments section coming soon! One last thing: if you’d like to chat with me in real time, check out my Patreon - I am running a public Discord for the discussion of cryptocurrency, and if you subscribe to my Patreon you can get a special role there!
Best of luck, and happy trading!
< Previous Next >