Are Altcoins the new "Penny Stocks" ? Will they take over Wall Street?

[daniel244king]

There are over a thousand companies and stocks listed on major U.S stock exchanges.  Despite tech giants like Apple (APPLE) and Google (ALPHABET) having near trillion dollar valuations, its has not taken away from the other approx 20,000 other stocks sold on various exchanges:

https://www.quora.com/How-many-publicly-traded-companies-are-in-the-world.

There are only only approx 900 Altcoins in the world compared to 20,000 U.S stocks.  

Bitcoin (BTC) has a valuation of approx $40 Billion USD but smaller Altcoins like FOOTYCASH (FOOT)  and Tatoocoin Limited Edition (TLE) have seen 5000%+ increases in the past month.

Are Altcoins becoming the new penny stocks?



UPDATE:

With the Feds now trying to regulate tokens like DAO, does this mean that altcoins are poised take over Wall Street?

[daniel244king]

I think we should stop calling them "Shitcoins" and recognize their real value and potential.  

Just like any stock on the stock market - a company can turn a stock around and increase it's monetary value; the same can be said about altcoins.

Lets just call them "PennyCoins" instead.

[JCowey34]

Yes, I think so.  I just invested in 2 ICO's in the past couple of days.

[ranih]

The only difference is it's much easier to create an altcoin.
It cost you almost nothing and there're no regulations at all.

I'm guessing that in a few years we'll have more altcoins than penny stocks....

[European Central Bank]

not really, because at least with penny stocks there's some actual potential for revenue. sure, most of it's bullshit but they are real companies attempting to do real things in theory. you can't say the same for almost all alts. they feed off their own asshole in an echo chamber.

[RandomEvent]

I think they are in a lot of ways. However once a coin reaches over a certain market cap there is room for real growth. It usually means its a good idea with people working towards development.

[Pearls Before Swine]

I think we should stop calling them "Shitcoins" and recognize their real value and potential.  

Just like any stock on the stock market - a company can turn a stock around and increase it's monetary value; the same can be said about altcoins.

Lets just call them "PennyCoins" instead.

Nay, shitcoins is an apt moniker.  Are they like penny stocks?  Yeah, I'd say so.  A vast majority of penny stocks are shell companies with no earnings and no requirement to do financial reporting.  Unscrupulous people pump and dump them to the detriment of people who got duped.  Sound familiar?  That's more or less what most shitcoins are.  Pump & dump scams.

[olio666]

I really see them from the start as penny stocks.

Pump and dump

[jekjekman]

The sad truth is everyone can make a coin of their own, and with that you can consider it as you are making your own product like 'U.S stocks' to sell in the market to have value, it will just depend on what is the aspects of it that doesn't have any other altcoins have, how will you implement it with faster transaction and lower fees or simply creating a name that suit what is your target audience that will use this coin.

We can call it other form of modern penny stocks if we want but at the end of the day it's still a form of currency that we use online, it's just so happen that fluctuation really happens so fast and make it so volatile either pump or dump.

[dissident]

not really, because at least with penny stocks there's some actual potential for revenue. sure, most of it's bullshit but they are real companies attempting to do real things in theory. you can't say the same for almost all alts. they feed off their own asshole in an echo chamber.

Right. Because people in crypto worship open source, no money can be made by the company because someone can steal the blockchain tech and use it without repercussions. Actual companies protect their trade secrets and intellectual property and sue those who try to rip it off.

I try to tell my favorite coins to not open source everything so that it can't be ripped off, but it seems to fall on deaf ears.  What big bank is going to pay for the blockchain tech a coin uses if it's all open source?  You have to close source the good tech, and license it out. I hope NEM does that with mijin.

Nonetheless, people including myself do invest in the tech, because I know others will.

However, the people who claim bitcoin has value while altcoins don't, have it wrong. The only value any of these coins has is in what people give them. There are a lot better blockchain solutions out there than bitcoin right now, yet it takes the crown because people perceive it to have value, like gold.  If exchanges allowed any coin to be traded directly for any other coin, and the big fiat exchanges Coinbase and Gemini added more coins, there's a chance things might have had a different ending.

[Spoetnik]

Nope.. Because of regulations.. Or a lack of them.
A very poor comparison.

Further more you are not investors.
And you are not investing in companies.

You are SUPPOSE to be helping get a currency started..
Not warping scam coins into the concept of penny stocks for profits.

Who the hell told you all this was all started for ROI's?
Do you realize no one uttered the words road map or white paper until clone devs started using the term IPO?
And IPO WAS NOT USED FOR THE FIRST FIVE YEARS OF CRYPTO.

REALITY CHECK TIME INVESTARDS..
YOU ARE FULL OF SHIT.
And all you do is keep lowering the bar. 

Quit trying to twist this scammy ICO SCAM facade into something legit.
And yeah I have heard the penny stocks retort endlessly for about 3 years now.
And it's just as dumb as the first time I heard it

By the way we were suppose to be getting away from centralization and companies and the traditional financial system like the stock market.
And.. And..
I expect a whole hell of a lot better than trying to be like the stock market.
The stock market is a scammy joke itself also.
Heard of Martha Stewart or Bernie Madoff?

Who in crypto ever did time in jail for insider trading?
And how many guys would here in crypto?

Hey chucklefucks I expect more from you than aiming to be like some other scammy scene

[findingthemoon]

Its a nice comparison and one friends of mine have raised with me before when talking about altcoins. Its obviously not quite the same thing but for everyday conversation it makes sense to use the comparison.

[Herbert2020]

they have always been the "penny stocks" and it has nothing to do with the marketcap or price or how much they go up and down. it is all about utilities. when the altcoins have zero usage and only exist to be traded or more accurately to be pump and dumped to make more bitcoin out of them, then they become worthless even with value hence they are "penny stocks".

the main characteristics that the altcoins share with penny stocks is the high risk and the short term reward and long term death.

[SiMoon23]

I think they are in a lot of ways. However once a coin reaches over a certain market cap there is room for real growth. It usually means its a good idea with people working towards development.

As long as you can't spend the coin anywhere what are you expecting to happen? This certain market cap is on a longterm also just temporarily.

what I wonder is that there are thousands of coins and ICOs or what it's called but until now nobody cared to look for easy ways to spend these "cryptocurrencies". And people still buy them in attention of what exactly? Can one really buy a coin like "piggy coin" and then believe "oh, in 5 years everyone is using piggy coin and i've made the deal of my life?"

By the way we were suppose to be getting away from centralization and companies and the traditional financial system like the stock marketAnd.. And..
I expect a whole hell of a lot better than trying to be like the stock market.
The stock market is a scammy joke itself also.
Heard of Martha Stewart or Bernie Madoff?

Madoffs ponzi worked at least 40 years if i remember right. I don't expect that stupidity to take 4 years from now... instead i'm seeing it like the occupy wall street movement in '11... a bunch of people without any knowlegde what they are actualy doing but hoping for some miracoulus revolution... it's kind of sad... imagine what the manpower which was needed to create this bloated shit could have done for a better acceptance of btc, eth or whatever you can call a serious token... but now I fear that the financial system just waits a little more and then adopt the most sophisticated ideas for free and us them for control instead of freedom... i mean imagine something like a Ripple or anything the industry agree with becomes something like a "world standard money" - which would actually hold the worth because of the industry support - the financial systeme certainly will find ways to avoid taxes even more...

I hope I'm wrong... but it wouldnt surprise me...

[Spoetnik]

"Penny Stocks" is the oldest defense for shitcoin profits trading.
It fails on any and all levels.

You can compare what ever you want.. does not mean fuck all.
Want to compare things ?

Compare these so called "penny stocks" with a ponzi/pyramid/mlm scam.
Now you have some similarities.

[xbiv2]

"Penny Stocks" at least have some value as part of liquidity of enterprise.
Altcoins have zero liquidity, no any papers, no bankruptcy law.
https://pastebin.com/ZUxTmR99

[HardFireMiner]

I think we should stop calling them "Shitcoins" and recognize their real value and potential.  

Just like any stock on the stock market - a company can turn a stock around and increase it's monetary value; the same can be said about altcoins.

Lets just call them "PennyCoins" instead.

There is no way I will call a scamcoin or a shitcoin in any other way, if you don't like it, oh no, who gives a shit? A shitcoin is a shitcoin and it's distance from Penny Stocks is bigger than 10 light years.

Get over it and start calling things by their real name.

[Spoetnik]

The only time i have seen "penny stocks" brought up is when..
Profiteers are trying to legitimize trading digital garbage for profits
..and trying to make it come off as legit and acceptable.

http://www.investopedia.com/terms/p/pennystock.asp

Does this sound familiar ?

What Makes Penny Stocks So Risky?

Four major factors make these securities riskier than blue chip stocks.

1. Lack of Information Available to the Public

The key to any successful investment strategy is acquiring enough tangible information to make informed decisions. For micro-cap stocks, information is much more difficult to find. Companies listed on the pink sheets are not required to file with the Securities and Exchange Commission (SEC) and are thus not as publicly scrutinized or regulated as the stocks represented on the New York Stock Exchange and the Nasdaq. Furthermore, much of the information available about micro-cap stocks is not from credible sources.

2. No Minimum Standards

Stocks on the OTCBB and pink sheets do not have to fulfill minimum standard requirements to remain on the exchange. Sometimes, this is why the stock is on one of these exchanges. Once a company can no longer maintain its position on one of the major exchanges, the company moves to one of these smaller exchanges. While the OTCBB does require companies to file timely documents with the SEC, the pink sheets have no such requirement. Minimum standards act as a safety cushion for some investors and as a benchmark for some companies.

3. Lack of History

Many of the companies considered to be micro-cap stocks are either newly formed or approaching bankruptcy. These companies will generally have poor track records or none at all. As you can imagine, this lack of historical information makes it difficult to determine a stock's potential.

4. Liquidity

When stocks don't have much liquidity, two problems arise: first, there is the possibility that you won't be able to sell the stock. If there is a low level of liquidity, it may be hard to find a buyer for a particular stock, and you may be required to lower your price until it is considered attractive to another buyer. Second, low liquidity levels provide opportunities for some traders to manipulate stock prices, which is done in many different ways—the easiest is to buy large amounts of stock, hype it up and then sell it after other investors find it attractive (also known as pump and dump).
How is a Penny Stock Created?

A penny stock, like any other publicly traded stock, is created through a process called an initial public offering, or IPO. First, a company must file a registration statement with the Securities and Exchange Commission or file stating the offering qualifies for an exemption from registration. It must also check state securities laws in the locations it plans to sell the stock. Then, upon approval, the company may begin the process of soliciting orders from investors. Finally, the company can apply to have the stock listed on an exchange, or it can trade on the over-the-counter market, or OTC.

Small companies and start-ups typically issue stock as a means of raising capital to grow the business. Though the process is lengthy, involves mountains of paperwork and can be quite costly, issuing stock is often one of the most efficient ways for a start-up company to obtain necessary capital. Penny stocks are often the result of such ventures and can make for profitable but precarious plays for investors.

As with other new offerings, the first step is hiring an underwriter, usually an attorney or investment bank specializing in securities offerings. The company's offering either needs to be registered with the SEC according to Regulation A of the Securities Act of 1933 or file under Regulation D if exempt. If the company is required to register, Form 1-A, which is the registration statement, must be filed with the SEC and is accompanied by the company's financial statements and proposed sales materials. These financial statements need to remain available to the public for review, and timely reports must be filed with the SEC to maintain the public offering. Once approved by the SEC, orders for shares may be solicited from the public by accompanying sales materials and disclosures, such as a prospectus.

After initial orders are collected and stock is sold to investors, a registered offering can begin trading in the secondary market via listing on an exchange like NYSE or Nasdaq or trade over-the-counter. Many penny stocks end up trading in OTC markets due to the strict requirements for listing on the bigger exchanges. The majority of penny stocks do not meet such requirements, and the companies cannot typically afford the hefty cost and regulations involved. Sometimes companies make an additional secondary market offering after the IPO. This dilutes the existing shares but gives the company access to more investors and increased capital. It is important that companies issuing penny stock keep this in mind and work to gain value in the shares as they trade in the open market. Furthermore, it is mandatory that the companies continue to publicly provide updated financial statements to keep investors informed and maintain the ability for quoting on the over-the-counter bulletin board, or OTCBB.
The SEC's Rules for Penny Stocks

Penny stocks are considered highly speculative investments. In order to protect the investor’s interest, the SEC and the Financial Industry Regulatory Authority (FINRA) have specific rules to regulate the sale of penny stocks. All broker-dealers need to comply with the requirements of Section 15(h) of the Securities Exchange Act of 1934 and the accompanying rules to be eligible to effect any transactions in penny stocks.

(1) Sales Practice Requirements §240.15g-9   

Before effecting any transaction, a broker-dealer must approve the investor's transaction (of specific penny stocks); meanwhile, the customer must give a written agreement to the broker-dealer for the same transaction. This measure has been taken to prevent manipulative, fraudulent practices in such investments. “Approving” the customer basically means checking his suitability for such investments. Approval should be given only after the broker-dealer has assessed the customer's investment experience and objectives along with his or her financial position.

(2) Disclosure Document §240.15g-2

A broker-dealer must provide a standardized disclosure document to the customer. The documents explain the risk factor associated with investing in penny stocks, concepts related to the penny-stock market, customer rights, broker-dealers' duties towards the customers, remedies in case of fraud and other important information which can be handy for an investor. The investor would be well-advised to go through this document so as to take informed decisions.

(3) Bid-Offer Quotations Disclosure §240.15g-3

It is mandatory for a broker-dealer to disclose and later confirm the current quotation prices and related information to the customer before effecting a transaction. If a broker-dealer doesn’t follow the same, it is considered unlawful. This helps the investor to keep a track of the price movement in the marketplace.

 (4) Compensation Disclosure §240.15g-4   

This rule makes the investor aware of the money being earned by the broker-dealer from a certain transaction. This can help the customer to judge if the broker-dealer has a selfish motive in trying to push a certain transaction.

(5) Monthly Accounts Statements §240.15g-6   

A broker-dealer must send to its clients a monthly account statement which discloses details such as: the number and identity of each penny stock in the customer’s account; the dates of transaction; purchase price; and the estimated market value of the security (based on recent bids and purchase prices). Such statements must also explain the limited market for the securities and the nature of an estimated price in such a limited market. In cases where there have been no transactions effected in the customer’s account for a period of six months, the broker-dealer shall not be required to provide monthly statements. However, broker-dealers should send written statements on a quarterly basis.

[Abricotier]

Penny stock is for me a great way to call shitcoins sold on YoBit, which is a bit like Jordan Belfort !

[BitcoinHodler]

many have called altcoin market as Penny Stocks over the years and i kinda agree with them too but i also find a big difference between the two markets.
in Penny Stocks market, it is my understanding that you trade shares of real companies so there is some reality to it. there is a physical company that is doing something. there are jobs, employees, money going in an out, ...
but in altcoins you are trading mostly "tokens" and these are mostly virtual not real. granted there is the similar blockchain technology behind bitcoin and altcoins but the differentiating factor is usefulness. when there is absolute zero usage for most altcoins and nearly no usage for the rest then they become virtual tokens changing hand.