“Take me on, take me on…” – Lord, is this song everywhere nowadays, she thought to herself?
“I’ll be gone, in a day or two”, it seemed like the shabby bus speakers were spitting A-Ha’s techno-pop hit directly into her brain.
She’d wish for it to get out in a day or two but we all know how sticky the song was. Once it hits the spot – it stays there for weeks. Thanks a lot, bus driver man. Thanks a lot.
At least that nice guy was there. He always gives up his seat for her.
“I should ask his name today. I really should.”
And so she did. She did much more than asking for the man’s name. She introduced the man to her husband for the two to later start what is now known as the infamous Stratton Oakmont Inc.
That man was Jordan – the Wolf of Wall Street – Belfort and her husband was Danny Porush, his partner in crime. The rest is a marathon of “pump and dump” fraud, midget tossing, drug abuse and millions wasted down the drain. You know, the story DiCaprio has portrayed flawlessly thus cementing penny stocks as something shady and untrustworthy in the minds of the entire world. Yes, it all started with a man giving up his seat for a woman or her daily commuting route in the eighties.
Ok, hold on. Watching an entertaining movie is fine and dandy, but what do penny stocks have to do with the Wolf of Wall Street, why are they illegal and what is the tie into the cryptocurrencies?
Let’s start from answering what penny stocks are. According to Investopedia, Penny Stocks are the stocks traded outside large exchanges because the companies these stocks belong to are too small to compete with larger players. What caught Jordan’s attention at the time was an insanely high return rate. Traders were earning a 50% commission. That’s 50 cents from every dollar of commission alone (investors still had to have profit, making the potential RoI even higher).
That noted, the fact that penny stocks are too small to be decently regulated has opened many opportunities for scammers and frauds. We don’t have to go further than Jordan’s “Pump and Dump” plan: employees of Stratton Oakmont Inc. Were artificially increasing the value of penny stock after purchasing a lot of them. Then they sold everything out and dumped the prices back to the original level. The whole thing was working on false advertising, lies, and insiders on a payroll.
Ok, fraud aside, do you remember the scene in the movie where the Wolf has discovered the world of penny stocks? He entered a firm that employed how many? Ten? Twenty people? More?
And how many of these firms were out there all over NY?
My point is that the market is large enough to support an entire economy of companies, brokers, and investors all of whom are working fair according to the letter of law while still making a decent profit.
What does this leave us with: A market filled with opportunity or a shady spider jar of lies? Both, actually. Penny stocks are both. They open the door of opportunities to those willing to work hard but the lack of regulation leaves it open for those willing to cut a few corners.
Penny trading and digital currencies
Penny Trading has a lot of charm because the entry point is low. Everyone can be a trader. But the sheer amount of malicious traders roaming the industry butcher this benefit and make life into hell for beginners. Cryptocurrencies, on the other hand, have a solution.
The Blockchain network, while not regulated by any authority or government is open by nature. People, traders, and miners themselves regulate payments, transactions and coin prices (for the most of it, at least), thus giving a second chance for life to the industry. Yes, there are the still risks of losing an investment just like on any other stock or currency exchange, but with the number of resources you will be dealing with the profits will surpass your expectations.
Do note that you will never make a fortune on penny trading in Blockchain because even a 50% return on an investment of $10 is 5 dollars and there are only so few deals one can get through daily.
Not all is gold that’s Blockchain
Why not trade Bitcoin? Isn’t that what the mining in particular and cryptocurrencies, in general, are made for?
Nope, not really. Sure, there is a lot of hype surrounding the Bitcoin right now but, as it always is with public attention, we are only showed what they want us to see.
Bitcoin is big right now – we all know that. What most of us don’t know is what matters, that thing is that Bitcoin is too big right now. It is impossible for a beginner to get the kind of industrial level gear to mine and sell it effectively solo and the prices on exchangers bite like hell.
A couple of thousands US dollars are required just to sink your toes into the pool and, as one wise woman once said, “ain’t nobody got time for that!”. Not now, not ever, especially given that you have 1200+ other cryptocurrencies to choose from and make a profit on.
Here are but a few examples of worthwhile investments anyone and their grandmother can pull off:
- Plentiful Coins: Look at Ripple for instance. It was a relatively unknown currency until recently yet it had something going for it – a plentiful supply. Get your hands on a currency that has no cap that, in theory, should keep its price low according to the basic supply-demand rules and wait for the public to notice it. A single spark in the modern world of internet news going viral can skyrocket the price of what otherwise is unlikely to flourish.
- Fallen coins: Same can be said about currencies that have lost their mojo over the course of a few months. Buy them cheap and wait for the spark. A rise in attention in Blockchain that works as an open ledger will ensure that more people following your logic will be buying the coin making it more and more visible to the crowd. The higher the attention, the sooner a new spark will ignite the currency.
- Newly-Mined coins: The amount of cryptocurrencies is proud of 1200+ names and they are still coming. Some of the currencies hit the spot and fly high. Others die slowly in a state of stagnation. That’s just the natural order of things and if you are lucky enough to invest in the first type while it is cheap – congratulations, you’ve just earned yourself a new boat.
Are penny currencies worth your time? It depends. If you are willing to invest time in research and are eager to keep your finger on the pulse of the Blockchain world – the gains will surpass the pains. You won’t be making millions with penny investments, yet you will ensure a stable, steady money flow.
If you wish to aim for the stars and have both the money and experience for a head start, then no, penny currencies are not for you.
So what will it be? Please share your thoughts in the comments!