ome of the more than 10,000 cryptocurrencies on the market lack the foundations, usability, and creativity required to survive. In addition, there is no lack of firms and people racing to produce valueless tokens to cash in on the buzz around cryptos. Shitcoins have risen in popularity as a result of this occurrence.
What is a shitcoin?
There is no value, use case, or actual demand for a shitcoin. Real cryptocurrencies have elements like functionality, investor interest, credibility, and long-term ambitions that this one does not.
A shitcoin is a cryptocurrency that has little or no value and serves no use soon. After Bitcoins became famous, the word was frequently used to denote altcoins or other cryptocurrencies that were created in their place.
Here are a few tips on how to know if it’s a fishy shitcoin:
- Awfully dubious
Shitcoins are more volatile than “regular” cryptocurrencies since they are more speculative. For example, if a shitcoin’s price rises from $0 to $100 shortly following the token’s issuance, then plateaus for a while, then jumps to $200, then crashes to $1, this is most than likely a shitcoin. Rug pulls, and shitcoins are two forms of trading that have a lot in common.
- Having a cult following
In addition to their cult-like followings, shitcoins have another unique feature: Many individuals will go wild on social media sites like Twitter and Discord when a shitcoin is ready to go parabolic or is finally displaying some positive price movement and encourage investors to acquire the cryptocurrency.
When the price of SHIB dropped from $0.00001 on October 1st to $0.00008 on October 29th, a Twitter campaign known as the SHIBArmy began. Crypto traders, SHIB enthusiasts, meme coin followers, and bandwagon investors formed the SHIBArmy, which used social media to inflate the value of SHIB. SHIB was a typical shitcoin during that month, notwithstanding the argument over whether it was a shitcoin or a meme coin (or both). As a new investor, there are hundreds of exchange platforms available in the market that can confuse you. To avoid falling prey to scams like shitcoins, one of the popular, trusted platforms is Immediate Edge. To see if it’s the right platform for your taste, you can take advantage of the review regarding Immediate Edge, conducted by the team at Open Ledger website.
On the other hand, if a crypto project has little or no supporters, it may be a shitcoin.
- Unclear whitepaper and background
It’s common for folks to spend some time reading the project’s whitepaper and website when they’re interested in a new coin. An important red signal maybe if the whitepaper is poorly written and fails to describe the project’s goals and intended usage. Another clue that this cryptocurrency is not worth your time is if it includes warnings on its website that claim it’s volatile and has been hacked before.
- No future projects and data information
Shitcoins are more likely to have weak transparency efforts. It is a red indicator, for example, if the company’s founders are anonymous or lack profitable and actual startup experience (or finance and cryptos). Furthermore, if you can’t locate any information on the project’s future objectives, proceed with extreme care. Finally, suppose there is no information available regarding tokenomics, supply, token allocation, holdings, and so on. In that case, the token is more likely to be a shitcoin than a legitimate one to investors.
Data aggregators like Coingecko and Coinmarketcap provide a wide range of publicly available information on legitimate cryptos.
On that note, here are two coins that may be worth your investment. Still, trade at your own risk.
Cardano (ADA)
Cardano isn’t a shitcoin, not even close. Cardano is a smart contract and dApp platform built on a multilayer blockchain. Cardano, despite its position as the seventh-largest cryptocurrency by market capitalisation (at $42 billion), is often criticised for its relative obscurity among its peers. Among its competitors are Ethereum, Avalanche, Polkadot, Solana, and Terra. Because cryptocurrency is a fast-paced business, organisations that fail to innovate and improve their product will swiftly fall out of the competition and become extinct. Cardano now faces danger in this area.
Ripple (XRP)
Bridge payments cryptocurrency XRP enables financial institutions to transport money and exchange value over the world. It was in December 2020 when XRP obtained an enforcement action that classified it as a security, lowering the asset’s price. The Ripple team’s supply and quarterly selling of XRP have also sparked debate. Because XRP is utilised by financial firms and has connections with banks and research institutes, it doesn’t seem that XRP is a “shitcoin.” However, the payments sector in cryptocurrencies will continue to face more competition, which might have a negative impact on Ripple.
Conclusion
Ponzi schemes and worthless crypto tokens are the two main types of shitcoins. Novice crypto investors need to know the difference between useful coins, promising altcoins, meme currencies, and worthless Ponzi shitcoins to avoid being duped into investing in them.
A lot of the stock market regulations apply to crypto as well, at least for now. Investing successfully is made possible by two fundamental lessons: Do your homework before investing, and only invest what you can afford to lose.