For me Steemit was the gateway drug for entering the bizarre world of virtual currencies.
Since accidentally discovering Steemit on the internet five months ago, I’m now neck deep in digital currencies, trading them and researching new projects within the space. I’m grateful for the economic opportunity I have been given, even while I’m busy critiquing the obvious systemic flaws within Steemit’s design. Some people cannot understand this dichotomy. Unlike many crypto fanatics, I don't identify as one. I'm an outsider, therefore I have a more objective perspective and I'm very critical. The fanatics don't like this trait and it took me a while to understand why. I think I get it now. Cryptocurrency shares some characteristics with religion.
Bad design causes needless suffering while good design brings joy. (I think Gavin Andresen said this in a tweet).
When I see an underlying structure that is badly designed and that is causing many people unease, I point it out in the hopes that the designers will hear me and fix the issue. That’s another story, though. Let’s get back to shitcoins.
I first learned the word, shitcoin in @fyrstikken's over-the-top video, Do You Want To Trade Some Shitcoins?:
Digital currency feels like the Wild West again on the internet. And it’s taking place in the creation of new digital currency altcoins. Among these newly created coins lies the dreaded shitcoin.
So, what’s a shitcoin?
To understand what a shitcoin is, you first have to understand what cryptocurrency is. From Wikipedia:
“A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. Cryptocurrencies are a subset of alternative currencies, or specifically of digital currencies.”
Bitcoin, which you’ve probably heard of, is definitely not a shitcoin.
But way before Bitcoin became established, it was doubted as a viable project. I'm sure the first doubters called it crap or shit money. There had never before been a digital currency that was maintained in a decentralized manner. No one was sure if it would succeed. But it did.
Bitcoin was invented in 2009. The first altcoins, which mimicked or improved upon Bitcoin’s basic design began to emerge around 2011. In 2013, altcoins exploded onto the scene and have shown no signs of slowing down. Everyone wants to be God of money. Because this market is so new and relatively unknown, it’s not well received by mainstream society.
This is always the case when a brand new market emerges that has no little to no history and no known real-world equivalent.
To understand exactly what I’m talking about, take a look at Coinmarketcap which shows you in real-time how much each digital coin is worth.
A shitcoin is basically an altcoin that becomes worthless over time or one that turns out to be a scam operation. And there seems to be an abundance of badly designed shitcoins in the crypto world. New altcoins that don’t introduce any significant technological innovation are also usually considered to be shitcoins. There are many reasons people would be interested in creating a new altcoin and as you can imagine, pure greed is the number one reason. Who wouldn’t want to create money out of thin air? Creating a long-lasting altcoin though, is a much harder thing to pull off. It requires many of the same qualities that run successful businesses: great leadership, communication, transparency, marketing and community engagement.
In the Wild West of cryptocurrencies, as a newbie, it’s hard to separate the shitcoins from the good coins, especially during the birth of the coin.
The amount of collapsed exchanges, scam coin operations and hacker thefts is pretty staggering, too, which greatly diminishes the reputation of the cryptocurrency world. [For examples, Google the following keywords: Mt. Gox, The DAO, OneCoin, Bitfinex]. These types of collapses scare mainstream people away from adopting digital currencies.
On the exchanges, I’ve traded mostly STEEM, but I’ve also bought and sold Potcoin, Amps and Bitcoin. With Potcoin, I made some decent money because I bought some on October 10th, right before its value went way up. I sold it the same day for about twice what I paid for it. I’m not into taking big risks because trading is a very new game for me. But my dad was a day trader for a while on the regular markets, so I'm used to the idea. Steem made this all possible and all I did was invest my time and energy into Steemit in the early days, back in June, before the flood of people arrived in it.
I am in no way qualified to give investment advice. This is just my experience. It’s been quite fun and educational, too. And scary at times, especially when my account was hacked in Steemit. I believe digital coins are here to stay and in fact, I think in the future, they will replace a lot of fiat currencies. The benefits of using digital currency far outweigh the risks. As long as you can tell the shitcoins from the good coins, you’ll be fine. I recently set up 2 Factor Authentication on all my accounts, including Bittrex. Bittrex just changed its withdrawal policy, making it harder to withdraw larger amounts due to a recent security breach. But if you have 2 Factor Authentication, you can withdraw whatever amount you like. Bittrex uses Google Authenticator to make its second authentication. Google Authenticator is really good and is found in the app store.
I'm leaving you with a quote I found recently that describes some of the fanaticism with regards to cryptocurrency communities:
The promise of great wealth is a manic depressive trigger, as any behavioral economist and psychiatrist knows. This effect occurs because the unconscious mind is time-agnostic, as evidenced by temporal distortions in art and dreams. And so, the vision of future wealth becomes numinous and real in the present.
Their ability to turn numbers into money, and therefore influence, is a classic example of transmutation and blurs the line between illusions and delusions of grandeur. The more money investors have sunk into a cryptocurrency, the more they will defend it. Not only to rationally increase their wealth, but to preserve this ideology and their new future status. - Medium, Why Bitcoin is a Religion by Filip Martinka
This article first was published on Medium and has been modified for Steemit: https://medium.com/@stellabelle/what-is-a-shitcoin-80f4e31ec160#.deybbiy34
The idea of doing video responses as created by @steempowertwins is one worthy of copying, with a puppet. I just might be adding video responses to my posts, too. Give me some time......here's their novel idea: https://steemit.com/introduceyourself/@steempowertwins/steempowertwins-guerrint-and-modernmama-bring-life-to-the-comment-section-with-video-replies