"Shitcoin" is a term given to a specific crypto that's useless and has no "real" value in terms of use case.  Typically created as copycats of more popular shitcoins, they have brought nothing new to the crypto markets and don't have clear goals for their project.  99.999% of the time, their Whitepaper section on the website is a dead link anyways, so there's no real way of telling which project is legit or not.

I am not sponsored by anyone or anything mentioned in this article. 
This is not financial advice.  I am not a financial advisor.
Please do your own research before making any decisions before investing. 
This article is meant for educational purposes only.

Bitcoin and Ethereum are projects that launched with specific, defined purposes and goals.  Shitcoins lack these functionalities and have minimal longevity because of this.  There are over 4,000 cryptocurrencies on the market and this number rises every day.  How do these coins stand out?  Many shitcoins are created to capitalize on investors who are jumping on the crypto bandwagon and following the hype wherever it leads them.  Unfortunately, this leads to those investors not researching the project prior to dumping money into a potential and likely rug-pull.  Since these coins have no real use case or functionality, their value is based purely on speculation and not much else.

Shitcoins are enticing to the investor for one main factor - they are cheap.  You can buy millions, billions, and even trillions of these coins and be a whale!  Sounds awesome, right?  Maybe to the newbie investor, but being a whale in a coin with no value and locked into the pump-and-dump scheme of most DeFi projects will not be very beneficial long-term.  You either dump your coins when the price is high, leaving other individuals out to dry... or you continue the whale journey while the rug is pulled out from underneath you.  It's a lose-lose situation if you ask me!  The ethics are whack.

Social media platforms are a big influence on spreading the word about shitcoin projects.  Telegram has become Shitcoin Central, with tens of thousands of crypto project groups being created daily.  If you look closely at these different channels, you can see they are all promising the same thing:  "NFTs coming soon!", "Presale starting soon!", "JUST LAUNCHED!".  Then you take a look at their price chart and notice that people are only buying and no one is selling.  You're witnessing a classic rug-pull at it's finest, and those $120 purchases are now in the hands of the malicious developer.

There are ways to avoid becoming a victim of these DeFi scams yourself.  You have to be vigilant and do your due diligence, just like you are [hopefully] doing with every crypto investment you make.  Make sure the developers are trustworthy and not a random group of sweaty scammers using fake names.  Check for the functionalities of the project and compare them to the promises in place.  Anyone can make big, false promises that sound exciting.  Not everyone can provide a detailed roadmap that accurately describes how these goals will be achieved. 

Most of these scams are just copy-paste code both in the contract and the website attached to the coin.  Designing a free website is easy nowadays and there are several websites that offer these services.  The number of holders are generally low, ranging between 100-200 holders per project.  As this is such a low amount of holders for the entire coin, any transaction makes the price skyrocket or plunge into the depths of nothingness. 

Last but not least, check the liquidity pool.  Even if it's locked, that doesn't mean the project is a safe investment.  Locked liquidity means nothing when the developer is the #1 holder in terms of volume to begin with.  Unlocked liquidity is just another disaster, as the developer(s) can just take all the liquidity and put it into their own personal wallets at any given moment.

This is where doing your research and only investing what you are willing to lose really comes into play.  The crypto market is volatile as a whole to begin with, and these shitcoins don't make it any easier to navigate through.  Even using the information above, it's still very difficult to determine what is going to end up a scam and what isn't.  If you choose to venture down these uncharted paths, then that's on you.  As for me, I think I'll be staying away from the shitcoin madness!

Have you fallen for the madness surrounding shitcoins?
Let us know in the comments down below!

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