Learn to grow and diversify your assets with this simple guide on penny cryptocurrencies.
In this article:
- What Is a Penny Cryptocurrency?
- Why Are Penny Cryptocurrencies Suddenly Becoming a Popular Investment Choice?
- What Is the Best Penny Cryptocurrency to Invest In?
- Where to Buy Penny Cryptocurrencies
- What Are the Challenges of Penny Cryptocurrencies?
- How Do You Succeed in Investing in Penny Cryptocurrencies?
What Are Penny Cryptocurrencies And Which Ones Should You Buy?
What Is a Penny Cryptocurrency?
Let’s begin with the definition: what are penny cryptocurrencies? Penny cryptos are complex, volatile digital currencies that offer an insane potential market increase.
According to Trading Strategy Guides, purchasing penny cryptocurrencies may be a good choice for seasoned investors who can handle their complex yet potentially profitable market.
While they offer exponential market growth that traditional stocks and assets can only hope to achieve, they’re also very complex. Investors need to study the most promising cryptocurrencies in the market if they want to maximize their returns.
Why Are Penny Cryptocurrencies Suddenly Becoming a Popular Investment Choice?
Penny cryptocurrencies are generally much cheaper than conventional blue-chip options. For example, venturing into Quantstamp only costs a fraction of what Bitcoin costs right now.
There are generally four reasons why a penny cryptocurrency is cheap:
1. High Supply
Some penny cryptocurrencies cost so little because they have too much supply. Even top-performing options count as penny cryptos if they have an excessive amount of supply, which causes the price to remain low.
For example, Ripple XRP used to be one of the most promising cryptocurrencies. In fact, its low market value is only caused by its high supply.
However, that hasn’t stopped it from amassing the second largest market cap for a cryptocurrency.
Needless to say, new cryptos are immediately listed under penny cryptocurrencies, as the market value is still low. Perhaps the best penny cryptocurrency to buy is a newly minted option with great market potential.
3. Low Demand
Cryptocurrencies that once traded high, but eventually crashed, are penny cryptos. Their low market value is the result of their recent market value crash. Investors generally want to avoid these types of penny cryptocurrencies.
4. No Activity
Penny cryptos remain the same if they don’t show any progress. You might want to explore your options before deciding to purchase these types of penny cryptocurrencies.
What Is the Best Penny Cryptocurrency to Invest In?
A penny cryptocurrencies list could go on forever. Luckily, here are the top five best options according to U.Today and Coinformant.
Take a quick look. You might be able to spot the best cryptocurrency to buy right now.
Right now, Quantstamp may be among the most secure penny cryptocurrencies in the market. Its security-audit protocol scans for weaknesses, threats, and vulnerabilities in smart contracts before the developers even launch it.
This feature protects both investors and users against technology’s advancing malware threats.
What are smart contracts? These are computerized sets of instructions that automatically execute the conditions of cryptocurrency contracts.
Qlink is more than just a penny crypto — it’s a new idea. The blockchain startup has created the world’s first decentralized mobile network.
If Qlink continues to gain momentum, it may change today’s mobile network system. The company’s main goal is to increase efficiency and eventually lower the costs of mobile network communication.
Most commercial companies today charge high costs for mobile connection. Qlink aims to overhaul this system to create a faster yet more cost-efficient system.
According to U.Today, this is the best cryptocurrency under a penny that focuses on secure asset transfers through its peer-to-peer network. They also say this may be the best penny crypto for investors looking for a secure place to transfer cryptocurrencies.
Also, you can only acquire Ravencoin through mining. That means there’s a lesser chance for investors to hoard and monopolize this currency.
What makes cryptocurrencies unique is that central banks have no jurisdiction over them. If you want to make the most of this privacy, then you might want to consider investing in Bytecoin.
It only costs $0.00061795 (as of August 7, 2019) and is completely untraceable. Bytecoin is the first crypto to offer this level of security and privacy.
Dogecoin offers investors a safe, secure way to transfer assets digitally. The going rate is only at $0.00293525 (as of August 7, 2019).
You can easily purchase a few for yourself. While it does not offer any unique security or privacy features, its comedic value makes it very appealing.
Where to Buy Penny Cryptocurrencies
Apart from mining penny cryptocurrencies, one of the most popular places to acquire penny cryptos is Bittrex.
Bittrex is an online crypto trading platform for investors.
It offers basic trading functions such as:
- Market orders
- Limit orders
- Bid-ask spreads
Investor Place says the concept of Bittrex intimidates a lot of newbie investors. However, they also advise that trading may be the quickest way to earn money using penny cryptocurrencies.
Crypto trends change on a daily basis, so Investor Place advises investors to trade regularly instead of purchasing new cryptos.
What Are the Challenges of Penny Cryptocurrencies?
There’s a lot to love about penny cryptocurrency, in particular, and cryptocurrency, in general. Smart investment advice, though, isn’t complete without also talking about the challenges that come with it.
These are the possible issues that may arise from investing in a penny cryptocurrency:
1. Rules and Regulations
One of the selling points of cryptocurrency is decentralization, which means it should be out of the government’s reach. The reality, however, is different.
Country, federal, or state laws can still have some significant control over the supply chain. For example, you may be able to buy and sell penny cryptos anywhere in the world, but this doesn’t mean you have cross-border payments easy.
One rule may also place any blockchain platform or the entire industry in jeopardy, which could mean massive losses for you.
2. Other Kinds of Payment
Technologies within the cryptocurrency system should make transactions easier and faster. For example, with smart contracts, you can now skip escrow services.
This doesn’t mean you don’t have to think about expenses anymore. These include the transaction fees, which can significantly vary according to your desired penny cryptocurrencies to invest in.
If you don’t learn to factor these when trading, you won’t be able to reach your desired profit for the transactions.
Cryptocurrency isn’t an easy concept to understand. Not many people understand terms such as “blockchain,” “alt coins,” “wallets,” etc.
The high level of complexity and difficulty can make penny cryptocurrencies less accessible and attractive to beginners.
Penny cryptocurrency, like any kind of active investment, is subject to fluctuations. These up-and-down movements can be large enough to lead to significant losses or gains.
How Do You Succeed in Investing in Penny Cryptocurrencies?
When done right, penny cryptocurrencies stocks can help you generate enough income for retirement and other endeavors.
To increase your chances of succeeding, keep in mind the following tips:
There are many ways to do this:
- Mix lesser-known penny cryptocurrencies with the more popular ones such as Binance coin or Ripple.
- Buy Ethereum, Ethereum Classic, and Bitcoin. The last one is the most important since it’s the most widely accepted.
- Open a Coinbase account.
2. Look for Financial Institutions That Now Let You Hold Cryptocurrencies
Banks are now catching up with the trend by allowing their customers to open a cryptocurrency account or wallet, as well as buying and selling coins.
This is advantageous for numerous reasons. One, money transfers or bank transfers are less hassle and may even be cheaper in the long term.
Two, you may be able to exchange cryptocurrency to fiat money, which is a legal tender the government backs.
Third, you may now fund your cryptocurrency wallet conveniently and quickly. For instance, you may use your credit card or debit card to do it.
3. Keep Track of Market Price Changes
When it comes to investing, there are two golden rules:
- Maximize your profit.
- Minimize your losses.
One of the steps to achieve these two goals is to know changes in the market price. This helps you decide when to execute an order, see penny cryptocurrencies with potential, and determine the worth of your currencies in USD (or your preferred fiat currency).
4. Go Beyond Market Capitalization
An excellent tip on how to buy penny cryptocurrencies is to go the extra mile when it comes to research.
Beyond market capitalization, movements of the currency in the market, and their prices, consider the following:
- Safety and security of every transaction
- Founder and the people behind the coin
- Overall market sentiment
- Purpose or goal for investing
- Current and possible laws and regulations that can affect cryptocurrency
Gone are the days when everyone relied solely on commercial banks for asset growth and protection. Today, penny cryptocurrencies allow you to store, transfer, and even grow your money online. Develop a solid investing strategy, and no market is too complex or volatile for you.
Do you have any questions about investing in penny cryptocurrencies? Post them in the comments section down below!
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Editor’s Note: This post was originally published on May 19, 2019, and has been updated for quality and relevancy.