A penny cryptocurrency refers to a fraction of a whole cryptocurrency, much like penny stocks. Most cryptocurrencies are like penny stocks – they are volatile, subject to manipulation, and also often cost literal pennies. This means penny cryptocurrencies cannot be considered as a store of value.
What is a penny cryptocurrency?
In simple terms, a penny cryptocurrency is a crypto or token with a market price that is under $1.
They can be split into four different categories: plentiful cryptos, newly minted cryptos, fallen cryptos, and stagnant cryptos. Plentiful cryptos are cryptocurrencies that have large supplies and newly minted cryptos refer to coins that are new to the market and are not widely known.
Fallen cryptos are cryptocurrencies that used to be worth a lot but took a dip in price due to changes in the market, and stagnant cryptos are coins that have been in the market for a long time but their price doesn’t fluctuate at all.
All of these types of penny cryptos should be treated differently. Cryptocurrencies in general are similar to penny stocks as they are subject to manipulation and have a high degree of volatility.
Why are they attractive to investors?
The majority of investors tend to choose large cryptocurrencies such as Bitcoin because of its popularity and liquidity. However, more and more investors are starting to choose smaller cryptocurrencies that only cost pennies to invest in. Because these smaller coins are cheaper, they have huge growth prospects.
Even though they may be a high-risk investment, history has shown us that penny cryptocurrencies can be worthwhile investments. Stellar Lumens and XRP are prime examples of penny cryptos that have climbed up the ladder over the years and are now huge players.
Others simply choose to invest in penny cryptos as they may not have a lot of money to invest with and choosing a cheaper coin is the best option for them. Whatever the reason or motivation may be, we are starting to see that people are looking to invest in more obscure coins.
Types of penny crypto
Basic Attention Token, Ravencoin, and Tron can all be classed as penny cryptocurrencies as they are worth $1 or less.
Basic Attention Token (BAT)
BAT is currently trading at around $0.30, meaning there is a lot of room for solid gains. The coin has been seeing impressive growth over the past months, proving that it has a lot of potential.
The coin is also seeing popularity in the press with the Coinbase Learning platform allowing users to earn BAT as part of its project. The new venture is aimed at raising awareness for the Brave open source web browser, which intends to declutter the web by removing intrusive advertising.
Ravencoin (RVN)
Ravencoin is a relatively young token which only launched in January 2018. It is currently trading at $0.06 after a large surge in March.
The Ravencoin protocol, based on a fork of the Bitcoin code, gives users ultimate freedom when it comes to tokens. Issuers can determine all the characteristics of their tokens, from quantity limits and security types to collectible statuses. Its community can issue, track, and transfer their tokenised assets.
It has a total supply of 21 billion tokens and its price has the potential to grow astronomically. If many decide to use Ravencoin, it could become a top penny cryptocurrency to invest in.
Tron (TRX)
This China-based platform was launched in 2017 and has emerged as a scalable decentralised network, ideal for creating dApps. Since its launch, TRX has raised its profile in becoming a top blockchain start-up with huge potential.
At the time of writing, Tron trades at around $0.03 with a market cap of $1.8 billion – a huge value that makes it one of the hottest penny cryptocurrencies.
Conclusion
If you are looking to invest in any sort of penny cryptocurrency, it is important to remember that the crypto market is a volatile place. Prices change at any given moment, often without reason, and this can leave many short and at a loss.
However, you can reduce this risk by doing a lot of research and diving deeper into the fundamentals of cryptocurrencies.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.