Real Coins vs. Shitcoins – A Safer Way to Invest in Cryptocurrency

Handy Tips / 27.05.2020

According to CoinMarketCap, the entire cryptocurrency market is worth a combined $250 billion today, 26th May 2020. The global cryptocurrency market is expected to grow with a CAGR (Compound annual growth rate) of 32% from 2019 to 2024.

The major drivers of growth in the crypto market are immutability and transparency of the distributed-ledger technology, growing adoption in developing countries, an increase in venture capital investments, and fluctuating monetary regulations. 

Before you venture into investing in crypto, it is important to understand some hooks in the industry to protect yourself from losses and frustrations. The following article will guide you on good and bad cryptocurrency investment options by distinguishing real coins and shitcoins.

Real Coins

Real coins refer to any coin whose motives behind their creation are clear, sincere, and well-articulated in the crypto spectrum. This differs from other coins (fake coins) that are mostly developed by forking – taking the existing code of a given cryptocurrency (mostly litecoin) and tweaking it to score.

Many in the industry consider all-but-Bitcoin as shitcoin. However, this notion doesn’t really hold since other Real Coins offer profound technologies and take the industry by a wave. For instance, many will not believe that Ethereum was once viewed as a Shitcoin.  

Bitcoin and Ethereum are now the largest “Real Coins.” While crypto tribalists try to present them as the only perfect coins, these cryptocurrencies have some flaws such as low processing speed and scalability issues. Therefore, it is worth noting that other real coins exist with faster transaction periods and have proven themselves as fruitful crypto projects to invest in. 

Shitcoins

A shitcoin refers to a scam cryptocurrency described as a bad investment choice. Shitcoin can also mean a cryptocurrency that serves no particular purpose. 

These are coins with no use case, whose value could rise exponentially overnight. The masterminds sell their coins upon the increase of the value. Soon after, the price sinks dramatically, causing the investors who held on for longer or bought the coins at higher prices to make massive losses. An example of a shitcoin is OneCoin.

Identifying a Shitcoin

The cryptocurrency industry has grown potentially with new markets that make it hard for investors to draw parallels between genuine and fake coins. 

Besides, the underlying blockchain technology used to manage cryptocurrencies may not be common for many investors, therefore, creating room for maltreating. For novice investors, identifying the genuineness of a cryptocurrency is a difficult task.

While the crypto market tends to be unstable in nature, with all coins going through cycles, some patterns show a coin could be a shitcoin. The indicators include:

A Poor Website

A website is the basic online representation of a person or a business. Any serious business will not feel the pinch investing in website development and design. 

A good website includes all information concerning an entity using understandable language, maps, and multimedia aids. It is also necessary that the site has essential pages such as “About” and “Contact Us” pages. Any cryptocurrency website with none of these basic features should trigger doubt.

A poor website could suggest inconsistency of the project and the unpreparedness of the team. Also, it shows possible hiding of details and secrecy, which is a sensitive concern in online investments. 

Poorly done WhitePaper

A white paper is an in-depth guide about a project that states the problem the project aims to solve and provides a solution. It is the most important deliverable in any project. 

A real whitepaper has:

  • A Vision that states the problem that the project team is trying to solve,
  • An overview of the proposed technical solutions to the problem and support statements,
  • Details of the technical implementation of the solutions,
  • A Blueprint for the delivery,
  • Technical details: including coin type, total amount, coin mechanisms, and soon,

Having a look at the whitepaper of a crypto project can help a big deal in recognizing shitcoins. Indicators of a shitcoin in a whitepaper include unrealistic expectations, incompetence, cheap grammatical mistake, or a plain scam setting.

Public Complaints

How people talk about a product is a good pointer to what it is. From word of mouth to online reviews, there are multiple ways to find what people say and think about a cryptocurrency before investing in it. A simple google search of the coin will present multiple links to blogs and Q&A sites that serve as great sources of information.

Lack of Product Demos

A major risk with cryptocurrencies is that you are placing an investment on a promise. Since high amounts of cash are involved in these investments, you should go for a highly acclaimed coin, and, if possible, the project should offer you a demo.  

Shitcoin developers avoid things that delay their projects, which could reveal their dirty games. While it is not a primary indicator, lack of product demos can help decide where doubt exists.

A Github repository is also a great place to track the activity of the owner. Most shitcoins have inactive repositories.

Conclusion

Cryptocurrency continues to gain interest since the successful implementation of Bitcoin. The sector has grown exponentially, with projections pointing to better days ahead. This calls for investors to consider venturing into this space and being alert of fake dealers. 

The past has seen several shitcoins making it into the markets and being mistaken for real coins. But with this information, you are now better positioned to tell them apart and..invest real!

After realizing the setbacks of centralization in the financial industry, Carol has dedicated her career to apprise everyone on the benefits of blockchain technology. When she is not writing, she’s probably somewhere in the park reading a book.