Investment options grow and change every day in modern times. That means there are a huge number of alternatives and strategies that you can lean into to generate profit. In such a context, being well informed is the best way to find the optimal strategy for increasing profits and cutting losses. This is especially true in the world of crypto.
Along with the many new ways to work with money, crypto has changed a lot of things for investors, software developers, and all sorts of businesses. While the inception of cryptocurrency was not seen as plausible by many, early investors and believers were proved right as the years went by. Now, crypto seems to be everywhere.
While most newcomers to the crypto ecosystem are familiar with cryptocurrencies like Bitcoin and Ethereum, they tend to be ignorant in regard to other cryptocurrencies. With most projects having less than half the market capitalization of the top coins, they are missing a great opportunity. Sure, a smaller market capitalization means higher risk… But also higher rewards. As such, it is not a surprise that penny cryptocurrencies are a favorite among risky investors.
What Is a Cryptocurrency?
Before we discuss what a penny cryptocurrency is, let’s review the basics of crypto. If you are already familiar with the technology, you can skip the section and go straight to your topic of interest. If you are just getting the hang of crypto… No information is superfluous!
Cryptocurrencies are decentralized virtual currencies backed by the security of cryptography, which creates a safe environment to operate with them. Often called ‘crypto’, these were born with the creation of Bitcoin, also known as BTC, the first decentralized digital currency. Decentralized means that no single administrator controls it and Bitcoins are stored in a public database called a blockchain. Exchanges are made freely by Bitcoin owners and buyers in a peer-to-peer network and registered on the blockchain once validated.
Since its launch in 2009, Bitcoin gained enormous popularity and helped pave the road for hundreds of other cryptocurrencies. In fact, its price saw incredible growth during the last decade. If you had bought $100 worth of bitcoin in 2010 you would own nearly $40 million in BTC as of 2022. This fact fuels the dream of many of creating huge value through cryptocurrencies.
Alongside Bitcoin, other cryptocurrencies also became popular and saw good price increases, such as Ethereum, Tether, Binance Coin, and Cardano. Together with many other new coins, these provide additional ways to get into the crypto scene as a new investor. One of the most popular cryptocurrency categories to invest in is one called penny cryptocurrencies. These are cheap, often recently created coins that can be bought in large quantities. In this article, we’ll see what they are, who created them, and what are the Best penny cryptocurrencies to invest in in 2022.
What Are Penny Cryptocurrencies?
As the cryptocurrency market grew it reached a capitalization of more than $1 trillion, with more investors trusting its future. Creating and owning cryptocurrencies became easier each year and a lot of people and companies rushed to have one. When one of these new ‘coins’ is born, its value tends to be low until it gains momentum and buyers raise the price. When valued below $1, these cryptocurrencies are known as ‘penny cryptocurrencies’.
Penny cryptocurrencies offer an interesting investment opportunity as their price fluctuates a lot, and there’s no telling which of them becomes mainstream and sees a price explosion. You probably heard about buying low and selling high. Well, that is the idea behind investing in these currencies that can see excellent price rises when managed and marketed appropriately. The main drawback of investing in penny cryptocurrencies is that some of them fail to gain enough momentum. This maps to relatively high risks of losing money invested in those.
Why Is This a Good Time to Invest in Penny Cryptocurrencies?
Some of the cryptocurrencies with the highest market caps and prices tend to be stable in comparison to penny cryptocurrencies. Stability is usually a good thing and of course, it’s a good idea to invest in those if you want to get into cryptocurrencies. However, you may want to consider investing part of your portfolio in a more high-risk high-reward sector of the crypto market. That’s where penny cryptocurrencies come in as an alternative investment within digital currencies.
As the digital token market keeps growing and attracting new investors, new projects appear often. Many of those present cool new ideas that can provide additional functionality to these technologies, and some already achieved that. There’s no telling if one of these innovators can create a new revolution in the digital money scene. In the end, any useful technology or idea implemented by a cryptocurrency is likely to impact its price in a positive way.
One good example of success for a penny cryptocurrency is XRP, which has grown a lot in value since its early days. With a starting price of $0.1, it’s amazing that it started the year 2022 at around $0.6. While XRP is still a penny cryptocurrency, it has seen peaks above the one-dollar mark several times.
If you had bought $100 worth of bitcoin in 2010, you would own nearly $40 million in BTC as of 2022. And now everything is even easier as you can buy Bitcoin with credit card faster than ever.
What Are the Risks Involved With Investing in Penny Cryptocurrencies?
While cryptocurrencies, in general, are considered volatile and risky securities, not all of them are created equal when it comes to risk. Those which are well-established and possess a large market cap and trade volume are less likely to fluctuate than the rest. That makes them a safer investment and means more liquidity when it comes to buying or selling them. Successful cryptocurrencies don’t necessarily have to surpass the $1 to do well. However, some of the better-established ones grew from penny cryptocurrencies into being valued at hundreds or thousands of dollars.
When investing in penny cryptocurrencies, there is often a bigger risk of the project failing and dying out. As these usually have a smaller community behind, they have lower liquidity and may quickly become hard to sell. For this reason, it is a good idea to diversify your crypto investments into different tokens.
As these tend to have a small fraction of the total crypto market, some exchanges may not list them. This is an issue you probably won’t encounter frequently but should be considered when investing. Therefore, do your research to know for sure that your platforms of choice support a specific penny cryptocurrency.
What Should You Look for in a Penny Cryptocurrency?
While volatility is high with penny cryptocurrencies, some characteristics can be sought for more stability. We’ll look into a few of the things that make some penny cryptocurrencies more stable than others.
The circulating supply of a token or coin has a big influence on its price, so how new units are released is a key detail to know. In order to better predict that information, you need to know what the whitepaper says. Whitepapers are reports written by those who create a token or coin, explaining how the project works and how it should evolve over time. Sometimes new units are released, or the mining process sees changes in performance at set times. In general, the creation of more tokens translates into price drops, while lost or burned tokens cause price raises.
When a large enough fraction of the available tokens have been mined, you can imagine those miners are trusting the currency and betting on it. If possible, you should see that at least a quarter of the available supply has been mined already.
Doing some research on the people who wrote the whitepaper, and what trajectory they have, is highly recommended. The presence of the project in social media, as well as software updates, are also things to consider. Transparency in the way it’s managed is very good to have too. Blockchain projects use different ways of governance, which is a key part of a coin’s future. Those cryptocurrencies that are backed by a large community tend to be much more trustworthy, as opposed to those with a small team of developers and nothing else.
Market capitalization refers to the total value of all the tokens in circulation. This number is an indicator of how much has been invested in the cryptocurrency. Tokens with a market cap in the tens of millions also tend to be more stable and assure a lot of people trust them.
In case the penny cryptocurrency you want to buy is near its all-time high price, it may be a good idea to wait. It will likely stabilize again in a few days or less. Buying when an asset is peaking at price often results in losses as the price goes back to normal values.
Supposedly, you may want to sell your crypto securities at some point in time. Selling cryptocurrencies can take a little time, depending on several factors. If a currency has a large trading volume, upwards of a million USD per day, it will probably be easy to sell. Before buying, however, a good practice is to check which exchanges support said token. At the very least, you should see your favorite exchanges in that list.
What Is The Best Penny Cryptocurrencies to Invest in (2022)?
In the thriving cryptocurrency environment, a lot of information is created each day, way more than what a single person can process. That makes it hard to keep up with all the tokens being created, let alone the news about existing ones. This article will help you make sense of that mess to put your investment priorities in order.
While there are many other good penny cryptocurrencies to invest in in 2022, these are some of the most notable ones. Some tokens that have been worth more than $1 several times in the past have been excluded.
Among the cryptocurrencies valued well below $1, Dogecoin has one of the highest market capitalizations, totaling nearly $15 billion. With a very active community and a decent trading volume, Dogecoin became the favorite of many crypto investors. It runs in its own blockchain, and transactions can be accepted in as little as 1 minute, much faster than Bitcoin for example.
Dogecoin’s logo and imagery are based on a Japanese dog breed called Shiba Inu, widely popular on the internet. It started somewhat as a joke and became iconic in the category of “meme coins” for being the first based around that theme. Make no mistake, however, Dogecoin is completely serious in its development and plans to keep on increasing its market.
Dogecoin is open source and decentralized in a way that the community can adopt software updates only if they want to. This adds credibility and brings in the many benefits of open-source software. A widely popular coin, DOGE is not likely to go away any time soon.
Shiba Inu (SHIB)
Also known as SHIB, the “Dogecoin killer”, Shiba Inu was launched in 2020 by an anonymous person or group known as Ryoshi. Being an ERC-20 token, SHIB is built on the Ethereum blockchain and has smart contract capabilities. Innovative in its delivery, Shiba Inu started with a supply of 1 quadrillion, making each unit of this token very cheap in comparison to others. For this reason, one Shiba Inu could be bought for as little as $0.000000000119 USD at one point. While its price grew enormously since then, it is still way below one dollar, at around $0.00002229 in 2022.
Ryoshi gave half of Shiba Inu’s initial supply to Ethereum co-founder Vitalik Buterin and locked the rest in an exchange called Uniswap. Vitalik later donated his SHIB to Covid relief funds in the largest crypto donation to date, totaling nearly $1 billion.
You probably understand that your earnings and losses will depend on the percentual change in the value of an asset. This means that even when buying a token as cheap as Shiba Inu you can get profits comparable to those achievable through Bitcoin or other coins. However, it is funny that you can own millions of SHIBs by spending less than $100.
Having a market cap above $12 billion, Shiba Inu seems to have gathered a good amount of investors. That puts it among the safest penny cryptocurrencies to get, together with the fact that it’s available on most big crypto exchanges.
Launched in 2014, Tron (TRX) is a penny cryptocurrency with a long trajectory. Originally, it was an Ethereum ERC-20 token but was transferred to its own blockchain in 2018. TRX has reached a $6 billion market cap, is listed in more than 130 exchanges, and sees trade volumes in the hundreds of millions. This means that buying or selling this coin should not be hard.
The TRON network is claimed to support handling over 2,000 transactions per second, and verify transactions in about 5 minutes. These numbers are much better than those you see in other networks, which rarely exceed 100 transactions per second. This promises a lot in the way of scalability, a word that is always good in this sort of project. This speed is great for smart contracts that enable DApps in the Tron network.
While it’s still below the dollar in price, the Stellar Lumen (XLM) has an impressive all-time high of $0.93. This is a lot when considering it has been as low as $0.001227. Stellar is an open-source protocol intended for easier transactions between different tokens and fiat currencies. It runs on its own blockchain, in which XML is the native digital currency. This system gets transactions closed in nearly 6 seconds, very fast in comparison to other blockchains.
Each Stellar account has a minimum balance of one Lumen, and transactions see a minimum per-transaction fee of 0.00001 Lumen. This is set up in this way to prevent wrongdoers from using accounts in harmful ways. Still, this minimum is extremely low when compared to other networks, meaning investors lose little money in each transaction.
There are close to 50 billion Lumens in circulation in 2022, and no more of them will be created. This means that demand may increase its value over time.
Having a market cap of around $4.5 billion, XLM has attracted a large number of investors. This fact and nearly $200 million in trade volume each day gives XLM solid stats among penny cryptocurrencies.
Hedera is a network designed with the idea of making DApps useful, based on a distributed ledger system that is different from conventional blockchains. This technology is known as the Hashgraph.
Hedera’s network has low fees, averaging nearly $0.0001 per transaction, and each transaction is closed usually in less than five seconds. Hedera Hashgraph is said to be able to process over 10,000 transactions per second, a significant number when compared to popular blockchains.
HBAR has a market cap of almost $4 billion, and its daily trading volume can be over a billion per month. While it is not one of the biggest players, it sees enough movement to be considered for investing. It can be staked for rewards, as Hedera’s network is based on proof-of-stake.
Hedera is governed by a council composed of up to 39 organizations from different industries. The idea behind this system is to maintain control over the network to make it as fair as possible.
The VeChainThor Blockchain is home to VeChain (VET), a token with a market cap of almost $3 billion. The trade volume for this token can be over one billion per month, which speaks of its liquidity. VeChain appeared on the public blockchain as an ERC-20 token called VEN, until it launched its own mainnet in 2018. However, this project has been working on smart contracts since 2015, which is one of its greatest strengths.
VeChain’s blockchain uses Proof of Authority, which is very energy efficient when compared to coins like Bitcoin. In this system, authority masternode operators are selected by an independent group. Those that are selected gain the authority to run a masternode. Masternodes help maintain the network’s integrity and earn 30% of the fees associated with validated transactions.
The project running VET aims at finding ways to create value for businesses, through its smart contract capabilities. These capabilities also allow for DApps, which are an important part of the plan. VeChainThor blockchain is home to an ample variety of DApps that you can check out or start using right away.
If you understand the risks and are willing to invest in penny cryptocurrencies, it’s probably best to split that investment into several different tokens. This means you may cover those that didn’t do well with the tokens that showed good profits.
Additionally, you could possibly get better liquidity with a diversified investment. Then, a good way to proceed could be to investigate the one penny cryptocurrency you are interested in. Only if you are convinced that it’s good for your intentions then go ahead and buy some of it. However, if you have the time you can compare several of them to see where they stand in terms of risks and capabilities.
When deciding on a penny cryptocurrency, check its history, and how it is developed. That gives you an idea of what it is about. To get a better view of how the token’s economy is doing, see how the market cap and trading volume are doing.
Checking out what a cryptocurrency’s team does and how they conceived it in the whitepaper is a great way to see what’s the idea behind the project. This should tell you whether they are on schedule, or if something failed along the way.
Another good tool to decide on the best penny cryptocurrencies to invest in 2022 is to check what sort of news presence they had. Besides the token and project itself, you can search for those who wrote the whitepaper and see what other projects they were involved with.
Putting together all the data you find on a penny cryptocurrency, you will have a better feel for how it can progress. This helps in creating a group of currencies in which you are interested and making them part of your portfolio.