What Is a Shitcoin? (And How To Stay Away)

Unlike President Trump’s unfortunate “shithole countries” comment, the criteria for differentiating the legitimate coins from a shitcoin are much more objective and less offensive towards large groups of people. After all, it’s the technology and the underlying business model that gets offended, not necessarily the more or less honest investors who simply try to make a quick buck. But in spite of the rational approach, you will still find Twitter and Reddit battles where every cryptocurrency in existence grts called a shitcoin.

If you ask Bitcoin core supporters about their definition of a shitcoin, they will most likely point out to the popular hard forks that divided the community: Bitcoin Cash (or, as they like to call it, Bcash), Bitcoin Gold, and every other greedy attempt to make a quick buck by separating from the core network.

Likewise, Monero purists will dismiss “scam” projects like Electroneum (or ETN), Ethereum fans don’t seem to like the competition of Neo or the rebels from Ethereum Classic (ETC), libertarian Litecoiners despise centralized pre-mined tokens like XRP and TRON (TRX), and Ripple supporters won’t stop talking about trading volume, fees, and scalability (which is the Achilles’ heel of every decentralized coin).

Depending on who you ask, every competing cryptocurrencily can be a shitcoin. Also, weak hands and impatient people tend to put this dismissive label on whichever coin they hold after they witness the first few dips that distance the price from the all-time high. And last but not least, everyone who knows a little bit about cryptos and partially understands the underlying mechanisms will always call Ponzi schemes like Bitconnect a “shitcoin”.

The methodology for identifying shitcoins

The crypto world is divided just like Christianity during the years of reformation. There’s a core belief that stood the test of time and has a special gospel status, and a bunch of preachers who have different interpretations of the “Bitcoin Whitepapers”.

But just like in the world of religious sects, you need a little common sense in order to differentiate those who care about their religion and those who only open their own churches to make money.

Before I get called a blasphemous POS (or shithuman), I will renounce the religious metaphor and get to the point: in order to identify the good coins and tell them apart from the shitcoins, one must ask the fundamental question “Do these people care about the technology and have long-term plans to develop it?”.

Sometimes it really is that simple, but for a clear judgement more filters must be applied. First of all, everyone looks good on paper and seems driven to change the world for the better. If whitepapers used to be statements about the technology and the principles that run it, now they are mostly filled with PR and publicity tactics that sound incredibly great but are hard to put into practice.

That’s why the second question must be “Does this solve a real problem?
This part is all about pragmatism and relation with practical use. The king Bitcoin is already accepted in various places around the world and companies from very diverse fields like Apple and KFC gladly take BTC payments. Likewise, Litecoin plans to release its own payments system, Monero has applicability in the fields where absolute privacy is required, and Ethereum is the fuel that drives engines like Crypto Kitties and various ICOs.

But when a new coin is released through an ICO and they pretend to do the same job as an older crypto, sometimes it’s better to be skeptical (well, unless you’re a well-informed speculator who has the time and money to play the pump and dump game).

The last mandatory question that you have to ask yourself before investing is “Do they have a serious and committed team of developers?”.
This one is pretty self-explanatory and will help you distinguish good intentions from greedy money-making. Software without proper developers is useless and bound to become obsolete really fast. So you wouldn’t want to bury your money in something that will reach a peak early on, attain hype, and then quickly fade as the truth gets revealed (I’m looking at you, TRX!).

Optionally, it’s recommended to look into the age and previous phases of the coin. Does it have a history? Are the core developers still on board? Did any major events compromise its integrity? Does it have the same clear vision and goals? Did it improve in time?

Clearly, crypto investing is tricky and there are thousands of shitcoins out there.

It’s easy to end up in a Reddit discussion, Facebook conversation, or real-life social situation where something like Bitconnect receives praise for bringing a lot of money over night. But you must always be smart with your money and invest in something that reflects your values while also standing the test of the above-mentioned questions. Stay away from shitcoins!

Also, remember to always buy the dips (avoid all-time highs or else you might get stuck with your investments for months and get forced to sell at a loss) and HODL!