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Thanks to professor @pelon53 for the wonderful Week 14 lecture on penny cryptocurrencies. I now make my homework submission.
Explain the Penny cryptocurrencies in your own words. Advantages and disadvantages.
Penny cryptocurrencies refer to digitally valued assets whose prices fall below a dollar. Generally, these refer to utility tokens, mining
-based coins, security tokens or stablecoins which act as financial instruments that are offered and issued to trade for just a few pennies per piece and are usually issued for less than $1 at inception.
Normally, their low market prices are understood to correlate to low market capitalisations - where the market capitalisation refers to the total value in dollars of the outstanding cryptocurrency which usually stems from multiplying the total coins in circulation by the price of each coin. The fact that the coins are quite inexpensive makes it possible to buy so many of them with little money and this greatly increases the volatility and in extension the risk in investing in such coins.
Advantages Of Penny Cryptocurrencies
There are quite a few advantages associated with penny cryptocurrencies.
Penny cryptocurrencies come with high risk reward ratio
The fact that penny cryptocurrencies are undervalued makes it possible for investors to be able to buy so much of it with little money. Actually, before an investor would go into a particular penny crypto it is expected that he would have undertaken a fundamental analysis of the coin to ascertain its future. Be that as it may, when coins that have great usability are invested in and receive so much acceptance and adoption of their blockchains in the near future their prices are likely to skyrocket since the more the demand the greater the supply which leads to increased prices.
Having bought such coins at low prices gives you much higher returns when their prices go up or explode. However, the fact that they are high risk means that they could go off the market or never gain traction at all, but should they perform well in the market there is the likelihood of your investment experiencing an explosion in upward value.
Penny Cryptos Offer An Opportunity To Diversify
For cryptocurrency investments to receive returns whatever the market condition maybe then there is a need for diversification of Investment portfolio. Investing in only one coin will be like putting all your eggs in one basket. However, making a diversified investment into a lot of penny cryptocurrencies which are quite inexpensive and, therefore, available and accessible for investment would increase your chances of having gains from some of them even if a lot others are not experiencing increase in value.
Penny Cryptocurrencies Come With The Opportunity Of Earning Passive Income
Generally, penny cryptos give you the opportunity of making passive income from them even while you sleep or go about your day-to-day business or work. The dividends you earn from cryptocurrencies are just similar to those you would get from stock market dividends. Simply buying penny cryptos as much as you can and storing them in your wallet, even without trading, has the potential of increasing the value of your investment over time. This is a great side hustle and comes with the added advantage of earning passive income.
They Grant You Access To Some Services
Some penny cryptocurrencies are actually utility tokens with which one can gain access to some important features, especially features that are domiciled in the blockchains where they are issued. An example is the Steem token. The price of the Steem token from coinmarketcap is seen to currently stand at $0.7684 as at 14:40 UTC + 1. This is the native token of the Steemit social media network. Having a lot of it which can be powered up to Steem Power would make someone a major influencer on the Steemit blockchain.
As an ordinary investor you can purchase a lot of Steem and power them up to receive Steem Power and this will give you access and right as a major influencer on the Steemit blockchain. You can then utilise this token to participate actively in activities on the social media network. The same goes for Hive and the Basic Attention Token (BAT) which can all be used as utility tokens to gain access to the various services for which they are created.
They Give You Right Of Participation
Owning penny cryptocurrencies gives you the right and opportunity to participate in one of the most innovative and greatest discoveries of the 21st century, which is blockchain technology. The fear of missing out is one of the major factors that drive people into investing in cryptocurrencies. The presence of penny cryptocurrencies makes it possible for one to enter the cryptocurrency world even with very little amount of money. Therefore, one can still have the satisfaction and boast of being a part of this major technological engine of the 21st century even with just a little monetary investment in penny cryptos.
Disadvantages Of Penny Cryptocurrencies
They Are High-risk Investments
Penny cryptos are considered to be high risk investments. This is due to the fact that there may be a long way off from gaining traction in the market and this is not what we can be absolutely sure about. When investing in penny cryptos we simply read the idea or concept behind their inception and hope that they will gain adoption. However, we cannot be absolutely sure with our choice. In the event that the crypto does not gain traction we stand the risk of losing our money. In the worst case scenario some might even go out of the market and we would lose our money entirely.
Unstable Valuations
There have been a lot of cases of penny cryptos undergoing some kind of shocking and unstable valuations in the past. These unstable and often shocking valuations could be the aftermath of mere gossip and hearsay. It would be more advisable to store huge amounts of capital investment with the more stable coins like Bitcoin due to the security that comes with it. Also, its price does not fluctuate quite easily due to market forces as much as the penny cryptos.
A typical example was the case where a particular crypto which bore some sort of similitude to a Tesla penny crypto skyrocketed up to 40 times on the announcement that Tesla would adopt cryptocurrencies for purchases. Unfortunately, this same coin immediately crashed when investors exited on getting to know that it was not actually linked to Tesla. So, penny cryptos are generally subject to market forces.
Issues Of Scalability
A lot of the penny cryptos that are in the market face serious difficulties when it comes to the issue of scalability and fast transactions. This is more noticeable when compared with a lot of the traditional payment and transactions processing gateways like MasterCard and Visa. When you consider the speed that such older and stronger networks use when processing transactions you will discover that many of the penny cryptocurrencies that have not even received adoption are still a far way off.
Issues Of Cybersecurity
Another very important and major issue that could be a serious source of concern with penny cryptos is the issue of cybersecurity. A lot has happened in the cryptocurrency space when ICOs have been breached by cyber hackers resulting in the loss of millions of dollars worth of digital assets. A particular case resulted in the loss of over $473 million worth of assets. Overcoming the issue of cybersecurity would require a lot of resources. Unfortunately, many of the penny cryptos that are not anywhere in terms of market capitalisation may not have the wherewithal to adopt the sort of technology required to develop the kind of security that will make people trust them so much to invest.
Volatility In Price And Absence Of Inherent Value
A lot of the penny cryptos in the market experience so much volatility in their price. Once I wanted to invest in a coin which had increased by over 50% on the Binance Exchange a friend of mine discouraged me by simply writing it off as one of the penny cryptocurrencies which he branded as flying coins! This is due to the fact that a lot of them may not even have a strong fundamental backing, idea or concept and, therefore, do not have an inherent value and may go down as quickly as they rose at any time.
For you: What will be the best Penny to invest in this 2021? Explain and show evidence.
My decision on the best penny crypto to invest in this 2021 will be based on a few parameters, namely:
- Security
- Market capitalisation
- Presence in exchanges
- Long-term or future prospects
- Concept behind the project
- It's adoption so far
- Historic price action
In the light of this after undertaking a lot of research I have come to the conclusion that although there are a lot of penny cryptos that tickle my fancy Cardano has some distinct and unique characteristics that have made me pick it as the best crypto to invest in 2021.
Cardano (ADA)
Important Cardano Statistics
| Metrics | Statistics |
|---|---|
| Cardano Price | $1.80 |
| Price Change (24h) | $0.1518 (9.22%) |
| 24h Low / 24h High | $1.33 / $1.94 |
| Trading Volume (24h) | $12,788,558,009.60 |
| Volume / Market Cap | 0.222 |
| Market Dominance | 3.26% |
| Market Rank | #4 |
| Market Cap | $57,595,567,908.57 |
| Fully Diluted Market Cap | $81,124,810,710.01 |
| Telegram | 50 169 members |
Cardano has exceeded the $1 mark. However, this was not too far ago as it traded at $0.93 even as at 20th February, 2021.
Cardano is a blockchain that operates on the proof of stake consensus mechanism. This coin has a strong concept and technology behind it. The coin was created by Charles Hoskinson who was originally among the founders of the Ethereum network. This network happens to be one of the largest to have successfully utilized a consensus mechanism which is by far less energy-consuming than that used by even the Bitcoin network. On the blockchain, decentralized applications and smart contracts can be built as one of the important use cases.
screen from TradingView
The coin falls in the large market capitalisation with a market capitalisation of over $57 billion and a daily trading volume of over $12 billion this means that this coin is not likely to go out of the market at any time without warning again it has received a lot of acceptance and is traded on over 50 exchanges including Binance, Coinbase and Kraken.
The system is quite secure because it makes use of a unique kind of proof of stake mechanism which is known as Ouroboros. While equally being environmentally friendly, this mechanism claims that it is also more than four times more efficient in energy usage as the Bitcoin network.
The coin has also experienced steady price increase and has tremendously overcome a lot of market hustles to gain so much traction and adoption. It crossed the $1 mark on the 21st of February this year and has shown a lot of promise to further increase in price as it gains more grounds and adoption. Among all the penny cryptocurrencies I would advise anyone to invest in currently I consider it quite outstanding.
Do a Ripple (XRP) analysis. Show screenshots. Would you invest right now? Explain.
From the analysis I have undertaken on the Ripple (XRP) I have come to discover that this particular crypto is one of the important and necessary choices when it comes to deciding on which coins to invest in currently.
Important Ripple (XRP) Statistics
| Metrics | Statistics |
|---|---|
| XRP Price | $1.19 |
| Price Change (24h) | $0.02583 |
| 24h Low / 24h High | $0.9118 / $1.27 |
| Trading Volume (24h) | $13,925,703,999.17 |
| Volume / Market Cap | 0.252 |
| Market Dominance | 3.12% |
| Market Rank | #6 |
| Market Cap | $55,250,144,670.50 |
| Telegram | 35 373 members |
XRP is the digital currency that is native to the Ripple.Net payment processing network that is itself built on the XRP Ledger - a distributed ledger database. Although you can use any crypto to transact on this network that makes use of the real time gross settlement ( RTGS) gateway, the XRP as the native token of this platform has gained much acceptance as a means of globally processing transactions very quickly and securely.
screen from TradingView
The crypto has a market capitalisation of over $55 billion and daily trading volume of over $13 billion. It has a lot of market acceptance with its presence name major exchanges like Binance, Huobi Global, Bitstamp, Kraken and Coinbase. The coin is built to securely perform instant global monetary transactions with much scalability and speed in a cost-efficient manner. Investing in this coin would be a very wise choice as the open-source distributed ledger system Ripple.Net is now being adopted as a way of transferring money globally.
It is very secure and less costly with the advantage that you can send in money in your local currency and it can be retrieved at the receiver's end in another preferred currency. So, the coin has a lot of future prospects. Its price action has steadily been on the increase reaching an all-time high in 2018. However, it forms a very good possible explosive investment as the concept behind it and the fundamental analysis reveal.
Present in detail a possible investment of 5 penny crypto assets. Explain and present data confirming your choice.
- Ravencoin – RVN
- VeChain (VET)
- Holochain – HOT Token
- Stellar Lumens (XLM)
- Zilliqa (ZIL)
Ravencoin – RVN
Important RVN Statistics
| Metrics | Statistics |
|---|---|
| Ravencoin Price | $0.09294 |
| Price Change (24h) | $-0.002923 |
| 24h Low / 24h High | $0.09282 / $0.1084 |
| Trading Volume (24h) | $79,624,687.82 |
| Volume / Market Cap | 0.09715 |
| Market Dominance | 0.05% |
| Market Rank | #98 |
| Market Cap | $819,565,700.37 |
Ravencoin, which bears similarity to Bitcoin, is relatively younger, only coming around from the 3rd of January 2018. This penny crypto is indeed a very good investment opportunity because of the solid concepts behind it. It operates on a block chain that is designed to make the verification of ownership claims quite flawless and immutable. Again, it serves the purpose of direct monetary payments through digital assets. The use of a decentralized network that recognises no master node gives it the much-needed unhackable security it deserves.
screen from TradingView
With the former Bitcoin Foundation Executive Chairman, Bruce Fenton as its creator, the coin has received so much adoption and market acceptance and is traded as more than 75 pairs in different exchanges as seen from coinmarketcap including Binance, Huobi Global and Bittrex. With over $800 million in market capitalisation, it boasts of over $80 million daily trading volume. Its price has moved from around $0.02 in 2018 to over $0.09 in 2021 and promises to even move higher in the coming months and years. Therefore, it is a good source of investment in penny cryptos.
VeChain (VET)
Important VeChain Statistics
| Metrics | Statistics |
|---|---|
| VeChain Price | $0.1241 |
| Price Change (24h) | $0.01042 |
| 24h Low / 24h High | $0.1128 / $0.1459 |
| Trading Volume (24h) | $2,168,501,028.32 |
| Volume / Market Cap | 0.2721 |
| Market Dominance | 0.46% |
| Market Rank | #19 |
| Market Cap | $8,011,227,353.55 |
| Over 348K followers | |
| Over 170K members |
This is a supply chain network that is built on top of the blockchain technology. With the use of Internet of Things (IoT) and distributed governance, this 2016 launched project hopes to eliminate most of the challenges faced in the management of supply chains. With an executive in IT who once served as CIO for Louis Vuitton China, Sunny Lu, as its creator, it seeks to increase traceability, transparency and efficiency while at the same time reducing cost in supply chain management. In terms of security it uses an automation that is trustless and a technology that recognises no identifiable point of weakness.
screen from TradingView
Hence, products can be tracked while the system is being used at a very affordable price. With over $8 billion in market capitalisation it has a daily trading volume of over 2 billion and has received so much market acceptance and adoption while existing has over 100 trading pairs in many exchanges including Binance Huobi Global and Hotcoin Global. Its price has moved from around $0.01 to over $0.12 currently and promises to increase with more adoption.
Holochain – HOT Token
screen from TradingView
Important HOT Token Statistics
| Metrics | Statistics |
|---|---|
| Holo Price | $0.008563 |
| Price Change (24h) | $0.0002202 |
| 24h Low / 24h High | $0.007934 / $0.00964 |
| Trading Volume (24h) | $207,730,998.62 |
| Volume / Market Cap | 0.1402 |
| Market Dominance | 0.08% |
| Market Rank | #68 |
| Market Cap | $1,481,561,489.55 |
With a live market cap of over $1 billion the coin has a daily trading volume of over $200 million. This coin is hosted on a network that is built for the hosting of decentralized applications without any form of blockchain technology. The network was founded by two expert contract coders, Arthur Brock and Eric Harris-Braun. It has an important use case of aiming to host P2P Dapps that can be accessible to mainstream internet users off blockchain. It has received a lot of market acceptance and exists as over 80 trading pears in major exchanges like Binance, Uniswap and Gate.io. It price has moved steadily from around $0.0003 to as much as $0.015 and now at $0.008.
Stellar Lumens (XLM)
screen from TradingView
Important XLM Statistics
| Metrics | Statistics |
|---|---|
| Stellar Price | $0.471 |
| Price Change (24h) | $-0.03234 |
| 24h Low / 24h High | $0.4684 / $0.5342 |
| Trading Volume (24h) | $2,239,297,570.73 |
| Volume / Market Cap | 0.2058 |
| Market Dominance | 0.62% |
| Market Rank | #16 |
| Market Cap | $10,879,023,206.29 |
With more than $10 billion in market capitalisation Stellar Lumens falls under the large market capitalisation with over $2.2 billion daily trading volume. This network that makes it possible for money to be stored and transferred is very much secured with the use of the Stellar Consensus Protocol which is decentralized, has low latency, asymptotic control and flexible trust. The price has increased from $0.002 to as much as $0.6 and now at over $0.4 and has received so much market acceptance.
Zilliqa (ZIL)
screen from TradingView
Important Zil Statistics
| Metrics | Statistics |
|---|---|
| Zilliqa Price | $0.1341 |
| Price Change (24h) | $0.001712 |
| 24h Low / 24h High | $0.1274 / $0.1467 |
| Trading Volume (24h) | $208,166,152.74 |
| Volume / Market Cap | 0.1372 |
| Market Dominance | 0.09% |
| Market Rank | #64 |
| Market Cap | $1,516,774,621.20 |
First the price had moved from around $0.1 down to around $0.1 and now around $0.13 and promises to even progress higher. With a trading volume of over $200 million, its market cap stands out over $1 billion. The blockchain is an open-source permissionless one which has as its main goal the hope to solve the problem of scalability in blockchains by offering sharding, which is a second layer solution to it. It has received a lot of market acceptance with a strong social media presence.
Show an investment (starting at $ 5) that you have made this week in Penny cryptocurrencies. List the steps you took.
This week, I had to invest in a few of these penny cryptos I have analysed. I invested in:
- Dogecoin
- Steem
- Cardano (ADA)
I followed a few simple steps in making this investment:
- First, I obtained a Steem deposit address and memo from Binance by clicking on the deposit button attached to the Steem token on Binance
- Then, I transferred some Steem tokens from my Steemit wallet to Binance after supplying the address and memo
screen from Steemitwallet
screen from Binance
Since I intend to invest and hold this penny crypto for a long time I simply left it like that.
I then used some of my already existing Bitcoin on Binance to purchase two more penny cryptos, that is Dogecoincoin and Cardano.
screen from Binance
screen from Binance
Below is the screenshot of my investment portfolio on penny cryptos this week:
screen from Binance
CONCLUSION
The whole concept and the idea of penny cryptos is quite interesting. Investing in them may be a worthwhile venture, especially when you look at the fact that such coins as dogecoin have increased by over 100 times in just a space of about 1 year. However, you must undertake a fundamental analysis of each coin before deciding on which ones to invest in.
(Unless otherwise indicated, all screenshots are taken from coinmarketcap)
Gracias por participar en Steemit Crypto Academy:
Es importante que revises los tag, por ese error no se iba a encontrar tu publicación.
Está muy bien, sin embargo en la pregunta 5 no hiciste el paso a paso de tu inversión.
Faltaron algunos gráficos y/o Captures sin tu nombre de usuario. Tienes que ser un poco más ordenado con los títulos, para que se entienda mejor y no exista confusión. Sobre todo en la pregunta 4.
Espero seguir leyendo tus publicaciones.
Calificación: 7.2
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Thanks professor @pelon53, please do ensure that it is upvoted by @steemcurator02
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