Penny cryptocurrencies have popped back into the spotlight lately as cryptos not named Bitcoin have gotten off to a strong start in 2020.
The last altseason saw astounding gains.
Collectively, non-Bitcoin cryptos rose 24,740% from January 2017 to January 2018. Individually, many cryptos - particularly penny cryptocurrencies - had even bigger gains.
Don't Miss: Bitcoin could shoot up 334% in 2020, but these tiny investments can go much higher. Read more...
But the cryptocurrency markets tend to follow Bitcoin's lead. And when the Bitcoin price started to tumble after reaching its all-time high of nearly $20,000 in mid-December 2017, the rest of the crypto market tumbled along with it.
Most cryptocurrencies lost 75% to 95% of their value in the "crypto winter" that followed. Last year, crypto prices rose in the spring as Bitcoin rallied, but they ended almost where they started.
That means cryptocurrencies are trading at bargain prices now.
So we decided to look at today's best penny cryptos with the goal of finding those with the most potential.
But before we do that, here are a few basic things you need to know...
Unlike penny stocks, penny cryptocurrencies aren't necessarily obscure, thinly traded coins. I consider any crypto that trades for less than $1.00 to be a penny cryptocurrency.
Case in point: XRP is the No. 3 cryptocurrency by market cap. It's one of the oldest and best-known alt-currencies, created by a company called Ripple in 2012. But it currently trades at just $0.23.
In fact, about half of the top 100 coins listed on CoinMarketCap.com are penny cryptocurrencies.
Another important thing to know is that the supply of a cryptocurrency plays a big role in its price relative to other cryptos.
The supply of a crypto is the total number of coins either created at its launch (known as a pre-mine) or designated to be created over time through some sort of digital mining process.
The total supply of Bitcoin is capped at 21 million, a relatively low number. That's one reason the price of Bitcoin is so much higher than the price of other cryptocurrencies.
The current supply of XRP, on the other hand, is 43.6 billion - and the eventual total supply is planned to top out at 99.9 billion. That's 4,761 times as many XRP than Bitcoin.
Can You Solve This Riddle? We’re betting not one out of every 10 people can figure this out. Can you?
It's common for penny cryptocurrencies to have a supply in the billions or tens of billions, though some have supplies in the hundreds of millions.
Other components driving the price of a cryptocurrency include its utility; how well it solves such issues as privacy, security, and scalability; and the quality of its developers (the people working on the project).
With that in mind, we looked at the top 100 cryptos by market cap and selected the 10 best penny cryptos for 2020...
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
XRP
Symbol: XRP
Current price: $0.227
Why it has potential: Often confused with Ripple, the company that created it, XRP has a devoted following. It's known for its fast transaction times, very low fees, and veteran development team. It is designed to facilitate cheap, quick cross-border payments between banks. Ripple offers a service to financial institutions, RippleNet, that utilizes XRP for fast global payments. One caveat: A pending court case could classify XRP as a security, which would disrupt Ripple's relationship with XRP.
IOTA
Symbol: MIOTA
Current price: $0.239
Why it has potential: IOTA was designed for use with the Internet of Things (IoT). It's essentially a decentralized value exchange that will allow Internet-connected devices to communicate both data and value. A report by research firm Fundstrat released earlier this month said that if IOTA does succeed in becoming the IoT standard, it could grow to $700 billion in value by 2035. That would put the value of one MIOTA at about $250.
Ontology
Symbol: ONT
Current price: $0.634
Why it has potential: This China-based crypto is a decentralized platform designed to verify identities and manage digital assets. It's partly integrated with another well-regarded Chinese crypto, NEO, with whom it shares several developers. One big advantage of Ontology is its ability to integrate with other cryptocurrencies.
NEM
Symbol: XEM
Current price: $0.039
Why it has potential: The NEM Foundation nearly went bankrupt a year ago, but new management has put the project back on track. NEM is a crypto platform designed to facilitate the development of enterprise blockchain apps. A revamped version of the network, called SYMBOL, is set to go live in the first half of 2020. That could serve as a catalyst for the NEM price.
VeChain
Symbol: VET
Current price: $0.006
Why it has potential: The VeChain project creates blockchain solutions for supply chains. Automakers BMW and Renault are already on board, as is Walmart China. Better still, the project joined China's Belt and Road Initiative at the end of last year.
Basic Attention Token
Symbol: BAT
Current price: $0.208
Why it has potential: BAT is a token designed to work with the Brave web browser. Brave blocks regular ads, but along with BAT is the foundation of a new advertising ecosystem that pays users in tokens to view ads. Users in turn pay the sites (in BAT tokens) to view content. The Brave browser graduated from beta to version 1.0 last November and already has more than 10 million users. Co-founder Brendan Eich also has an impressive pedigree: He was a co-founder of Mozilla's Firefox browser and invented JavaScript.
Ravencoin
Symbol: RVN
Current price: $0.025
Why it has potential: Built on a fork of Bitcoin, Ravencoin's purpose is to transfer assets from one party to another. Ravencoin has close ties to Medici's tZERO security token trading platform, itself a pet project of former Overstock CEO Patrick Byrne. Last year, tZERO announced it would create digital shares on the Ravencoin blockchain. This puts Ravencoin at the forefront of the push to put securities trading on the blockchain.
ICON
Symbol: ICX
Current price: $0.151
Why it has potential: ICON is an ambitious project based out of South Korea. It seeks to serve as a link between blockchain-based communities; already it has linked such institutions as banks, securities firms, hospitals, and universities. The ICON foundation has forged partnerships with such crypto groups as the Blockchain Interoperability Alliance and Pantera Capital as well as several South Korean banks. Top crypto influencer Don Tapscott is a member of ICON's board of advisers.
Enjin
Symbol: ENJ
Current price: $0.083
Why it has potential: Enjin seeks to capitalize on the popularity of gaming by providing a standardized, crypto-based ecosystem to facilitate in-app purchases, trading, and more. That means assets earned in one game could be transferred to another via Enjin. It already has partnerships with key gaming players such as PC Gamer, Arena Match, Unity, and NRG eSports. Last year, Samsung integrated support for Enjin into the Galaxy S10, and Microsoft announced support via an initiative called Azure Heroes.
Nexo
Symbol: NEXO
Current price: $0.102
Why it has potential: Nexo is essentially a bank for cryptocurrencies; it's a crypto-backed lending institution. So far, it has loaned out the equivalent of $700 million to more than 200,000 users - but using cryptocurrencies for the financing. People who hold the Nexo tokens are paid dividends - last year, the yield was 12.73%. Not many cryptos pay you to hold it.
But while each of these penny cryptocurrencies has impressive long-term potential, Money Morning Defense and Tech Specialist Michael A. Robinson has developed a way to identify cryptos with the ability to deliver big gains without such a long wait...
A decade ago, a $3 stake in Bitcoin could've landed you firmly in the 1%.
You can't manage that with Bitcoin now - or even with most other cryptocurrencies - but such gains are still possible with one special class of cryptos.
This sector provided monster returns in 2019. Gains like...
And people have seen massive gains from cryptocurrencies like these in remarkably short periods of time.
Now you can, too - thanks to our Bitcoin 2020 Masterclass.
All the details are right here...
Follow Money Morning on Facebook and Twitter.
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.