Best Penny Cryptocurrency to Invest in 2021
The market environment had never been so friendly, affordable, accessible, and most importantly – with such a profit potential. A major reason for this is the rise of the cryptocurrency industry. Today anyone can invest in various types of digital assets, including security tokens, utility tokens, dividend cryptocurrencies, altcoins, and more. And the best thing, you can do all this from your phone at minimal costs and capture what had proven to be one of the most remarkable bull runs in history. I will share my views on the best penny cryptocurrency opportunities you can invest in in the following article.
How To Find The Best Cryptocurrency to Invest In
New crypto projects are popping up every single day. The market is no longer driven only by the media coverage and public interest in Bitcoin, Ethereum, Litecoin, or Ripple. The rise of new projects like Polkadot, Hex, or Chainlink and meme coins like Doge (the Shiba Inu cryptocurrency) has attracted the interest of many crypto investors.
Today, the cryptocurrency market looks beyond the traditional and established digital assets to capture unicorns with high-growth potential. But in a market, as saturated as the crypto one, where we have tens of thousands of projects, all with different use cases, it remains a real challenge to find where the next “gold rush” lies. To do that, investors have to do their due diligence and focus on projects’ fundamentals, underlying technology, transparency, team, and roadmap.
As this is a tricky and exhausting process, here are my views on the Bitcoin and Ethereum alternatives I consider the best penny cryptocurrencies in a nutshell.
Best Penny Cryptocurrencies List: Top 5
The penny coins are short-listed based on crucial factors, including price (only penny cryptocurrencies priced below $1), recent crypto price movements, their use cases, fundamentals, social media presence, and more.
1. Stellar Lumens (XLM)
Stellar had been around since 2014. It is an open-source, decentralized protocol that allows crypto-to-fiat transfers between any pair of currencies at low costs. XLM is the largest cryptocurrency on the list, holding a market cap of over $8.9b. At the time of this writing, its price floats around the $0.35-mark, but in the past, it has enjoyed rallies where it hit levels between $0.80 and $1.00.
What makes Stellar an exciting opportunity is its solid fundamentals. It is probably the most trusted cryptocurrency among traditional financial institutions. It also partners with IBM to facilitate its adoption among big banks.
Furthermore, its main competitor is Ripple. Considering the hurdles it had faced recently, there is solid reasoning to believe XLM will capitalize on the momentum and attract the interest of a substantial amount of people.
2. Algorand (ALGO)
Algorand aims to bridge the gap between the decentralized world and traditional finance by allowing institutions to create next-generation financial products and protocols easily. If it succeeds in overcoming this challenge, it can unleash unseen growth within the crypto industry.
In terms of design, Algorand’s proof-of-stake network supports smart contracts and enables quicker and cheaper transactions than Ethereum.
The project partners with leading universities, financial infrastructure providers, and application developers. It is also backed by some of the most successful stakeholders in the world.
Regarding its recent price action, at the end of 2020, the price of ALGO had been floating between $0.20 and $0.30. However, it then embraced a bullish rally and quickly hit $1.80. Currently, the coin trades around the $1.00 mark, with a market cap of $6.6b.
3. VeChain (VET)
VeChain Tor is another promising cryptocurrency project. It aims at helping streamline supply chains through the power of blockchain technology. In addition, the project improves supply chain efficiency, transparency, and security, something that lacks traditional supply chain management systems.
Its mission is crucial considering that virtually any business, government, or institution uses some sort of supply chain. However, the problem with supply chains is that they are often too complex, lengthy, inflexible, and untransparent. For supply chain operators, this bears financial, reputational, and compliance risks.
Currently, VET trades at $0.13, with a market cap of $8.88b. However, during January – April 2021, its price jumped from $0.01 to $0.28, marking one of the most impressive rallies.
4. Basic Attention Token (BAT)
The Ethereum-based token is the fuel that powers the most popular next-generation blockchain technology-based advertising system. It rewards users for their attention to ads while bringing advertisers a more optimal return on their spending.
The advertising ecosystem works within the privacy-focused web browser Brave. Think of Brave as a faster and more secure Google Chrome. It even has an integration with the Tor browser.
The project was launched by Brendan Eich, co-founder of Mozilla, in 2017.
Throughout the majority of 2020, the price of Basic Attention Token (BAT) ranged between $0.10 and $0.20. However, in April 2021, it skyrocketed to $1.64. Today, it trades at $0.80, with a market capitalization of $1.2b.
5. PotCoin (POT)
PotCoin is one of the penny coins that if you look only at its price chart over the years, you will immediately cut it from your list.
In 2018, POT was trading at $0.55. Today, it trades at $0.01, with a market cap of $3.88m. Not exactly setting the world alight, right?
However, the core idea and the fundamentals of the project might help it get back to its previous heights. It was designed to solve banking problems for people looking to transact in legal marijuana by ensuring P2P transactions instead of relying on a bank or clearinghouse as an intermediary.
The project aims to fill a major void in US legislation. As of June 2021, medical marijuana is legal in 36 states. Yet, marijuana is still illegal at the federal level, meaning businesses and operators selling and distributing recreational and medical pot aren’t allowed to use banks for their transactions.
However, the industry is booming, and the potential for POT’s price to skyrocket is there.
Cryptocurrency Exchanges for Penny Cryptos
The issue with most penny cryptocurrencies (although not particularly related to the ones in our list above) is that they aren’t traded on every exchange. Furthermore, some cryptocurrency exchanges have a controversial history, while others charge high fees.
Due to factors like these, the complicated process of choosing a cryptocurrency exchange often takes significant time. To help you out, here are the 5 best exchanges for penny cryptocurrencies:
Coinbase is the most popular and widely-used exchange globally, with over $68m users. It is user-friendly and a convenient choice for complete beginners.
It lists over 5.300 digital assets, with new ones added continuously. Usually, when a new project is launched, its go-to stop is Coinbase, as it opens the gates to millions of potential investors. This means it is very likely that you will find any of the penny cryptocurrencies you are interested in there, as well as all types of upcoming projects.
Coinbase has many services and functionalities that empower the regular trader to go beyond just buying and selling Bitcoin or altcoins. In addition, the fee structure is reasonable, although a bit higher than other exchanges.
Binance is another leading cryptocurrency exchange. It is considered the most welcoming exchange for altcoins and new project listings.
Binance operates in various markets globally, and the site is available in 40 languages.
What sets Binance apart from all other exchanges is the universe of services and accompanying products. These include an NFT marketplace, crypto futures trading, an interest-earning program, a debit card, crypto-backed loans, and many others. This makes it a perfect choice for users willing to find a one-stop-shop for their crypto investment needs.
Gemini is a crypto exchange known for its transparency, security, and fair terms. While it is an excellent choice for beginners, it also appeals to the needs of professional crypto traders as it offers various cryptocurrency products. The platform has an excellent interface, and users will find the onboarding highly simplified.
However, on Gemini, you won’t be able to find every up-and-coming digital asset project. The exchange is very picky in what cryptocurrencies it lists and usually features only assets with sufficient liquidity and proven credibility.
However, if you are interested in trading the most popular penny cryptocurrencies, you will most definitely love Gemini. This, paired with the exchanges’ impeccable service, evident reputation, and reasonable pricing terms, makes it one of the top choices for beginners and advanced traders.
As one of the longest-standing crypto exchanges, Kraken is renowned for the high quality of its services. For a decade of operation, the trading venue has managed to build a well-balanced offering that combines access to an extensive basket of cryptocurrencies, reasonable fees, quick bank withdrawals, and global availability.
Kraken lists 90 assets, the most popular and booming altcoins included. In addition, the fees are lower than most other exchanges, ranging between 0 and 0.36%, depending on your past trading volume and the type of order. In a nutshell, Kraken rewards traders that generate higher liquidity with lower trading fees.
Among the key distinguishing factors of the platform are its easy-to-navigate interface and user-friendly mobile app.
Put, if you are looking for a trusted and transparent service provider to trade not only Bitcoin but also a variety of altcoins, make sure to give Kraken a shot.
Although many other crypto exchanges are worth mentioning, the fifth place in the list is reserved for eToro, the all-in-one copy-trading platform and one of the best cryptocurrency brokers where you can trade all types of CFDs. Aside from standard asset classes like stocks, commodities, and currencies, eToro also supports cryptocurrency trading. The platform lists over 100 digital assets, including many penny cryptocurrency projects.
Buying and selling on eToro is as simple as it gets, while the fees are better than many coin exchanges.
However, you should know that on eToro, most of the cryptocurrency trades are conducted through CFDs and not real assets, meaning you won’t be able to withdraw them from the platform.
How To Buy Penny Cryptocurrencies
Buying penny cryptocurrencies is nothing different than buying Bitcoin or popular altcoins like Ethereum, Litecoin, or Ripple. However, to ensure your peace of mind and navigate the process seamlessly, make sure to follow the following steps:
1. Choose the penny cryptocurrencies you would like to trade and build a risk management strategy
Focus on the fundamentals and the mission statement of the cryptocurrency projects. Don’t go for the hype, but do your best to research the prospective assets. Bear in mind that new tokens often become a target of pump-and-dump schemes, and if you aren’t aware of the accompanying risks, you might lose your capital.
Furthermore, you should also research the seasonality effects in the crypto market. Let’s take the “altcoin season,” for example. This term marks an event where, once Bitcoin hits a peak, the altcoins embrace a bullish run and can surge by as much as 100 times. The idea is that investors take their Bitcoin gains and throw them at altcoins.
While this might sound very tempting, don’t forget that there is always a significant risk of losing capital, no matter how promising some cryptocurrency projects may seem. So make sure to have a profit target before you buy an instrument and avoid going against your risk management strategy.
2. Choose your wallet
The first thing to do is to chose top crypto wallets and decide whether you would like to keep your crypto assets in a software or hardware wallet.
While software wallets are quicker to set up, easier to use, and suitable for trading on the go, they are less secure. Besides, they are free and can be downloaded on your phone, desktop computer, tablet, etc.
Hardware wallets, on the other hand, are the most secure medium for coins storage. They come in the form of a physical object (i.e., a USB flash drive). The best crypto hardware wallets on the market start at around $50 to $80, but there are more advanced solutions.
The best way to choose a wallet for your coins is to define the purpose you will be using it for. For example, if you plan to trade continuously and keep a limited amount of assets in your wallet, you can go with a software solution. On the other hand, if you are trading from time to time, plan to store significant amounts of coins, and want the best protection for them, then a hardware wallet is the better choice.
Whatever option you choose, make sure to check whether it supports the penny cryptocurrencies you want to trade beforehand. In most cases, however, there won’t be any issues.
3. Set up your account
Once you have chosen your wallet solution and the coins you would like to trade, it’s time to set up an account with your preferred trading service provider. Usually, most exchanges and trading platforms follow similar procedures.
First, you will have to sign up by providing personal data like email, names, phone, etc.
Next, you will have to pass a KYC verification procedure. Based on the exchange’s policies and the region you reside in, you might have to provide different types of documents. In most cases, the mandatory selfie would be accompanied by either a Driver’s License, a Passport, or an ID. However, in some instances, you might also be required to provide additional documents like a bank statement, a scanned copy of a utility bill, or else.
The KYC verification can take anywhere from an hour to 48 hours, based on the exchange’s policy. Once you pass it successfully, however, you will be able to start trading.
Penny Crypto vs Penny Stock
The idea of the so-called “penny” instruments is that they won’t cost you a fortune. Penny crypto and stocks are perceived by investors as more affordable alternatives that can also prove quite profitable.
Bitcoin, for example, is floating around $50.000, while there are penny cryptocurrency opportunities that cost a few cents.
With stocks, the case is similar. Amazon is priced at $3.200, while penny stocks will cost you less than $5 per share.
Here are the key similarities and differences between cheap coins and stocks:
- Both represent unproven, reasonably new, or intransparent low-priced opportunities for the penny investor;
- In most cases, both are micro-cap;
- They enjoy lower liquidity;
- Both pose a greater risk and potential return than higher-priced/blue-chip instruments;
- Both might be hard to find on lit markets/leading exchanges;
- Both have a low market capitalization;
- Penny cryptocurrency projects and OTC traded penny stocks are unregulated;
- Based on a different asset class;
- Exchange-traded penny stocks are regulated, while penny cryptocurrency assets aren’t;
In the general case, penny cryptos and penny stocks are more or less comparable. With either asset class, it is better to stick to instruments listed on leading markets. While this isn’t necessarily a 100% guarantee of their quality, it shows that the venue had performed some due diligence before listing the particular asset.
With penny cryptocurrency assets and OTC-traded penny stocks, the risk for your capital is much higher.
What is the best penny cryptocurrency to invest in?
Penny cryptocurrencies are digital assets with low prices, usually less than $1. The low price doesn’t mean the cryptocurrency isn’t a good investment opportunity. Just the opposite, the price of penny cryptocurrencies can often grow up to 100 times in a matter of a few months. Penny cryptocurrencies are very similar to penny stocks.
What are penny cryptocurrencies?
Projects with stable fundamentals like Stellar, Basic Attention Token, and Algorand seem like good investment opportunities. However, note that they don’t operate in a vacuum. What seems like a good opportunity today might not be tomorrow due to the development of competitive projects, black-swan events, adverse market events, etc.
Where can I buy penny cryptos?
You can buy penny coins on the majority of the leading cryptocurrency exchanges such as Binance, Coinbase, Kraken, and more. They are also available on P2P networks and decentralized trading venues. Make sure first to choose the penny crypto you want to trade and then find the best exchanges that list it.