Shitcoin Meaning
What is a Shitcoin?
The term “shitcoin” describes a coin or token with little to no fundamental value, credibility, and potential utility. However, the term is kind of subjective as some critics may refer to legit altcoins gaining traction from the success of Bitcoin. Memecoins, such as Dogecoin and Shiba Inu, are a good example of shitcoins since they are designed as a joke rather than to provide real-world value.
Shitcoins have no foreseeable future since they are primarily founded on price speculation. Most crypto prices rise due to increased demand for the utility they provide. Most shitcoins, on the other hand, launch during bull markets to capitalize on the high positive investor sentiment. Typically, investors overlook fundamental value and utility for short-term profits in bull markets.
How Do Shitcoins Work?
Since their supply is extremely higher than their demand, they are often cheap. These cryptocurrencies diminish in value once the investor interest subsides, especially when they fail to meet investor expectations. Most of them often completely disappear during bear markets.
Furthermore, shitcoins are an easy target for pump-and-dump schemes. This is where a group of investors artificially drive a shitcoin’s demand up to inflate its price and ‘dump’ their holdings when the price rises. In some cases, the projects turn out to be rug pulls where the founders disappear with investors’ funds once the coin’s price has skyrocketed, leaving investors with worthless coins.
Such tokens usually market their project through social media platforms for publicity, i.e., they hire influencers or use chatbots to hype the project launch. Others urge investors to HODL their tokens, touting that the token is going “to the moon” to fashion a sense of fear of missing out (FOMO). Other marketing ploys include airdrops, giveaways, or token burns to create the illusion of scarcity.
Some characteristics of shitcoins include:
- Anonymous founders and developers.
- Unrealistic promises of outsized profits.
- Extremely low liquidity
- Unlimited maximum coin supply with the total supply in the trillions.
- No whitepapers to outline important information, such as project tokenomics, functionalities, use cases, etc.