How to Buy Penny Cryptos In 2021?

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How to Buy Penny Cryptos In 2021?

Cryptocurrencies are increasingly becoming the main headline in news broadcasts and the central topic of finance and technology discussion forums. The price of the leading coins, Bitcoin and Ethereum, has led to the crypto market cap topping $2 trillion, and this has only increased interest amongst investors. Whilst major coins continue to take much of the public’s attention, savvy investors are looking to invest in the next sensational coins. Often referred to as penny cryptos, these are coins with a low value but high potential.

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This ad promotes cryptocurrency within the EU (by eToro Europe Ltd. and eToro UK Ltd.) & USA (by eToro USA LLC); which is highly volatile, unregulated in some EU countries and the UK., no EU consumer protection. Investments are subject to market risk, including the loss of principal.

What are Penny Cryptocurrencies?

The term penny cryptos are borrowed from traditional penny stocks. Although in stocks, this refers to any price below $5, in the case of cryptocurrencies, it refers to any digital asset whose price is less than $1. With over 8,000 Altcoins available online, these low-cost coins make up the overall greatest number of coins and tokens.

This collection of penny crypto coins can be split into numerous categories. Whilst some are highly volatile, others are stablecoins. There are several utility tokens or security tokens, and whilst some coins are new and ready to prove themselves, others have existed for some time and have become stagnant. Understanding the different characteristics of penny cryptos is important to use the most appropriate investment strategy.

This ad promotes cryptocurrency within the EU (by eToro Europe Ltd. and eToro UK Ltd.) & USA (by eToro USA LLC); which is highly volatile, unregulated in some EU countries and the UK., no EU consumer protection. Investments are subject to market risk, including the loss of principal.
This ad promotes cryptocurrency within the EU (by eToro Europe Ltd. and eToro UK Ltd.) & USA (by eToro USA LLC); which is highly volatile, unregulated in some EU countries and the UK., no EU consumer protection. Investments are subject to market risk, including the loss of principal.
This ad promotes cryptocurrency within the EU (by eToro Europe Ltd. and eToro UK Ltd.) & USA (by eToro USA LLC); which is highly volatile, unregulated in some EU countries and the UK., no EU consumer protection. Investments are subject to market risk, including the loss of principal.
This ad promotes cryptocurrency within the EU (by eToro Europe Ltd. and eToro UK Ltd.) & USA (by eToro USA LLC); which is highly volatile, unregulated in some EU countries and the UK., no EU consumer protection. Investments are subject to market risk, including the loss of principal.

Pros & Cons of Penny Cryptos

Depending on the type of investor you are, you might view penny cryptos as either an often-overlooked investment opportunity or a high-risk gamble. The truth is that in general, both descriptions are correct. The news is full of stories of people who invested in penny cryptocurrencies and either became rich or lost all their capital.

Understanding the story behind specific penny crypto coins is important to evaluate the likelihood of price increases. It is important to remember that most coins whose value is above $1 today began by being penny cryptos. For this and other reasons, they deserve to be viewed fairly. Have a look at some of the advantages and disadvantages of penny cryptocurrencies.

Advantages of Penny Cryptos

The main advantages of penny cryptocurrencies are:

  • Support a young project – Provide seed funding to promising coins.
  • Reduce your investment risk – Spread your capital over a broader range of coins.
  • Participate in a volatile environment – Penny crypto coin prices can change dramatically.

Amongst the thousands of penny cryptos are a handful of unicorns and a larger number of modestly successful projects. You will find numerous with a solid whitepaper, an experienced management team, and a clear and useful purpose. By investing in the right projects you will be able to support a revolutionary financial system and become a part of history.

Investing in these cheap cryptocurrencies allows you to spread your capital further. By diversifying your portfolio you would be reducing your risk, whilst being invested in a variety of different coins. It only takes one or a few successful investments to make up for losses and provide you with a significant return.

Investing in penny cryptos can be very exciting since some coins are subject to awesome volatility. Whilst you may only make a marginal return on your investment each year, every trade can provide an adrenaline rush. Not all penny crypto coins are highly volatile, but the ones that are, provide an opportunity for results in days, rather than months or years.

Disadvantages of Penny Cryptos

The main disadvantages of penny cryptocurrencies are:

  • Investing in pointless projects – Most penny crypto coins are not going anywhere.
  • A high-risk investment – The overall likelihood of success is low.
  • A risky environment – Some coins exist to trick investors.
  • No coin interest – Unpopular coins often experience limited or no price changes.

Whilst there are certainly valuable projects within the thousands of penny crypto coins available, it can be very challenging to spot them. Most coins are destined to fail from the start, often lacking the right team, plan or purpose. Sometimes, the price of once-valuable coins falls dramatically as a result of fierce competition.

Statistically speaking, you are more likely to lose money by investing in penny cryptos. This is why gambling your capital is not a good idea, and you should follow a proper investment strategy that is designed for such low-value assets.

Unfortunately, scams and fraudsters operate within the cryptocurrency sector just as they do in the traditional financial system. Seeking to dupe naive or ill-informed investors, they provide fictitious information and records, sometimes creating a hype just to jack the price up. With no official oversight, it is very easy to lose an investment.

Although the sector is known for its high volatility, many unpopular low-cost cryptocurrencies are thinly traded, with little to no price variance over a period of time. This means that you can sometimes wait months or years to see any price movements, essentially freezing part of your capital for an extended period of time.

What is the Best Penny Cryptocurrency to Invest In?

In 2021, finding the best penny cryptocurrencies to invest in is important to safeguard your capital and increase the likelihood of high returns. The following have been identified as the best coins to invest in, based on their specific characteristics.

  • VeChain Thor (VET) – A coin designed to help solve real-world financial problems.
  • Ravencoin (RVN) – A Bitcoin fork designed to improve payments and asset ownership records.
  • Stellar Lumens (XLM) – An established coin seeking to provide equal access to financial systems.
  • Reserve Rights (RSR) – A stablecoin designed for use on the Ethereum network.

VeChain Thor (VET)

VeChain Thor (VET)
Image source: CoinMarketCap

VeChain Thor is a Blockchain created with the ambitious goal of helping to solve current economic challenges. The Blockchain operates with two tokens. In addition to VET, the infrastructure has VeThor Token (VTHO) which is used to execute smart contract transactions. These transactions are based on a three-part consensus level which covers technical, business, and governance requirements.

Potential uses for VET include providing traceability, such as for food production or logistics. This allows it to practically eliminate the risk of counterfeit items and provide a complete historical record for the manufacturing, health, and entertainment sectors, amongst others.

ProsCons
• Provides real-world uses
• Backed by the audit firm, PwC
• Current market cap: $9.1b
• 24-hour trading volume: $2.3b
• Close links to the Chinese government
• Close links to Chinese government

Ravencoin (RVN)

Ravencoin (RVN)
Image source: CoinMarketCap

Ravencoin is a Bitcoin fork launched in 2018. It was created to serve two main purposes. First, it seeks to make the process of determining asset ownership a flawless one. Second, just like Bitcoin, it aims to become a payments currency offering quick, safe, and cheap transactions. RVN presents itself as completely decentralised, with no master nodes or ICOs backing it.

ProsCons
• Provides real-world uses
• Has an experienced management team
• Current market cap: $3.77b
• 24-hour trading volume: $260m
• Fierce competition from other payments
• Coins including BTC and LTC

Stellar Lumen (XLM)

Stellar Lumen (XLM)
Image source: CoinMarketCap

Stellar is one of a few relatively well-known penny cryptos since it has existed since 2014. Created to provide equal access to the global financial system, the coin is maintained by a non-profit organisation known as the Stellar Development Foundation. The Blockchain operates using XLM, with the coin used as a payment method to cover all services and functions.

ProsCons
• Provided real-world uses
• Is already well-known
• Current market cap: $14.73b
24-hour trading volume: $6.1b
• It has lost significant value since its high in 2018

Reserve Rights (RSR)

Reverse Rights
Image source: CoinMarketCap

RSR is the utility token of the Reserve Protocol, a stablecoin used on the Ethereum Blockchain. Featuring low volatility, it is backed by a basket of assets as collateral, and therefore viewed as an ideal digital currency for a stable market. RSR is backed by numerous prestigious entities, including Coinbase Ventures, and the well-known venture investors, Peter Thiel and Sam Altman.

ProsCons
• Is a utility stablecoin
• Backed by well-respected venture capitalists
• Current market cap: $1.17b
• 24-hour trading volume: $203m
• A relatively young and unproven project

How to Buy Penny Cryptocurrencies

In order to start buying penny crypto coins, you need two essential items. First, you must have a multi-cryptocurrency wallet where to store these coins. You should remember that not all wallets would support a variety of less-known cryptocurrencies. Second, you need to open an account with at least one low-cost crypto exchange that can let you convert fiat currency or a major cryptocurrency into your desired penny coins.

The step-by-step process to buying your first penny cryptos is fairly simple:

  1. Find the coin or token you wish to purchase from the exchange.
  2. Select the number of coins to buy or the equivalent amount of currency you wish to spend.
  3. Complete the purchase process by including a funding method and providing your wallet address if required.

In most cases, buying low-cost cryptocurrencies is a very quick process. If the exchange you have chosen does not provide an in-built wallet where to store your funds you will need a separate wallet. We recommend the Ledger Nano S, as it can support over 1,100 different coins and tokens, is portable and highly secure. The Nano S can connect to your Windows, Mac, and Linux computer and facilitates quick transactions through the Ledger Live application.

The best cryptocurrency exchange to buy penny cryptos is most probably Binance. It is one of the largest trading platforms in the world and supports one of the greatest varieties of Altcoins. In addition, it offers competitive trading fees when exchanging cryptocurrencies. Whilst it also supports buying coins using a debit or credit card, fees for doing this are quite high.

Therefore, if you do not already own some form of cryptocurrency, we recommend you get started with Coinbase. This user-friendly and popular exchange lets you buy cryptocurrencies using multiple options, including bank transfers which do not incur any additional payment fees. The exchange provides a free in-built wallet where you store your funds, allowing you to transfer them with ease to your Binance wallet in order to start buying penny cryptos.

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Spotting Promising Penny Cryptos

The following are some tips to help you invest in coins that have a higher likelihood of success. Whilst these tips can help you, no investment is guaranteed to succeed. You must, therefore, only invest with funds that you are prepared to lose or to keep invested for longer periods of time.

Here are great ways to spot a promising low-cost cryptocurrency:

  • The coin or token should be listed on popular cryptocurrency exchanges, such as Binance. Very often, these platforms would have carried out some form of due diligence as they do not wish to be associated with fraudulent coins or projects.
  • The supply of a particular coin should be above 10 million coins, and at least a quarter of these should have already been mined. This shows that the coin has long-term plans and has already gained a following.
  • Adding to the previous point, the coin’s market capitalisation should be over $20 million, whilst the coin daily trading volume (or liquidity) should be over $1 million.
  • It certainly helps if the coin’s percentage gain is higher than 50%, on average, for the previous week.
  • The coin should have an active social media presence, where it announces future plans and updates its followers regularly.

Final Words on Penny Cryptos

Investing in penny cryptocurrencies is certainly worth considering. As their name suggests, they are relatively cheap to buy and allow you to spread your investment and reduce risk without requiring substantial funds. It is important to remember that such coins are significantly riskier than established cryptocurrencies, such as Bitcoin or Ethereum. You should always research your investment and seek low-cost Altcoins created with a clear purpose in mind.

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