What is a shitcoin in the crypto world?

What is a shitcoin?

A shitcoin is an informal term for a cryptocurrency considered to be of little interest or value.. Shitcoins can be blockchain projects without solid foundations, outright scams, or doomed projects due to a definite lack of innovation.

Shitcoins are often created by malicious people for purely speculative reasons and are used to manipulate the market or trick investors into believing that they are investing in a higher quality cryptocurrency.

In parallel, some shitcoins are just created as a joke and their creators do not necessarily have the desire to defraud potential investors.

Whether it’s a scam or a joke, shitcoins are also characterized by short-term price increases followed by sharp declines caused by investors who want to take advantage of short-term gains.

In the short history of cryptocurrencies, several shitcoins have managed to achieve great heights in terms of market capitalization, even to the point of overtaking some of the projects with the strongest fundamentals. However, despite remarkable performance, part of the community still refers to these cryptocurrencies as shitcoins.

💡 The use of this term depends above all on the personal opinion of each investor. For example, a Bitcoin maximalist, that is, an individual who considers Bitcoin to be the only truly legitimate cryptocurrency, believes that all other cryptocurrencies are shitcoins.

Why are shitcoins so popular?

Shitcoins are getting more and more popular lately. This phenomenon is partly due to the increase in demand for cryptocurrencies in general and the democratization of access to investment in this market. Many inexperienced investors see shitcoins as an easy opportunity to make a quick buck.

This gain in popularity is generally supported by social networkswhere unscrupulous individuals do not hesitate to promote dubious cryptocurrencies to users who are very uninformed about the world of cryptocurrencies and finance in general.

Moreover, shitcoins continue to grow in popularity, as they are often very cheap (understand that these are tokens that are exchanged for dust cents). Thus, many novice investors hope to generate significant gains in a very short time, believing that the margin of progression of the token in question is colossal.

Despite these characteristics being seen as positive for some investors, shitcoins carry a very high risk of losing funds. It is therefore better to invest in established and reliable cryptocurrencies than to take any risk with unreliable shitcoins. But then, how to spot a shitcoin and avoid investing funds in it?

A shitcoin can be identified by several characteristicsincluding the following:

• If the project’s whitepaper is an almost exact copy of that of another known cryptocurrency, or simply has no whitepaper, it generally means that it is a shitcoin;
• A certain lack of innovation: many shitcoins do not offer any unique or innovative features, and are simply clones of existing cryptocurrencies with no real purpose;
• An anonymous and/or dubious team: The team behind a shitcoin may not be transparent, professional, or have any industry experience. Although it may be well perceived by a certain part of the investors, a shitcoin is often launched by a completely anonymous team;
• No real use case: shitcoins often have no real use case and may not have any use other than speculation;
• Very high volatility: shitcoins are often very volatile, experiencing large price variations in a short time, which can make it a risky investment;
• Low market capitalization: shitcoins generally have a relatively low market capitalization, which can make them more vulnerable to market manipulation;
• No development activity: A lack of development activity, such as code commits, may indicate that the project is inactive or has lost momentum;
• Ponzi scheme or scam: some shitcoins can be created for the sole purpose of enriching their creators. It may therefore be a rug pull or a scam.

Please note, however, that the above list is not exhaustive.. A cryptocurrency that meets one or more of these criteria is not necessarily a shitcoin. However, by being aware of these warning signs, you can avoid investing in shitcoin and protect your funds.

It is also important to thoroughly research a cryptocurrency before investing.looking at factors like its technology, team, adoption rate, and community involvement.

Conclusion on shitcoins

For many, shitcoins are a worrying reality in the cryptocurrency industry, because they do not help the development of the sector. It is important to do due diligence before placing money in a particular cryptocurrency, by learning about the project behind it.

If a cryptocurrency has little or no fundamental value, little trading activity, or very low capitalization, it is most likely a shitcoin. It is crucial to avoid these cryptocurrencies to minimize risk.

Do you need support in your investments in cryptocurrencies, in particular to avoid falling into the trap of shitcoins? Cryptoast Research is here to support you. In the form of a bi-monthly newsletter and a Discord group, Cryptoast Research is led by a team of experts to train you and help you make the right choices in your investments.

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Editor-in-chief of Cryptoast, I discovered Bitcoin and blockchain technology in 2017. Since then, I have been striving to share quality content so that the sector becomes more democratic for everyone.

Clement Wardzala

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