You will always hear me say "stop buying shitcoins and scamcoins".
But what are shitcoins and scamcoins?
In this post, I will be sharing with you what I think qualifies a cryptocurrency to be called a shitcoin or scamcoin.
Along with relevant and relatable examples to help you make that judgement by yourself with the next coin you come across.
What are scamcoins?
Scamcoins are cryptocurrencies that are designed to take your money from you.
They're pure money-grab coins with the sole intention of stealing your money.
Any temporary benefit (if any) you get from investing in such coins will soon be wiped off by the time you realise what they really are.
Some characteristics of scamcoins:
You can't sell or transfer them.
They may be listed on an exchange e.g Uniswap or other DEXs, but it is impossible to sell them. However, you can buy them. That's a scamcoin. e.g KICK, DSD, CFX, etc.
Zero team effort or commitment.
Some scamcoins in this category that I have been involved in are NEKO and RCKT.
Both teams dragged investors through a lengthy process of inaction and minimal effort until all trading and liquidity for tokens dry off.
Yes! You can buy and sell these types of scamcoins but you will lose your money regardless.
NEKO was a farming token that dumps faster than an object respecting the laws of gravity.
RCKT was a deflationary, rebase, and staking token that punishes both sellers and buyers.
Both died very slowly.
And I consider them the most wicked of all scams as they take you through a long period with a maximum dose of hopium, emotional and psychological rape.
Most people want to get-rich-quick with crypto. So they tend to be more attracted to coins that offers some highly insane promises of rewards.
Bitcoinnect promises to pay investors 1% daily interest daily. OneCoin had a similar program.
And both were some of the biggest scamcoins and Ponzi schemes ever.
Bitconnect (BCC) was one of the top 7 cryptocurrencies by market cap in 2017 before its inevitable collapse.
If the business a platform is doing does not explain how it is able to pay the returns it promises, consider it a scam.
And don't be too attracted to high returns without asking where those returns are coming and if it is sustainable.
Because the immediate and temporary gains, you make now will be wiped off when the platform finally collapses.
Question how comes the returns you're getting from a farm, staking reward system, and other tokens you buy to earn more with.
Where are the profits coming from? Is it sustainable? Can this platform grow further than it is to make it possible to sustain what it is paying?
Learn to ask questions and get satisfactory answers before buying.
Otherwise, you may be buying the next big scammcoin.
These are just a few examples that come to mind right now, but I'm sure there could be other forms of scamcoins out there.
And new ones are being invented almost every other day.
If you know of others that I didn't mention, please feel free to share in the comments section below.
What are shitcoins?
Shitcoins are usually cryptocurrencies with "zero to non-essential utility or use cases".
They lack strong fundamentals that can sustain and grow their value over time.
And are mostly driven by hypes, hypes, and more hypes and pump and dumps.
When all the hypes die down, these coins will usually be very dead for a long time, if ever they resurrect with yet another pump.
To cut the long story short, shitcoins usually have no reasonable reason for being in existence.
Other cryptocurrencies that will easily qualify as a shitcoin are those with billions and trillions of supply with no use case or potential adoption (market) to match that supply.
Investing in shitcoins for the long term is a maximum mistake.
Because they are most likely going to die or remain in a dump for an extended period of time before the next pump (if it ever comes).
Some characteristics of shitcoins
Zero use cases
We don't need a zillion other crypto CURRENCY.
What that means is that if a cryptocurrency's only reason for being in existence is to be used as currency for payment for goods and services, then it's mostly a shitcoin.
Did you say, Doge?
Doge is a senior shitcoin in this category.
Pump and dump
Shitcoins pump the hardest.
The biggest selling point of shitcoins is mostly pumps.
And these pumps are followed by a dump that's nearly impossible to recover from.
Shitcoins have no staying power. They cannot sustain their value let alone continue their upward trend.
That's why if you ever catch yourself with a shitcoin and it's pumping, the best thing to do then and there is to sell it.
Then patiently wait for the dump that follows to buy more of it with the same money if you wish to play and make money with it.
But don't be surprised if it keeps dumping like forever after you buy a shitcoin dip.
Because the bottom for a shitcoin is ZERO (0).
So don't ever assume you're buying the bottom of a shitcoin. There's no bottom.
Some coins started with strong use cases and a good business model, backed by a spirited team.
However, things happen and the project fails to deliver and eventually turns into a shitcoin.
Either the team abandons the project or the have lost track so much that they're merely surviving.
Doing one thing or the other to give the project a sign of life and hope.
Good examples of this type of shitcoins are Storiqa (STQ) and Money Token (IMT).
I was invested in these projects, back in those days but they're now technically dead and special shitcoins.
However, there are major shitoins that have little to zero utility or technology but has big market caps.
Examples of such are XRP, XLM, Doge, ETC, LTC, etc. These are big shitcoins with market value mostly because the market is irrational.
They lack the utility and a working product to explain their market value. And when adoption comes and the crypto market matures their big names alone cannot save them.
Only working techs, a solid team, and a token with real-life use cases will stand a chance of serving the crypto market reset that will inevitably happen.
Investors are getting wiser and smarter. And there's only how far hypes, market manipulation, etc. can drive or sustain a coin's value.
However, because shitcoins usually pump the hardest and most crypto "investors" are "gamblers" looking for quick riches, a lot more money may keep pouring into some established and even new shitcoins.
Don't be deceived by this, as it does not invalidate the fact that they're still shitcoins.
Big money means nothing. Only a working product and a solid tech that's solving real-life problems matters in the long run.