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Introduction – What is a Shitcoin?
In the Cryptocurrency space, a Shitcoin is a term given to coins that have absolutely no inherent value at all and are usually scams or part of pump-and-dump schemes to profit in the short term usually with trends at the time.
These types of coins are considered bad investments and are usually fueled by nothing but speculation and may hold value initially but tank after a few weeks or months.
While the term is mostly associated with scams or purely worthless Crypto coin assets it can also be applied to any cryptocurrency based on personal opinions/viewpoints.
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How do Shitcoins work?
Shitcoins work like regular Cryptocurrencies but usually piggyback off another established coin such as BitCoin or Ethereum so they are powered by the same underlying technology.
The difference between Shitcoins however and other coins is that there is no underlying value and the value is based purely on speculation or what the creators are claiming.
Other Cryptocurrencies have their value either backed by physical assets like gold and silver or pegged to fiat currencies like USD or have some kind of “utility” value as they can be used for software projects like smart contracts, financial apps, etc.
In other cases like scams Shitcoins won’t even use proper Blockchains or decentralized technologies and are in fact centralized with no proper infrastructure to make them function independently.
An example of a Shitcoin would be Dogecoin which is a meme-inspired coin that doesn’t actually hold any value and was created as a joke based on the popular Doge meme which mainly accrued its value by online influencers and well-known figures most notably Elon Musk.
Below tweet made back in 2021 by Musk stating that SpaceX used Dogecoin to fund a space mission which triggered the coin to surge in value:
SpaceX launching satellite Doge-1 to the moon next year
– Mission paid for in Doge
– 1st crypto in space
– 1st meme in spaceTo the mooooonnn!!https://t.co/xXfjGZVeUW
— Elon Musk (@elonmusk) May 9, 2021
Avoiding Shitcoins
Shitcoins can usually be spotted early on if the whitepaper published by the creators is very vague and doesn’t go into much detail and the team behind the project doesn’t openly present themselves and remains hidden online.
Other danger signs to watch out for are projects which don’t share any goals, or roadmaps that explain any of the technical backbone and long-term plans.
According to experts, any new coin worth investing in should have at least 200 to 300 holders. Any coin that does not meet that criterion is unhealthy and not worth investing in. A healthy new coin should have five to ten transactions per minute.
In addition, any projects that seem to make wild claims or any type of guarantee should be viewed with caution as no project has any guarantee of success or growth in value and like any type of investment online or offline has the potential to fail or decline.
Conclusion
We hope you found this page on our tech glossary to be helpful, if you are interested in learning more about Crypto or technology in general be sure to check out our blog and glossary.
You can also follow us on our various social profiles such as Facebook as well as check out some of our business service offerings.
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Source(s) cited:
“Twitter.com” twitter.com/elonmusk/status/1391523807148527620. Accessed 23 Feb. 2023.
Helms, Kevin. “Japan Implements Significant Changes to Cryptocurrency Regulation Today – Regulation Bitcoin News” 1 May 2020, news.bitcoin.com/japan-changes-cryptocurrency-regulation/. Accessed 23 Feb. 2023.
Leyes. “How to Identify and Avoid ‘Shitcoins’ in the Cryptocurrency Market” Entrepreneur, 3 June 2021, www.entrepreneur.com/money-finance/how-to-identify-and-avoid-shitcoins-in-the-cryptocurrency/373188. Accessed 23 Feb. 2023.