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Beginners Guide: How to Spot a Shitcoin — The Shitcoin Epidemic

CryptoWhale
CryptoWhale
According to crypto market capitalization aggregators, there are more than 8,000 cryptocurrencies in existence today.
With the ongoing speculation surrounding cryptocurrencies, it’s important to be able to spot which ones are valuable, and which ones are vaporware.
What is a Shit Coin?
Depending on how long you’ve been involved in trading or investing, the term ‘Shit Coin’ will come up somewhere along your journey.
This defines the various aspects of a coin that lacks any real governance, wealth distribution, quality, and technology. Coins such as CumRocket, which blatantly offers no real value, and was created because of a meme, are characterized as shitcoins.
Due to the lack of regulations in the crypto markets, scam coins that have no true value use marketing schemes in order to lure in new investors, and eventually profit on their greed. Over the years, we’ve seen thousands of projects claim to be the “next big thing” then they always fall short of those misleading promises.
Am I invested in a Shit Coin?
Most of the time, people are involved in several projects that are blatantly worthless. The tricky part is being strong enough to not catch feelings.
The goal of virtually every coin on the market is to attract new investors. Regardless of whether there is true value or not, you must be able to see through any marketing techniques and find true value by doing your own research.
One piece of advice is to always look at multiple sources. If you’re looking only on the project’s website, telegram, or Reddit as to why you should invest, you’re obviously going to be met with attractive information.
Look at the pros, but more importantly, look at the cons!
1. Solves No Real Problem
The most common technique that scam projects use to attract new investors is by creating a problem that doesn’t even exist.
Around 99% of coins on the market are all claiming to solve some huge “issue”, although is it really an issue to begin with? Likely not.
2. Price Doesn’t Equal Quality
A common misconception for new investors is that rising prices somehow means the cryptocurrency is intrinsically valuable.
Bitconnect rose over 5000%, and was thought to be a great investment by many. Once the bubble popped in 2017, the owner’s exit scammed, and got away with millions, leaving investors with nothing.
Just because a coin is up 100% or 10,000%, doesn’t mean that it’s any good. We cannot ignore the fact that most investors are completely uneducated, and lack any skills other than FOMOing into an asset.
While it is possible to capitalize off other people’s FOMO, It’s much safer to invest in coins that have real value, and are safe long-term holds.
3. Anonymous Team
If the team is anonymous, it can be very concerning. There is no reason for any team to be private if they’re doing a regular project unless they want to hide something.
You should never invest in a project where you cannot see the faces, and credentials of the owners. There are many manipulators out there that will also say they are someone who they are not. Be careful.
Don’t be fooled by a big team of advisors. Many advisors are simply there for the name and because they get paid a lot- look into the product and don’t blindly follow names.
4. Ponzi Scheme Community
You’ll notice that many communities of specific coins are constantly shilling the coin throughout several internet forums. This behavior is a group-think mentality, where the Investor will follow suit, and endlessly shill the coin to others in hopes of others buying in and having the price go up.
This game is a cycle of greed. People are constantly trying to one-up everyone else. This behavior is seen in many Ponzi Schemes, where they are told to refer others in order to be rewarded.
You shouldn’t have to shill a coin anywhere. If the coin holds true value, it will eventually attract new investors over time, and naturally, rise.
5. Time of Creation, and Market capitalization
These are the first two things that I look at when reviewing a cryptocurrency.
I avoid anything that was created during the 2017 (or after) ICO bubble. This time was when any random dude in his basement created a coin and got millions in funding from Investors.
By looking at how old a coin is, we are able to determine whether they’ve fulfilled past promises. I specifically avoid newer coins because we aren’t able to put a proper valuation on the company yet.
Look at any chart of top tech stocks, and see how many years it took them to rise to where they are today. It took several decades.
Many alt-coins have been around for a few years or months, and people have invested their life savings into them. The reality is, most of them are going to zero.
Market Cap is another thing to look at. Coins that hover around a few million dollars invested are easily moved by new buy orders. This could attract lots of FOMO, but at the same time, the MC could be an indicator of poor liquidity and failure as an asset. It’s better to invest in coins that have high liquidity, volume, and other important fundamentals.
6. Big Pages = Shilling Coins
Many big pages on Twitter have been shilling low market cap shit coins. They were likely paid a large amount of this said coin, and are incentivized to get their followers to buy in, so they (and the developers) can dump their bags.
This has been the case with many big accounts. It’s unfortunate how fast people forget about these events. I’m not going to name any names, although I’m sure there are a few you can think of, if not, fell victim to.
Someone’s level of “trust” through the internet shouldn’t change your decision when you’re investing in a project.
You should always do your own research.
7. No Whitepaper or Working Product
An idea may be great, it may be revolutionary, but with no whitepaper, working product, or patent, at the least it’s useless.
The bigger the idea, the harder it is to accomplish.
Conclusion:
As I’ve said many times on Twitter. I believe most coins are garbage. Many have fallen victim to them, and many reading this are probably holding onto some. Depending on how skilled the team is at marketing and advertising, you may even convince yourself it isn’t a shit coin.
I personally avoid shitcoins because they generally fail in the long run, although I know many investors who prefer to get in cheap, and profit on a bounce in the short term, then get out. This could be a good strategy, although it’s personally too risky and unsafe for my taste.
Good Luck with Trading Everyone!
“Every coin on the market is a shit coin until they can prove otherwise.”
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