What is a Shitcoin and how to avoid being scammed with them? Before talking about what a shitcoin is, we must understand that the first cryptocurrency on the market is Bitcoin, which was created in 2009 by a person (or group of people) with the fictitious name of Satoshi Nakamoto.
Bitcoin was a revolution and the first time in history that a decentralized digital currency could be created and, therefore, that its operation, issuance and control belonged to all users and at the same time to none in particular.
However, as the years passed and Bitcoin began to establish itself, several other cryptocurrencies were created, some by developers curious about this new technology, others looking to solve problems, and many others for unknown reasons.
Thus the term Shitcoin was born as a pejorative term used to describe a cryptocurrency that has become useless. It is a cryptocurrency with no purpose, value or future, a shitcoin can lose value because the previous project did not materialize or because the coin itself was not created in good faith.
But the term has also been used by Bitcoin maximalists (those who believe that only Bitcoin is a true cryptocurrency) to even describe Ethereum, which is the second largest cryptocurrency on the market. Other cryptocurrencies that were previously called Shitcoins such as Dogecoin, also gained their space and ended up creating a new 'niche' in the market, the so-called memecoins.
This is why the term shitcoin is broad and is nowadays used to describe cryptocurrencies that are created without any purpose, often just to steal money from investors looking for high valuations without caring about the purpose of the project.
What is a Shitcoin and how to identify it?
A shitcoin is not always easily identifiable And in some cases, you can even have an efficient marketing team, which manages to attract investors in large numbers. However, one of the main incentives for the adoption of these coins is the very low trading price, which suggests the idea of a false potential for explosive growth, as occurs in well-funded assets.
Some important tips:
Find the official project documents
To assess the integrity and provenance of a cryptocurrency, just look for its official documentation, also known as a white paper. Traditionally, the technology behind these digital assets seeks to provide a service or function to investors in a safe, transparent and reliable way, so it is only natural that these characteristics are reflected throughout their base text.
Unlike well-founded coins, shitcoin documentation can be vague, inconsistent, copied entirely, and even have serious typos, revealing carelessness on the part of the developers.
Meet the developer team
As in the traditional market with companies, investors must know who is responsible for the projects in which they participate. The anonymity of a development team is often a negative sign when it comes to trust, especially in the case of small cryptocurrencies.
do your own research
Look for digital assets that have clear core values and that perform a function with security, reliability, and transparency. Keep an eye on Coingecko and Coinmarketcap. If a coin is not listed on these portals, it is a negative sign as they do a lot of smart contract scanning before listing a cryptocurrency.
What is a Shitcoin and how to avoid being scammed with them?
Identification of shitcoins can be done from the attention of the investor to some characteristic details of these cryptocurrencies, but we emphasize that there may be cases where digital assets will be classified as useless currencies, but will not have the characteristics below. Verify:
Pre-mined coins – It is important to pay attention to whether coin tokens have already been mined, as this can usually indicate more developer control over the asset, as is common with shitcoins, making it easier to scams;
Developer tokens: Do developers have a lot of tokens? Be cautious as it may be indicative of a future mat and pull scheme;
They do not offer solutions: altcoins, the name given to legitimate cryptocurrencies other than Bitcoin (BTC), are characterized by offering solutions to BTC problems or innovations in the sector. On the other hand, shitcoins offer nothing, they just exist.
Buggy code updates: few updates and all of them with bugs is an indication that the developers are not thinking too much about potential investors, but are looking for a quick way to make a profit;