Penny stocks are corporate shares that trade for pennies or just a few dollars per share. Stock pickers looking for a quick return can sometimes make a big lick off a penny stock trade because their low price and small market cap makes it easier for them to surge in price than large cap companies.
But in this article we are going to share some of the reasons why it’s better to invest in penny altcoins– like one of Ethereum’s latest Shiba Inu challengers, Kai Cat ($KAI)– than penny stocks, especially in 2024 with the crypto market rally in full swing.
Penny Stocks vs. Altcoins: Who’s Better?
According to Forbes Advisor:
“Typically, penny stocks are the shares of troubled companies with very small market capitalizations that are not listed on major stock exchanges. While a few may still be listed on the NYSE or the Nasdaq, most penny stocks are traded via over-the-counter (OTC) transactions, or on the electronic OTC Bulletin Board (OTCBB) system.”
Forbes warns that investing in penny stocks is “incredibly risky, with a very high potential for fraud and loss.” That’s because retail investors investing in penny stocks can lose their money to pump-and-dump schemes like those depicted in the popular Hollywood movies, “The Wolf of Wall Street” and “Boiler Room.”
Penny stocks and new altcoins worth tiny fractions of a penny may seem similar to beginning investors at first glance, but they have some important differences.
According to an FX Empire Editorial Board report from 2019, when the alternative cryptocurrency market was in bloom during the ICO (Initial Coin Offering) boom of the 2018-2019 era in the crypto industry:
“Cryptocurrency is less risky because of the blockchain technology they use, which is a public ledger. There is less fraudulent activity because all records, accounts, and transactions are public.”
Not that new altcoins that can be purchased for pennies or less than a penny per token on crypto exchanges or directly from new projects are without their risks of pump-and-dump schemes, rugpulls, and wider market capitulations. These are risks that serious crypto investors take into consideration while doing their research on new coins to invest in.
But in crypto this sort of grift is quickly rooted out by markets because everything on the blockchain is transparent and public and updates in real time over the Internet 24-hours a day. Looking at the blockchain, what you see is what you get. Worthwhile projects with long-term prospects stand out.
Why To Consider Penny Altcoins Like Kai Cat (KAI)
There are no guarantees in life or investing, and it is impossible to know for certain how any investment will perform until the market has moved.
But as one Redditor put it in a thread comparing crypto to penny stocks on the Cryptocurrency subreddit– OTC penny stocks are for trading and crypto is better for investing in quality projects with long-term potential. Most of them start off as new coin offerings in presale like Kai Cat ($KAI).
That’s because off-Wall Street day traders push penny stocks up and down the chart at will to make quick profits. That happens in the altcoin space all the time too, but crypto is full of far more investors with long-term time horizons and the know-how to nurture a new currency from presale to over-the-moon prices capitalizing the high-tech sector’s blockchain industry.
Altcoin projects that succeed are those with long-term aims, economic thinking, secure technology, and an innovative approach, like the first-in-class crypto, Bitcoin. If you only buy one cryptocurrency in Q2 of 2024, buy Bitcoin. But if you want to invest in a new currency to turn your savings into brand new capital for a fresh project, you may want to have a look at KAI.
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