It seems like new forms of cryptocurrency are coming out everyday. Some quickly fizzle while others gain in value and earn a place on the top of the charts.
It’s easy to see that there are similarities to penny stocks because most cryptocoins are wildly inexpensive. And of course you want to buy low and sell high, but what other similarities and differences are there?
Low Cost of Entry
The low cost of penny stocks is blown away by the extremely low cost of cryptocoins. Sometimes these trade at a small fraction of a penny, allowing you to buy a ton of coin for not a lot of cash. However, since most cryptocoins don’t find any traction it doesn’t really matter if you own a million shares, it’s still not worth much if the stock never takes off.
Established Trading Platforms Exist
At this point it’s pretty easy to start trading penny stocks or start trading cryptocoins. You simply pony up the dough and you’re off. In that respect, the two are pretty similar because neither require a lot of hoops to jump through in order to start making trades with real money.
Stocks Have Been Around Much Longer
One thing that penny stocks have going for them that cryptocoins don’t is that they’ve been around much longer. People are familiar with what stocks are and how they work, but cryptocoins are still largely a mystery to most. This means that much has been written on stock trading and strategy, but finding a successful cryptocoin trading strategy will be tricky because there are few experts that exist.
The Future of Cryptocoins Is Highly Uncertain
Twenty years from now there will likely still be penny stocks because there will always be new businesses getting their start. But the same cannot be said for the vast majority of cryptocoins that exist today. There will probably be one or two main cryptocoins, like Bitcoin and one other big competitor, but who’s to say there will always be start-up coins around?
Both Are Fun to Trade
It’s a lot of fun to trade penny stocks and cryptocoins because of how much action they get in a short period of time. You can buy a cryptocoin and in just a few hours it can make a considerable jump with plenty of buyers ready for you to sell to, and the same can be said for penny stocks.
Both Offer Fast Profits and Losses
Because of the speed involved in both cryptocoins and penny stocks they can provide quick profits and you can lose your starting balance faster than you might be used to. It’s something to be aware of when starting out, and one more reason why you should never bet the farm, only using money that is earmarked for high-risk trades.
No Heavy Regulations
It’s still very much like the Wild Wild West in the world of cryptocurrency and therefore you have to watch out for scams and unscrupulous trading platforms. There’s almost no regulation with cryptocoins so you need to trade at your own risk.
Since penny stocks have been around longer there’s more regulation involved (although scams still exist) and you can trust a well-established brokerage will still be around six months from now.