What is a Shitcoin and which coins are labeled as such?
With the expansion of the crypto market comes the inevitable increase of scammers looking to take advantage of others with less skill. While most cryptocurrencies are useful in some decentralized applications or blockchains, some have no actual worth. In the crypto community, a “shitcoin” refers to a worthless cryptocurrency.
How are shitcoins used?
Satoshi Nakamoto’s 2009 introduction of Bitcoin boosted cryptocurrencies’ appeal. Following Bitcoin’s success, other organizations are exploring blockchain technology. Several initiatives use digital money. “Altcoins” are alternative cryptocurrencies built on Bitcoin’s foundation.
Coin developers disclose token distribution caps. Bitcoin’s whitepaper includes a 21 million-coin hard maximum. The Ethereum whitepaper limits the annual supply of Ether (ETH) to 18 million tokens.
This causes scarcity. Investors expect a token’s supply to decline. More coins than promised will diminish investors’ shares’ value. When a cryptocurrency’s total supply is capped, its price should fluctuate based on demand.
Since shitcoins are useless, demand is low. Speculation determines the token’s value. Despite having no real worth, many people believe in shitcoins as they always look for the best Shitcoin to buy.
Which characteristics define a shitcoin?
Many shitcoins have a recognizable format. Initial interest in shitcoin’s token is expected, but its price will likely remain modest. Demand and low supply drive up pricing. This usually causes a value decline. This reduction is due to traders selling their tokens to take profit from short-term price changes. “Pump-and-dump” can leave abundant investors with worthless coins.
Shitcoins have a modest market capitalization. Due to the small market size, a few big investors can easily boost the price.
Lack of purpose is a shitcoin’s defining trait. Bitcoin was designed to be used without a central authority or trusted third parties. Ether, Ethereum’s native coin, certifies transactions and protects the network. Shitcoins have unclear functions.
History and projects can help you detect a shitcoin (if it exists). Is this notion on another coin platform? Is this white paper plagiarized? If any of these concerns are contested, the cryptocurrency may be a shitcoin.
How should you investigate cryptocurrencies before buying?
Carefully read the project’s whitepaper
Whitepapers are the best way to spot shitcoins. First, look for a whitepaper’savailability. A shitcoin may lack a whitepaper.
Consider the whitepaper’s tone. A whitepaper should have flawless English. A cryptocurrency’s shoddy website or marketing materials are red flags. Top-tier coins invest in whitepapers.
Third, investigate the developers’ promises. Non-technical people rarely read a project’s whitepaper in its entirety. The individuals behind shitcoin know this and plan to capitalize by inflating the project’s goals, use cases, and roadmap. These recommendations’ technology remains unknown.
Too many photos is a red flag. Whitepapers should contain technical details about a project. Heavy-image whitepapers with few solutions should raise warning flags.
To spot a poorly written whitepaper, study exemplary models. Ethereum, Bitcoin, and Cardano all have excellent white papers.
Keep your eyes out for warning signs in ICO
Investors can buy a cryptocurrency through an ICO before it’s publicly distributed. If the ICO offers early investors a 30% discount or more, the cryptocurrency may be a shitcoin. Early investors can earn by buying coins at a bargain and selling them immediately higher than the ICO price. If the development team is confident in their coin, they shouldn’t need to incentivize token sales.
The absence of a product, source code or demo is another red flag. Researching project team members is also helpful. Do they use social media? Lack of profile activity is discouraging. A group that wishes to remain anonymous must be hiding something.
Places to get shitcoins
In the previous section, we said shitcoins are controversial. Because any alternative cryptocurrency is a shitcoin, it’s hard to say where to buy them.
Most have low market capitalization, making them less liquid on Binance and Coinbase. A coin must be reviewed thoroughly before being traded on a major exchange. Few shitcoins get there.
Below are some of the most high-profile shitcoins currently trading on cryptocurrency platforms:
- Dogecoin (DOGE) – Dogecoin is a cryptocurrency based on a Shiba Inu internet meme. Influential people endorsed and promoted the coin, which helped its success.
- BitTorrent (BTT) – BTT coin extends the BitTorrent protocol. People consider BTT a “shitcoin” because the platform could have existed without the token. There’ll be 1 trillion tokens.
- Dent (DENT) Digital money DENT is used to buy cell phone packages – Despite this, many think the software can work without blockchain. Many see it as a manner to put money on the rise of cryptocurrencies.
- TRON (TRX) –Tron needs TRX to work. Tron’s validity has been questioned due to plagiarism claims in the whitepaper.
- Shibu Inu (SHIB) – Shiba Inu’s name was added to the SHIB token after Dogecoin. It has no role in blockchain or distributed ledgers—maximum tokens: 1 quadrillion.