Shitcoins: Unmasking high-risk cryptocurrencies
Have you heard of shitcoins but don't know exactly what they are and how they work? Do you wonder if you have ever invested in one of these coins unknowingly? Don't worry! In this article, we explain everything you need to know about shitcoins.
Definition of shitcoin
A shitcoin is a type of digital currency that has no real value or solid purpose, although they may try to pretend otherwise. Often, these coins are created with the aim of deceiving investors into investing in them and ultimately taking their money. Unlike solid cryptocurrencies like Bitcoin or Ethereum, shitcoins have no solid structure behind them and no real utility.
The founders of shitcoins try to take advantage of trends or events with hype to create them, hoping that there will be users who fall into their trap and buy the tokens they have just created, but which have nothing behind them.
However, there are also many investors who see this as an opportunity. Knowing that there are certain trends that cause a lot of excitement in the crypto space, they buy shitcoins to sell them in the short term, hoping that they will appreciate due to this excitement and multiply their investment.
Nevertheless, it should be noted that this practice carries a very high risk and practically all small investors who attempt it, lose their money. As we said, shitcoins have no real project behind them and, therefore, they also have no real value.
Examples of shitcoins
Although any currency can be a shitcoin as long as they don't have a project behind it, their creators usually follow certain patterns based on the trends we have mentioned. Some examples of shitcoins that have emerged can be:
- Memecoins: Numerous attempts have been made to take advantage of the popularity of memecoins to create shitcoins and thus try to scam users. So much so that, as we mentioned later, many users confuse memecoins with shitcoins.
- Artificial Intelligence: Due to the great hype generated by projects like ChatGPT or Dall-e 2, many cryptocurrencies related to AI have been catapulted. That's why hundreds of fake projects have also emerged around this trend.
- Major events: In the past, many tokens related to events such as the coronavirus, anti-vaxxers, elections in important countries, or even conflicts like the invasion of Ukraine emerged. This led to the creation of tokens like $PUTIN, $TRUMP, or $nuBTC (related to anti-vaxxers). Although these cryptocurrencies arise to take advantage of the media attention on these events and actually have nothing behind them, many investors invest in them and lose their money. Therefore, if you come across tokens related to some highly popular event, it's best to stay away as it is almost certainly a shitcoin.
- Airdrops: When major projects announce, or are expected to announce, an airdrop, many fake projects emerge that try to deceive investors by promising high returns. In these cases, only get information from official sources, being very careful, as scammers also create fake accounts on social media and websites that look very similar to the official ones. Always try to consult them from reliable sources, such as CoinMarketCap. Examples of this practice have occurred, for example, on the Optimism and Arbitrum blockchains.
- Copies of other cryptocurrencies: When a project becomes popular, there are many scammers who create tokens with exactly the same name to try to trick other investors into buying their token instead of the official one. Avoid searching for tokens from explorers and try to use official or reliable sources like CoinMarketCap or CoinGecko.
Differences between memecoin and shitcoin
Sometimes, shitcoins are confused with memecoins. This is mainly because memecoins are cryptocurrencies based on memes and often have a humorous component. Additionally, when one of these memecoins stands out and gains popularity, many shitcoins emerge around it, trying to take advantage of its momentum and scam users.
However, unlike shitcoins, memecoins usually have a solid structure behind them and over time can have real utility. For example, Dogecoin was created as a joke currency, but it is now widely used as an online payment method.
So before investing in a memecoin, research its team, its community, and try to follow the following steps to analyze and detect a shitcoin.
How to detect shitcoins
In the world of cryptocurrencies, it is easy to fall into the trap of a coin that appears to have great potential but is actually a "shitcoin". Here are some tips to help you detect which coins are shitcoins:
- Lack of real utility: One of the most common ways to identify a shitcoin is its lack of real utility. If a coin does not have a clear purpose or practical application, it is likely a shitcoin.
- Small or inactive community: A solid coin has a strong and active community, so it is important to research the community behind the coin. If the community is small or inactive, the coin likely does not have a promising future. Investigate their social media, discord, and even search for information on forums.
- History of volatile prices: Shitcoins often have a history of volatile prices, meaning their value can fluctuate quickly and without apparent reason.
- Lack of transparency: Shitcoins often have an anonymous or non-transparent team, which can be a sign that something is wrong. It is important to research the team behind the coin before investing.
- Lack of adoption: Shitcoins often have little to no adoption, meaning there are not many users or merchants interested in the coin.
Remember, there is no foolproof way to detect a shitcoin, but these tips can help you identify coins that may be a trap. It is important to conduct thorough research before investing in any coin, especially if it is a shitcoin.
This article is part of our guide on bitcoin and cryptocurrencies. Specifically, the guide on types of cryptocurrencies. Find more related articles in the following list:
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