What is a Shitcoin and how to profit from it. - Crypto Academy / S5W8 - Homework post for nane15.
Hello fellow steemians, I believe you are all doing great. This is the 8th and last week of season 5 in the steemit crypto academy. Below is my submission to the assignment given to us by professor @nane15.
INTRODUCTION
To begin with, as an investor, you need to know that there are two kinds of people who want to know what shitcoin are and what they really do. The first is a person who came across the term on social media conversations or crypto-related forums but still doesn’t know exactly what it means for something to be a "shitcoin". The other kind of person gets the whole idea of what a shitcoin is, but cannot differentiate between which cryptocurrencies are shitcoins and which aren’t. So for those who actually give a "shit", continue reading to clarify all your doubts.
Explain your understanding of what a Shitcoin.
The term "shitcoin" is simply referred to as an umbrella covering all the spin-offs of already failed or failing cryptocurrencies with no identifiable purpose. These currencies don't actually have the basis for existence and lack fundamentals to back them. Since their purpose is undefined, unlike Bitcoin, they have no longevity associated with them. Shitcoins are designed or created to scam users and are considered to have a very little monetary value. It can also be attributed to any cryptocurrency or altcoin developed after Bitcoin became famous based on personal opinion.
Shitcoins is believed to be valuable simply because of their existence. The speculation surrounding their creation upon launch results in an influx of investors who pump in a lot of money moving the price of the coins exponentially higher within a short period. After crowd sale and the investor's cashout to make short-term gains, the price of the coins then falls drastically and remains at the same level without showing many price movements. This small increase and decrease in price make it very hard for novice investors to suspect that they have invested in a shitcoin or a worthless coin.
As an investor, you need to know how to identify shitcoins in other to avoid wasting your capital on them. They exhibit several red flags regardless of how hard the developers try to conceal them. Below are some of the main key points you should look out for:
Undefined Functionality: Cryptocurrency blockchains such as Ethereum and Bitcoin were designed or developed to improve on Decentralized Finance (DeFi) by enhancing transaction security and removing central authorities. Meaning ETH and BTC stores value due to all the utility they provide to their customers, unlike shitcoins which have no specific purpose and exist solely because they can.
Unidentifiable Developers: Cryptocurrecy developers who are visible or known by the public earn enough trust from them which adds legitimacy to the newly laughed coin. Developers who are unknown are inevitably suspicious and very likely to defraud the masses.
A coin with few holders: It requirement for every legitimate cryptocurrency coin to have at least 210-300 coin owners. Any said number below the lower limit of the range given indicates a bad activity. A healthy token worth investing in must display also a 5 to 10 transaction per minute (Tpm).
Generic Projects: Most shitcoins websites are hosted on free domains, riddled with typographical errors, or casually designed, so watch out for a project you are trying to invest in if it has made big promises with no defined functionality.
Do you think it is possible to profit from investing in Shitcoins?
Although shitcoins are generally terrible investments with extremely low profits. Thus, investing in them require huge risks and rarely offers rewards in return. The majority of investors follow the bearish and bullish schemes where only a few "insiders" really comprehend the price dynamics. After a pump and dump scheme, it comes out with no actual value and leaves the minor investors with worthless cryptocurrencies. Well, there is no denying that altcoins can produce exponentially higher returns to their investors. Taking BTC, for instance, was first thought of as a shitcoin before its mind-blowing upward explosion which made all its initial investors multi-billionaires.
Similarly, Dogecoin which was initiated as an internet joke or sarcasm by Jackson Palmer and Billy Marcus some years ago (December 6, 2013, to enable traders to transfer funds to each other without the involvement of central authorities, rose to fame and was bought by investors in droves after Elon Musk, one of the richest and influential men in the world began promoting it online. So from the examples given, it can be seen that profiting from shitcoins actually happens occasionally when the investors get extremely lucky and sells the coins at the appropriate time.
So to answer the question above, I personally think investing in shitcoins can be very profitable regardless of all the risks associated with them. Although there is a higher probability or chance that an investor may lose all of their initial investment, there is also a chance for them to earn massive profits from them when they acquaint themselves to good risk management and researching skills. After all, trading is just like gambling, so as an investor, if you don't learn how to take little risks, how are you going to earn?.
List advantages and disadvantages of investing in Shitcoins.
Unlike the well-known cryptocurrencies such as Bitcoin and Ethereum, Shitcoins are not actually popular and have low value. Even though they are not very popular, investing in them can however provide you with some great advantages which are as listed below.
The price may increase extremely high: Since Shitcoins are very low in price, there is a tendency for the amount of circulation and holdings to be extremely small. Therefore, when cryptocurrency investors and famous influential figures speak out on behalf of the developers, the price will/would rise sharply at that moment because of the awareness made to the masses. As a result, provides higher profits to the investors because of the sudden price increase of the shitcoin
Investors can purchase a wide variety of shitcoins: Being able to purchase a wide variety of shitcoins as an investor is also an advantage in the sense that, Some of them can be purchased for less than 100 USD, so if you have an amount of 50,000 USD in your possession, you can hold multiple kinds of them by firstly doing thorough research to confirm whether they are legit or not. This, in turn, increases your chances of winning profits leading to well-balanced cryptocurrency investment.
There is an equal possibility that investors can expect a big or massive profit from Shitcoins, and may even be able to lead them to the path to being billionaires, but there are some disadvantages or negative outcomes associated with it as well, some of them are as listed below.
There is a possibility that the price will decrease drastically and lose its value: Shitcoins have the merit to rapidly increase in price within a short period of time, but there is also a chance that they will fall and lose their value. Because shitcoins are originally unpopular cryptocurrency coins, their expectations in the future are very less. Meaning, they can suddenly become worthless in a glimpse.
There is a possibility of fraud: There are various types of shitcoins that have purposely been developed to trick and take money from investors with no actual conditions attached. Taking the instance that occurred in Japan around 2017, a popular cryptocurrency called "Clover Coin" was rumored to increase in value if purchased by the masses, but the reality is that it is a typical Multi-Level-Marketing (MLM) coin and was used to deceive the public.
They give cryptocurrencies a bad name. knowing very well that we want adoption and the world at large to use and utilize cryptocurrencies. Shitcoins have made it quite hard to get people to invest after seeing and hearing all the bad comments some people make on the internet about them.
List at least 3 examples of Shitcoin that have been a scam, also explain what they consisted of.
The scam shitcoins that I would be explaining are Squid Inu (SQUID), Smart Trade Coin (STC), and Save the Kids coin ($KIDS).
SquidCoin is one of the cryptocurrencies that caught the attention of the general public in 2021 and was talked about for weeks. It was inspired by the popular Netflix series Squid Game. Just like the hit Korean Netflix show, the coin also picked up a lot of interest, as people were getting to know about it. In just a few days after its launch in November 2021, the new token skyrocketed over 2300%. In fact, it was one of the best performing coins two months ago. Before launching, the developers managed to come up with a Game project (a play-to-earn platform) inspired by the same Korean hit series on Netflix about children's deadly tournament games with large price money. Users were allowed to participate in the game if only they had SQUID. The game was said to mimic the six rounds game format used in the Korean series which will provide its players with the chance to earn more Squid Game Token (SGTs).
Investors were able to get hold of Squidcoin by firstly investing in a preexisting coin like Bitcoin from any well-known exchange. Then, used Pancakeswap exchange afterward to exchange the cryptos for SQUIDS with no idea that the inspired virtual currency was made with the intentions of being unsellable. CoinMarketCap saw this and warned investors to handle the Squid Game token with caution after they flagged it. The warning message is as shown below
WE HAVE RECEIVED MULTIPLE REPORTS THAT USERS ARE NOT ABLE TO SELL THIS TOKEN IN PANCAKESWAP. PLEASE DO YOUR OWN DUE DILIGENCE AND EXERCISE CAUTION WHILE TRADING! THIS PROJECT, WHILE CLEARLY INSPIRED BY THE NETFLIX SHOW OF THE SAME NAME, IS NOT AFFILIATED WITH THE OFFICIAL IP.
SmartTrade Coin
A smart trade coin is a cryptocurrency coin that claims to enable or allow its users to earn automatically a significant amount of money without putting in any effort. Frankly speaking, this is obviously too good to be true. Smart trade coin is an opaque platform that does not disclose its founder's complete information and team members as well. The only information used to reference the founder is his age. Also, the developers provided their address with the wrong Country name. As seen below.
source
The "an" in the image should be "and". I have actually never seen any company misspell their country name before.
In addition, the team has provided software that claims to connect to multiple cryptocurrency exchanges via a single interface allowing users to use one app to manage several crypto exchanges. But from App Stores,
More than half the reviewers call the application to be a scam because they had lost all their savings with no idea where it disappeared to.
source
SaveTheKids Coin
Save the kids is a cryptocurrency token that was peddled by huge social media influencers and gamers from FaZe Clan. They managed to convince their millions of followers, most being minors to purchase the coin with a promise that, whenever it was traded 1 percent of the 3 percent tax on the transactions would be donated to children in need. Because of this, the value of $KIDS increased initially, followed by a massive sell-off shortly after, which in turn crashed the value of the $KIDS token from approximately $0.0029 to $0.0012 in about a week, leaving many who purchased with worthless crypto. $KIDS is now down with more than 150% and the founder of the coin has since abandoned the project, taking all the project's funds along with him.
Explain at least two examples of Shitcoin that have been successful and are currently keeping it. (Other than Dogecoin or Shibainu.)
In this section, I am going to explain to you the best two shitcoins which have been successful and have caught the interest of investors for some time now. Now, the first one that I am going to be talking about is SafeMars.
SafeMars
SafeMars is a shitcoin with an automated yield and liquidity generation protocol launched on March 2021 by Kenneth Churchill. It imposes a 4% tax on any transaction done by its users out of which 2% is distributed as a reward among the SAFEMARS holders which helps in the generation of demands and the remaining 2% is paired with BNB and diverted to its liquidity pool with the purpose of constantly increasing its price floor. Although SafeMars cryptocurrency was launched just recently, it has still been attaining massive attention from investors for some time now. SafeMars is one of the best secure and reliable shitcoins to invest in if you want to make some cash as its initial liquidity has been locked forever by its developers. It burns the liquidity pool (LP) tokens, which makes it almost impossible to remove or withdraw liquidity at any given time.
From the screenshot above, the live SafeMars price today is USD 0.00000004418 with a day trading volume of USD 268,359. As of when this post was written, SafeMars is dropped down to 9.18% with a CoinMarketCap ranking is #3904 along with a maximum supply of 1,000,000,000,000,000 SAFEMARS coins.
Dent coin
Dent Coin is a popular cryptocurrency shitcoin that has been gaining a lot of attention recently. It was created and published in 2017 by the company "Dent" which plans to revolutionize or make significant changes in the mobile data network worldwide by becoming the best global exchange for mobile data in the world. According to their website, their main plan is to provide users with a platform that would enable them to transfer, purchase, and sell mobile data just like Ethereum and other cryptocurrencies that are traded today. The company wants to reduce the world's dependency rate on service providers and develop a decentralized space where mobile data can be freely traded as a commodity with the use of Dent Coin or Dent Tokens to make payments on the Dent network. Based on the performance of Dent coin, it has been recognized and ranked #163 on the world's most referenced cryptocurrency assets tracking website (CoinMarketCap) as shown in the image below.
From the above image, it can be seen that Dent's current price as at when this post was written is approximately USD 0.00355 with a day trading volume of USD 51,578,513. But just like any cryptocurrency, Dent dropped down to 10.40 percent in the last 24 hours with a live market capitalization of USD 351,815,591 and is currently circulating a supply of 99,007,791,203 DENT coins.
Perform a historical analysis of the prices of any of the cryptocurrencies that you chose for the previous question. (Use screenshots.)
In this section, I am going to base my analysis solely on the Dent cryptocurrency coin. From the picture uploaded below, it can clearly be seen that, from the date the coin began to gain the attention of investors, its initial amount was $0.00000 before it started to increase a few days later. The coin couldn't bearish instantly from there, it managed to maintain a flat market for 124 days (from October-December) which provided much time for a lot of investors to enter the market. On December 16th, the coin miraculously increased in price and lasted about 25days before indicating an extremely bullish trend for about a year (from late January 2018 up to 2019).
The bearish trend continued for a long period along with a flat market before the occurrence of a breakout in March 2021 as shown in the picture below. After the breakout, a strong bullish trend took over the market for just 25days and multiplied the money invested by investors who had enough patience. It later resulted in a bearish trend afterward. It has since been dropping with hopes of increasing again in the upcoming days. Take a clear look at the image provided below to fully comprehend what I just explained.
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Based on your previous analysis, what do you think will be the development of the price of the cryptocurrency for this year? Be creative when explaining.
Yes, I strongly believe that the price of Dent coin will increase regardless. This is mainly because of the interesting trends it has been showing since August 2021 as shown in the screenshot below. From the image, it can be seen that all the recent trends are still above the Risk line, which means that there is a high possibility that the trend will breakout with an upward trend. As we all already know the risks involved when investing with shitcoins and how the market is also manipulated by the complementary men. I strongly suggest that anyone reading this post and wanting to invest in Dent coin, should take all the necessary precautions, wait for the right moment before hoping into the market in other to gain multiple profits.
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CONCLUSION
Shitcoin Cryptocurrencies are characterized by speculations, complications, and risks. So its performance can not be fully predicted as there is no assurance for certainty. It is also very important to put every little opportunity into consideration by exploring your recommended coins before investing in them. As we already know, shitcoins can make you rich and can also drain your bank account as well. Taken the sudden increase in price and volume of some of the publicly known shitcoins namely; Dogecoin and Shiba Inu. This was due to the hype made by social media trends and celebrities, especially by some of the world's most richest and influential billionaires. So when we come to think of it, we would realize that shitcoins are not as worthless as we think they are. Besides, they are bound to be volatile and have a similar tendency to Bitcoin and Ethereum, so as an investor, all you need to do is take all the necessary precautions when investing in them with good risk management skills. Thanks professor @nane15 for such a great lecture.