- Penny cryptos are altcoins that have huge benefits but also higher risks.
- In contrast to established cryptocurrencies, these coins have a high probability of rug pulls.
- This article lists the top five penny cryptocurrencies to invest in in 2021.
Cryptocurrencies saw a massive rally during the 2021 bull run. Altcoins, DeFi blue chips and even meme coins have more than doubled in value within a few days to months. This price increase takes place in every boom cycle.
Like stocks, Bitcoin price goes through periods of extreme expansion known as boom cycles, followed by bust cycles. Altcoins typically grow during the boom and have a higher return with an even higher risk.
It’s not easy to choose altcoins, however, as they are a dozen, let alone a few cent cryptocurrencies. Hence, this article deals with a list of penny cryptocurrencies that could get exponential in the second section of the bull run.
The top five penny cryptocurrency picks fall into three categories, meme coins, transfer tokens, blockchain tokens for real-world use cases.
Here are the top 5 penny cryptos to buy in 2021
- Dogecoin (DOGE) – the original meme coin.
- Shiba Inu (SHIB) – the crypto-crypto with dogs that has said goodbye to the waves of advertising and launched its own DEX.
- Ripple (XRP) – the remittance token that has tremendous potential to jump out if they win the ongoing lawsuit.
- Stellar (XLM) – While in many cases it is similar to XRP, XLM could benefit massively if the SEC vs. Ripple result is negative.
- VeChain (VET) – the blockchain already helping clean up the oceans recently entered the $ 1 billion pet food industry in China
Altcoins vs. Penny Cryptocurrencies
All cryptocurrencies other than BTC are generally grouped together under the nickname “Altcoin”. However, these coins can be further broken down into several categories, such as:
- ERC-20 and BEP-20: These altcoins are the result of smart contract standards. ERC-20 stands for the Ethereum blockchain, while BEP-20 refers to the Binance Smart Chain (BSC). Examples of ERC-20 coins are Uniswap (UNI), Yearn Finance (YFI) and Chainlink (LINK). Pancake (CAKE), Alpha (ALPHA) and Swipe (SXP) are some of the BEP-20 Altcoins.
- Native tokens: These coins come from their parent blockchains like Ripple (XRP), Stellar (XLM), Dogecoin (DOGE) and so on.
- Industry-specific: DeFi coins such as Yearn Finance (YFI), Aave (AAVE), Terra (LUNA); Meme coins such as Shiba Inu (SHIB), Dogecoin (DOGE), SafeMoon (SAFE); and oracle tokens like Chainlink (LINK), Band (BAND) and Augur (REP) are subordinated based on similar use cases.
Before we look at the list of the best penny cryptocurrencies to invest in in 2021, let’s take a look at what penny cryptocurrencies are and what investing in them entails.
The facts about penny cryptos
While the categorization of altcoins is complex depending on the classification aspect, penny cryptocurrencies are much easier to define. They are altcoins worth less than $ 1 regardless of which sector they want to influence and which blockchain they are based on.
Aside from price, penny cryptocurrencies can vary in a multitude of ways and can be tracked based on risk factors, market capitalization, etc.
Altcoins are relatively risky due to their volatility, but with penny cryptos the risk increases exponentially for three reasons: lack of information, liquidity, and fraud.
- Lack of information: Pseudonymity, an important ethos of cryptocurrencies, is a significant barrier that allows developers or creators to hide behind anonymous accounts. When investing in cryptocurrencies, it is crucial to know the team that work behind the scenes, which helps to gauge their intentions to some extent. In addition, the projects tend to skip exams, which in most cases leads to loss of money or scams.
- Liquidity: In the recent bull run, many meme tokens were launched on decentralized exchanges (DEXs) with no audits and very little liquidity. In addition, the token distribution was skewed with massive concentration among project developers. Therefore, penny cryptocurrencies are usually subject to “pump-and-dump” schemes. The best example of this was a coordinated pump-and-dump from XRP on February 1, 2021, which at times hit more than 100,000 members on Telegram.
- Scams or Rug Pulls: Rug pull is a term used to describe a project whose founders are pulling the projects out of investors’ money and abandoning the project, leaving investors overwhelmed. Many projects experienced rug pulls at the Bull Run 2021. SushiSwap was the only project to recover from an exit scam while the vast majority of them crashed and burned. While the risks associated with penny cryptocurrencies are inherent, the rewards often far exceed the returns on altcoins and bitcoin.
SushiSwap creator, Chef Nomi, returned to the room after debates and the intervention of FTX CEO Sam Bankman-Fried. For the record, Chef Nomi made it with 38,000 ETH, which was then valued at around $ 14 million (now valued at $ 126 million).
This is what the exit scam transaction looks like.
SushiSwap Carpet Pull Transaction Diagram
However, after six days, the creator returned the stolen 38,000 ETH.
To all. I messed it up. And I’m sorry.
– Chef Nomi #SushiSwap (@NomiChef) September 11, 2020
According to reports from Cipher Trace, DeFi rug pulls and scams accounted for 99% in the second half of 2020. This move by the scammers was strangely reminiscent of the 2017 ICO scammers.
Regardless, the total value locked in DeFI is around $ 85 billion, roughly the same level as it was during the May 2021 peak.
DeFi TVL diagram
The astronomical difference in return between penny cryptos and main cryptos can be seen in the graph below. Shiba Inu, a dog-themed meme coin, saw a 734,526% increase in value from August 20, 2020 to its peak on August 10, 2021. Bitcoin, on the other hand, rose about 515% over the same period.
Other penny cryptos achieved returns of up to 8,400%, which is more than a plus for the rewards compared to major cryptos like Bitcoin or Ethereum.
BTC vs. Penny Cryptos Yield Chart
So without further ado, here are the best penny cryptocurrencies to invest in in 2021.
The best cryptocurrencies 2021 pen
These coins were created for memes or jokes and usually have no use. However, Shiba Inu seems to have taken the concept of meme coins a step further when ShibaSwap DEX launched and plans to use Shiba Inu Incubator, a platform for incubating holders and incentives for them, and Shiba Rescue, where The creators use “Amazon” to further implement “Smile” to collect a percentage of your Amazon purchases and donate it to the Shiba Inu Rescue Association.
- Dogecoin (DOGE):
Dog coins, or meme coins, became so popular that they were featured in the mainstream media. Dogecoin is the original meme coin, created as a joke in 2013, that featured the logo of a Shiba Inu dog. While the altcoin was silent for a few years, Elon Musk’s tweets revived it.
DOGE was the only altcoin to enjoy free promotions from Musk and other celebrities for a while, but things changed when other meme coins appeared. Learn how to buy Dogecoin
- Shiba Inu (SHIB):
Shiba Inu is one such dog-themed cryptocurrency that has seen a massive 734,526% surge. On the flip side, Dogecoin price returned 23.022% from August 2020 to its peak on May 8th.
Ripple was developed with Proof-of-Stake to create a better blockchain that is more efficient than Bitcoin and capable of handling real world applications. Stellar Lumens is following a similar path, but is in a lesser dilemma than Ripple and has no arguments with authorities.
- Ripple (XRP):
The concept of Remittance Tokens is to increase the efficiency of cross-border transfers. Ripple was launched against this backdrop and is currently working with banks and institutions around the world.
While the origins of Ripple and XRP are puzzling, investors don’t seem to have a problem with it. Additionally, the current battle with the Securities & Exchange Commission (SEC) has helped Ripple’s case in some cases, but a win would definitely be a positive development for its partners and the XRP award.
XRP price grew 670% from August 2020 to its peak on April 14, but has room for growth.
- Stellar Lumens (XLM):
Stellar Lumens also points in the same direction as XRP, but supports various projects to build on and has strong fundamentals.
Check out our guide to stellar lumens (xlm)
- VeChain (vocational training):
The VeChain price rose about 1,500% between August 2020 and August 2021 and began to recover well before many altcoins did. VET is a blockchain-based supply chain platform that focuses on problem solving in the real world.
The partnership with the ReSea project has led to noticeable developments and freed oceans, rivers and other bodies of water from plastic. This advancement is the result of the association between VeChain, ReSea and DNV.
Because of the real world applications, VeChain has room for growth as they work with more industries.
The other five penny cryptos that didn’t make the list but are worth noting are:
- Basic Awareness Mark (BAT).
- Decentralized land (MANA).
- The diagram (GRT).
- Raven coin (RVN).
- Zilliqa (ZIL).